The Bracks Government's decision this week to approve the expansion of the Hazelwood brown coal power station was not just the right decision, but the only possible decision.
Large reserves of low cost brown coal have long been one of the Victoria's key competitive advantages.
It is used to generate more than 90 per cent of the state's electricity and has allowed the state to maintain world competitive electricity prices and thereby attract and keep energy intensive manufacturing activity.
Victorian Governments have long recognised the importance of brown coal.
During the Cain Government, the expansion of the coal sector was identified as a top development priority not only to generate exports directly but as means of attracting energy intensive industries. Under Kennett, the brown coal/ electricity industry was seen as a prime source of improved productivity and funding.
Indeed, the Hazelwood plant played a major role in the Kennett reforms.
Kennett found an eager buyer and the new owners turned it into an efficient, profitable and clean plant. The sale not only generated $2.5 billion in income for the government but saved billions of dollars by avoiding the cost of a replacement plant.
The Bracks Government confronted a different policy environment. The electricity industry is now privately owned and operates in a competitive, interstate market, thus is outside direct government control.
And the greenhouse scare has gained force and mesmerised many in the Government.
For most of this decade the Bracks Government successfully pursued its usual tactic of trying to please everyone. It placated the greenhouse lobby with promises to restrict greenhouse emission.
At the same time it told the productive side of the economy not to worry.
This was always going to be a short term strategy and a decision was eventually forced on them.
The planning bureaucrats, always keen on another rationale for regulation, took the government at its word and put its commitments to reducing greenhouse gases into planning laws.
The greenhouse lobby used this hook to appeal a Government decision to approve rezoning application need for the continuation the Hazelwood mining operation.
An activist judge appointed to VCAT by the Bracks Government upheld the appeal and the Government was forced to make a policy choice.
That is, it was forced to either go with brown coal, which is CO2 intensive, or with the alternative proposed by the greenhouse lobby -- windmills, solar cells and energy rationing. We are not talking about a small change as Hazelwood accounts for 25 per cent of the state electricity consumption.
The decision was in reality not difficult. The greenhouse lobby's options are not even close to being viable. If adopted, they would necessarily result in significantly higher electricity prices, outages and a loss of jobs and investment.
Moreover, they are unlikely to reduce greenhouse gas emissions. The processing activity lost here would migrate elsewhere such as China and result in new and offseting emissions.
In the end the Bracks Government recognised that coal is the state's main future energy source and that technology and bringing China and India into the loop are the key to addressing greenhouse gas emissions.
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