Government should learn lesson from ZeroGen

The State Government will learn an important lesson – about the risks to governments in embarking on risky business ventures – as a result of the failure of the state-owned ZeroGen clean coal company.  The Courier-Mail reported this morning:

State Government drops ZeroGen project after taxpayers pump $150 million into the plan

Despite the ZeroGen failure, the Queensland Government has made the correct call to support the development of clean coal technology, given the risks to Queensland’s coal industry (and exports) arising from the possibility of measures worldwide to control greenhouse gas emissions.  With several hundred years’ worth of coal reserves in our state, it is clearly in Queensland’s economic interests to develop clean coal technology.  If we can minimise greenhouse gas emissions from coal-fired power stations, we can continue to use coal, which is cheap and plentiful, to deliver electricity at a much lower cost than alternatives such as renewable energy.

The US Government has wisely avoided the risk of setting up its own clean coal business and has decided to simply grant money to a private sector consortium (which involves BHP Billiton, Rio Tinto, among other major players):

US awards $1 billion for clean coal power plant project

This way the US Government can ensure essential R&D gets done, but without taking on any of the downside business risk associated with the project.

Of course, with R&D on clean coal occurring in other parts of the world, the case for a major R&D investment in Queensland is diminished.  As it rebuilds its clean coal policy in the wake of the ZeroGen failure, the Queensland Government could usefully look to clean coal R&D projects overseas to see if there is any contribution Queensland can make to what rightly should be a global effort.

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