Energy projects for Victoria

A $125 million investment in two Victorian energy projects will help cut greenhouse gas emissions in Australia's energy sector over the next 30 years, the federal government says.

Treasurer Peter Costello and Industry Minister Ian Macfarlane announced the first two projects under the $500 million low emissions technology demonstration fund (LETDF).

The first is a $75 million grant for a $420 million large-scale solar concentrator in north-western Victoria to be built by Melbourne-based Solar Systems Pty Ltd. The project will start in 2008 and reach full capacity by 2013.

The second grant is $50 million towards a $360 million pilot for a brown coal drying and a post-combustion carbon dioxide capture and storage project at the International Powers' Hazelwood facility in Gippsland. Construction is to begin early next year with the project to be completed by the end of 2009.

Both projects have also attracted Victorian state government funding.

"Technological improvements will be instrumental in delivering large-scale reductions in emissions both in Australia and throughout the rest of the world," Costello said. He signalled that he and Environment Minister Ian Campbell would make further announcements about the LETDF in coming weeks.