Coalition’s last minute energy policy continues to unravel before its eyes

The federal Coalition’s energy policy moves continue to unravel before its eyes, with the latest blow coming from legal opinion that suggests that the government would need to get funding for any new fossil fuel generation through parliament if it is to have any legal force.

The opinion comes just days after the federal Coalition decided to pull its so-called “big stick” legislation after discovering that Labor and the independents would support an amendment by The Greens that would ban the government from funding new coal investments.

The “big stick” legislation is a lead-footed attempt by the government to try and “control” the energy market, drawing on some aspects of an ACCC report into market gaming and manipulation, but introducing others – such as a threat to force companies to sell assets – that the ACCC, and just about everyone else, says is a really bad idea.

The government is also trying to rush through an “auction” to underwrite “24/7” dispatchable power. It has less than two months before entering the care-taker period to conduct a formal tender, choose its favoured projects, conduct detailed negotiations, and sign a contract.

An informal “registration of interest” process elicited 66 proposals, mostly gas, but including 10 relating to coal projects, and others such as from Sanjeev Gupta and AGL to combine renewables with battery storage or pumped hydro, or a mixture of both.

The government was been warned that any move to underwrite new coal generation – as proposed by Vales Point co-owner Trevor St Baker – would require billions of dollars in government guarantees and indemnities against any future carbon pricing.

The government says it is “technology-neutral” – a euphemism commonly used to hide their preference for technologies that are not cheapest and cleanest – but when the Greens amendment threatened the viability of coal, the government decided to pull the legislation.

Ben Oquist, from The Australia Institute, said it asked two prominent legal experts who found that the Coalition could not make such a funding commitment without legislative approval. One avenue already exists, the Clean Energy Finance Corporation, but it can only invest in renewables, or “low emission” technologies.

“This legal advice is very clear, the government’s hasty, poorly-designed program to invest in new gas and coal power stations cannot proceed without legislative intervention by Parliament,” said Richie Merzian, the Climate & Energy program director at The Australia Institute.

“Energy Minister Angus Taylor is in such a rush to funnel taxpayer funds to new coal-fired power stations before the election, he seems to have overlooked that he has no constitutional authority to do so.

“This is another blow to the federal government, that their signature program to fund electricity is destined for the shelf – along with the rest of the Government’s energy policies.”

Taylor – the self-described “minister for lowering electricity prices” – has instead presided over a period of record highs, driven mostly, the Australian Energy Market Operator reports, by black coal and gas generators.

Tensions over energy policy – which precipitated the dumping of prime minister Malcolm Turnbull and the rise of Scott Morrison – have re-surfaced in the Coalition government over the dumping of the “big stick” legislation, with the National Party not happy, and there appears to be tension over the proposed Snowy 2.0 pumped hydro scheme.

The most vocal opponents – cited by the Murdoch media – are the old favourites Tony Abbott, Barnaby Joyce and Craig Kelly, who fear the project will be a Trojan horse for new renewables, even though Snowy’s initial research suggested it might be good for coal generators.

Taylor is thought to be kindly disposed to the plan – his grandfather played a lead role in the original Snowy Hydro scheme – but while the Snowy board has given its imprimatur, despite not releasing final costings or environmental and engineering reports, the government is yet to make a decision on whether to fund it.