THE indefinite delay of emissions trading will halt the cleaning of Victoria's energy supply, with Santos confirming it will not build a proposed $800 million gas power plant while there is uncertainty over a carbon price.
The oil and gas producer is investigating the feasibility of a 1500-megawatt, gas-fired power station at Shaw River, north of Port Fairy.
Proposed in 2008, the plant would be built in stages before reaching the size of a Latrobe Valley coal-fired station in 2020. It is estimated it would emit 70 per cent less greenhouse gas and use less than 1 per cent of the water of a brown-coal generator.
Santos chief executive David Knox said yesterday that a carbon price was needed to put gas-fired power on a level playing field with coal.
''It's very important for businesses such as ours to have certainty; we won't invest unless we have certainty,'' he said. ''Obviously we don't have that now with carbon pricing.''
The savings from deferring the emissions trading scheme and putting a price on carbon will be much less than the $2.8 billion predicted by the government last year, according to Treasurer Wayne Swan, but he would not say what they would be.
Sources say the cash amount available to the government will be ''substantially'' short of the figure in the mid-year budget forecasts. The gap is due to different accounting methods.
The savings had been seen as an important windfall for a government trying to get the budget back into surplus as soon as possible.
Going into damage control against a barrage of criticism of the decision to put the scheme on ice at least until 2013, Prime Minister Rudd said the government would speed up its rollout of its renewable energy plan.
''There is a truckload of work about to happen when it comes to renewable energy plans for the entire nation,'' he said. ''These projects will be rolled out one by one.''
The projects include the $1.5 billion large-scale solar flagship program, a shortlist for which is expected mid-year, and the $100 million smart grid project. Both were in last year's budget.
Mr Rudd also said two other projects would be announced soon that would generate 53 megawatts of power.
He said the government ''remains absolutely committed to the principle of a carbon pollution reduction scheme and its implementation''.
The government's commitment to greenhouse gas reduction targets remained unchanged. What had changed was the pathway to a scheme.
Renewable energy company Pacific Hydro said the ETS delay underlined the importance of proposed changes to the government's 20 per cent renewable energy target being passed by the Senate in the winter session.
The government has promised to fix flaws that promoted domestic technology at the expense of large-scale projects.
Pacific Hydro general manager Lane Crockett said the renewable energy target was ''the only thing keeping us here''.
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