In a landmark decision the 1,635 MW Hazelwood coal-fired power station in Victoria’s Latrobe Valley, Australia, is to cut its carbon emissions over the next 25 years after the state government imposed a cap on the power station’s total emissions, after which it must close.

The agreement requires Hazelwood to reduce its estimated emissions by 34 million tonnes and caps its total greenhouse output at 445 million tonnes of carbon dioxide.

At its current level of output the station would reach the cap by 2029 although the deal will allow Hazelwood to extend its operations until 2031. The station will also have to reach emissions milestones every six years and can be penalised if it fails to do so.

Environmental groups want the station phased out after 2026 when they say the supply of coal for which it is currently licensed would run out.

Hazelwood is majority owned by International Power.