The carbon tax, despite the support by some large Australian businesses, continues to be the favourite whipping boy of the Opposition and even some state governments.

On the first week of the tax's implementation, the New South Wales (NSW) government partly blamed the carbon tax for its decision to shutter the 45-year-old Munmorah power plant in Hunter Valley.

NSW, which owns Delta Electricity, announced the closure of the power plant citing concerns over the viability of coal-fired power generators due to falling demand and legislated doubling of renewable electrical capacity by 2020. Its economic viability is also in question because of its age and high maintenance cost, exacerbated by the carbon tax.

The Coalition immediately seized the moment to blame the carbon tax, while NSW Treasurer Mike Baird complained of the carbon tax compensation package being skewed to privately owned, brown-coal generators in Latrobe Valley in Victoria and South Australia.

However, Climate Change Minister Greg Combet described as absurd and ridiculous the attribution of the power plant closure to the carbon pricing. He said the NSW statement is merely adding to the Liberal's scare campaign, adding that Delta Electricity has admitted the plant would have been decommissioned anyway, with or without the carbon price.

His position was backed by the Energy Supply Association of Australia (ESAA) research that stagnant demand when combined with the impact of the renewable energy target would result in a 6 per cent fall below 2000 levels in emissions from the electricity sector by 2020.

"If overall demand isn't growing, the impact of the renewable energy target is that emissions intensity falls because of more renewable capacity. This RET effect will happen regardless of whether or not there is a price on carbon in Australia," ESAA General Manager of Corporate Affairs Andrew Dillon said.

Delta Chief Executive Greg Everett admitted also, "We're not doing this as a carbon stunt, we could have held on, but as soon as we were given approval to close the station down we had an obligation to go and tell the staff."

"The carbon price was probably the final straw, but it needs to be put in the context of falling demand in electricity.... If we obtain fuel for it, it would be at a high international price. On that basis, it wouldn't have been competitive in the market," he added.

With the closure of the power plant, its 100 staff were absorbed by the Vales Point power plant. The Munmorah facility was responsible for 4 per cent of NSW's carbon emissions estimated at 4.2 million tonnes of carbon dioxide a year.

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