“Are you prepared to build or subsidise a new coal-fired power station?”
If he was asked that question once, today, federal energy minister Josh Frydenberg was asked it a thousand times. And a thousand times he didn’t answer it.
Why is this important? Because the Coalition right wing, for whom the carbon price, the emissions intensity scheme, the clean energy target have been sacrificed or discarded, need to be told they might have one under the final, total compromise, the National Energy Guarantee.
Frydenberg is dancing a fine line – any hint of new coal generators would kill the chance of an agreement with the states, and any rejection would cause uproar in the party room.
Here are some of Frydenberg’s responses, so far…
In an interview with News Corp papers:
“I would welcome a new coal-fired power station for our country because it supplies reliable baseload power and it has served us well in the past and will continue to serve us well in the future.”
“We have twenty coal-fired power stations in Australia today with an average life of 27 years. While they may not live forever, they will certainly live longer than that 27 years and the NEG will provide that level of stability for the investors and the owners of those assets.”
“The reliability that coal provides the system will be valued and [coal is] much more likely to be staying in the system under the NEG than not.”
(It should also be noted that The Australian ran a story suggesting that Frydenberg was planning an “addendum” to the NEG that would pave the way for new base-load, coal or gas. Frydenberg’s office didn’t answer that either).
At a door-stop at Parliament House:
“I have said publicly the government does not build new power stations. What we do want to do is create the investment framework for companies to take that decision as to what new assets they will build.
This is what the National Energy Guarantee will do. It will provide a stable investment framework for companies to decide where, when and what they build.”
“My focus is on delivering the National Energy Guarantee… what my colleagues want to see is the lowest possible prices… We will do everything possible to reduce people’s prices and increase reliability…
“We have said the government’s not building a new coal-fired power station, we’ve been pretty consistent with that …
“We are in the business of ensuring that the market works… Australia will require some $250 billion worth of infrastructure investment in the energy sector in the coming decades and government can’t provide that sort of money, it can only come from the private sector, so we need the right investment signal, and we need to dispel some of the myths in the energy system, like, for example, that we can decarbonise overnight, and close down our coal-fired power stations.
“At the same time, we are working in a carbon-constrained environment, where financiers are taking into account those issues when they’re making decisions as to which generators to fund and to build, and that is why we believe the National Energy Guarantee is the best way forward.
(HM: “But minister, can we get a straight answer to the question – it’s pretty simple – will the government rule out subsidising the construction of any new coal-fired power stations, or paying to keep existing ones open, that the corporates don’t see a future in?”)
“Well, what I’ve said consistently on this, Hamish, is that the best chance for existing coal-fired power stations, and indeed for new ones to be built, is to get the investment framework right, which the NEG provides…
(HM: But what does that mean in real terms? That the government would have a role in that, or not?)
“Well our focus is getting the market to work. That’s our absolute focus. And when you get that market working, you will get the investment in generation assets, including thermal generation assets, be they coal or gas.”
(HM: Does that mean, though, that you think that if the investment framework is right, that some corporations will see value in investing in coal? Is that what you’re saying?_
“Absolutely, absolutely. … I mean we’ve see the market operator say how important our existing baseload capacity is. … Coal is absolutely critical…
“My focus is on taking subsidies out of the system…
(HM: So you can rule out any subisidies for coal-fired power stations in the future…)
“Hamish, my clear message to you and your listeners is that with the NEG we have removed the subsidies, removed any consideration of taxes or trading schemes, we have a technology neutral approach, and we see all of the above being important in Australia’s generation mix, including coal and gas and, of course, an increasing role for renewables.”
(HM: But minister…. can you rule out that the government would subsidise any new coal-fired power stations or keeping any open?)
“Well I’ve made it very clear that we’re not in the business of building new coal-fired power stations, but if we get the market working, then you’ve got the best possible chance of sending the signal to those companies that decide what they want to build…
Meanwhile, Matt Canavan told Peta Credlin on Sky News on that…
“I think the reason why they haven’t been built, or aren’t being planned in Australia, is because of the policy environment we’ve got, which has put a priority on renewable energy, through the Renewable Energy Target, so it’s created no space for alternatives to be supplied, whether it be gas or coal or other options.
“The National Energy Guartantee will remove that, it will remove that priority we’ve given – at least at a federal level – to renewable energy.
And that does create the space for coal to be an option. So I think the first thing we’ve got to do is to change the policy environment we’ve got, from one being pro-renewables and pro-subsidies, to one being technologically neutral and all of the above, and then I’m quite confident, given the costs of coal-fired power relative to other power, that coal will certainly be an option going forward in this country.
(Is coal on the way out?)
Absolutely not. Because the latest and new coal fired power stations are more efficient and they can help us lower emissions.
Meanwhile, the energy industry continues to insist that building a new coal fired power station would be barking mad, for any number of reasons – costs, security, emissions.
But barking mad is what we are dealing with.