HUNDREDS of jobs are at risk as the State Government moves to shut Hazelwood power station.
Premier John Brumby committed to cut the output of Victoria's dirtiest power station by 20 per cent within four years, the Herald Sun reported.
But this can only go ahead if the Federal Government agrees to underwrite a compensation payment that could run to almost $2 billion for International Power, owner of the LaTrobe Valley power station.
This would be used to finance the potential conversion of the Hazelwood plant from brown coal to gas. Hazelwood supplies about 25 per cent of Victoria's electricity.
Ray Burgess, from Morwell Newsagency, said the decision was bad news for the community.
"I think it has probably caught them (workers) a bit unaware," he said.
"It will be a big topic around town over the next few days."
The Hazelwood plan is the central plank of the Brumby Government's White Paper to tackle climate change and reduce Victoria's carbon emissions by at least 20 per cent by 2020.
"The most cost-effective way to clean up our environment and achieve this reduction in greenhouse gas over the next four years is to close two of the eight units at Hazelwood power station," Mr Brumby said.
But the proposal to gradually shut Hazelwood is on shaky ground as the Government has had only one preliminary discussion with International Power on a payout.
And Canberra has yet to agree to the proposal.
Mr Brumby yesterday refused to speculate on the amount of compensation needed to pay out International Power.
But the State Opposition claims it could cost $6 billion for the Government to close Hazelwood and meet the target of a 20 per cent reduction in greenhouse gases.
A Hazelwood spokesman said it agreed in principle with the closure but there was no agreement and talks would continue with the state and federal governments.
Hazelwood produces about 18 million tonnes of brown coal a year to fuel the power station, and employs about 800 staff and contractors.
The State Government's White Paper also includes actions to encourage more efficient homes and solar power generation and drive greener transport solutions.
Mr Brumby said household electricity bills could drop by 30-35 per cent if residents adopted solar hot water and upgraded their homes to a five-star energy rating.
He said the introduction of a global carbon tax was inevitable.
But the Greens, a potential coalition partner with Labor after the November state election, slammed the climate change White Paper as a target without a plan.
Greens MP Greg Barber said it was nothing more than a transparent attempt to win over young, environmentally conscious swinging voters in key marginal seats.
Federal Opposition environment spokesman and Victorian MP Greg Hunt said the announcement was "a slap in the face" for Prime Minister Julia Gillard's planned Citizens' Assembly.
"In essence, Mr Brumby has asked for the federal Coalition to finance his promise as he has no money to do so and Julia Gillard has no such fund," he said.
"Climate and clean energy policy under Labor has descended into a farce."
