By Lenore Taylor and David Wroe
AUSTRALIA'S highest-emitting brown coal electricity generators are between $400 million and $1 billion better off than they would have been if there were no carbon tax, new modelling shows.
The brown coal generators' stronger-than-expected financial position yesterday forced the Gillard government to abandon its attempts to pay some of them to close down by 2020, infuriating environmental groups and the Greens.
Giving up on the negotiations frees at least $1 billion in the budget from 2013-14.
It triggered demands from the Greens that the government reconsider $4.5 billion worth of compensation yet to be paid to the companies on top of $1 billion already handed over.
Viable ... brown coal generators have collectively gained aproximately $1 billion following the implementation of the carbon pricing scheme.Credit: Justin McManus
Those calls will become even louder as a result of new modelling by Frontier Economics obtained by the Herald.
''We estimate that, in total, the brown coal generators are, at the very least, around $400 million better off than if the Gillard government carbon pricing scheme had never been implemented. More likely the collective gain in value … is around $1 billion,'' the private modelling company says.
The analysis shows that instead of winding up collectively somewhere between $400 million and $900 million worse off, brown coal generators are likely to be between $400 million and $1.1 billion better off, depending on assumptions about how much of the carbon price they are able to pass on to customers.
NSW black coal generators, who got no compensation for the carbon tax, had argued the Victorian brown coal stations were unfairly advantaged by the compensation package.
The Greens leader, Christine Milne, who fought against the generous compensation, accused the government of a ''breach of faith'' and called for an immediate review.
''Shutting down some of the dirtiest coal-fired power stations was at the heart of what we are trying to do,'' she said.
A spokesman for the Climate Change Minister, Greg Combet, said the government did not believe Frontier's modelling ''accurately reflects the impact of carbon pricing''.
The failure of the closure negotiations shows that the shift to cleaner electricity will be much slower than predicted.
A buyout of dirty power stations would have slashed the nation's annual greenhouse emissions by up to 21 million tonnes - about 13 per cent of the 159 million tonnes needed to meet Australia's 2020 target.
These cuts could now be shifted onto the companies and councils who will pay the carbon price. At Treasury's forecast 2020 price of $37, that would amount to $777 million. ''It shifts the burden from the power generation sector onto the broader economy,'' said Erwin Jackson, of the Climate Institute.