Department officials walk back Coalition coal funding promises, say no decisions made

Energy department officials have walked back suggestions that the Morrison government has already committed funding to coal power developments at Collinsville and Liddell, telling a senate estimates hearing that no final decisions to commit taxpayer funds had been made.

In February, prime minister Scott Morrison announced that $4 million of taxpayer funds would be used to find a feasibility study into a new high-efficiency, low emission coal-fired power station in the Queensland town of Collinsville.

As reported by RenewEconomy, serious questions are being raised about the need for such a power station, as has been expressed by Queensland state energy minister Anthony Lynham, as well as the ability for the preferred project proponent Shine Energy to actually deliver such a large infrastructure project.

While an announcement from Angus Taylor on 8 February said that the government had fulfilled an election promise to provide “up to $4 million to support Shine Energy Pty Ltd’s feasibility study for a proposed 1GW high-efficiency, low emissions coal plant at Collinsville in Queensland,” department officials said that such a funding arrangement had not been finalised.

During the senate estimates hearing on Monday, officials from the Department of Industry, Science, Energy and Resource said that Shine Energy was currently progressing its application for the “ad-hoc” grant, and had been issued a set of guidelines for Shine Energy respond to before a final decision on whether to provide the grant was made.

The responses provided by department officials suggest that Shine Energy became the front runner to receive the grant funding as a result of a Coalition election promise to fund work towards a coal-fired power station in Collinsville, and Shine Energy being the only group proposing to build such a plant.

Department officials confirmed that no due diligence has been undertaken into the ability of Shine Energy to undertake the construction and operation of a new coal-fired power station and that such an assessment would only be undertaken once the company had provided a response to the grant guidelines.

“The guidelines have not been made public yet, they’re currently with the proponent and the proponent, Shine Energy, will be developing their application and assessed against the guidelines,” a department spokesperson said.

“On the basis of their application against the guidelines and due diligence, we will then provide advice to the minister in terms of the $4 million.”

Labor climate and energy spokesperson Mark Butler said that revelations that Shine Energy had not yet secured grant funding nor undertaken due diligence into Shine Energy, despite the Morrison government announcing otherwise, suggests that prime minister Scott Morrison simply using the funds to placate a rowdy pro-coal backbench.

“The Department confirmed they are yet to perform any due diligence on Shine Energy, and Shine Energy is yet to meet ad-hoc program guidelines to assess whether the feasibility study can go ahead,” Butler said.

“Scott Morrison will do anything to try to buy off the climate-denying hardliners in his party room, including not even doing basic due diligence to protect basic principles of value for taxpayer money.

“The Prime Minister is still willing to spend billions of taxpayers’ dollars on a new coal-fired power station and has refused to rule out providing a taxpayer-funded indemnity sought by the proponents of the Collinsville coal-fired power station, which the Australian Industry Group says could cost taxpayers $17 billion,” Butler added.

Department officials also played down reports that the Morrison government was exploring options to purchase the ageing Liddell power station outright from AGL Energy or provide the $300 million required to keep the power station operating through to 2026.

Officials said that the work of the Liddell taskforce had not yet completed and that the report to be delivered to energy minister Angus Taylor was still being finalised.

Energy minister Angus Taylor likewise told an interview with ABC’s 7.30 Report that a decision on the government’s response to the looming closure of the Liddell power station would be made after the taskforce had delivered its recommendations.

“I haven’t received the final report yet but what I will say is that it is crucial that as… these power stations get older, we have either life extension or replacement and that is to ensure that we have downward pressure on prices,” Taylor said.

Leaked conclusions from a draft version of the Liddell taskforce report suggested that it would cost $300 million to keep the power station operating for a further three years, without any improvements to overall power station reliability. The conclusions also suggested that the funds would have to be provided by the taxpayer, as no private financiers would be willing to provide the funds.

The details about the government’s funding for coal developments come as Bureau of Meteorology (BOM) officials told senate estimates that Australia was on track to experience levels of global warming above that of the global average.

Addressing the findings of a World Meteorological Organisation report that fund that the world was on track for up to 3.4 degrees of global warming based on the current levels of emissions reduction pledges made by national governments, BOM officials confirmed that this would likely lead to warming within Australia of up to 4 degrees.

“The United in Science report showed under current emissions pledges, the world is on track for 3.4 degrees of warming. We heard today in Senate Estimates that in Australia we could experience closer to 4 degrees of global warming,” Greens senator Larissa Waters said.

“We look forward to the outcome of the Bureau of Meteorology working with the Australian Energy Market Operator on how 3.4 degrees of warming will impact our energy systems. This global warming will transform our society and environment, yet no government agency or government minister has asked for a briefing so they can plan for this new climate change-affected reality.”

The BOM said that it has continued to work with energy market operators, including AEMO, to undertake analysis of the stresses such levels of global warming would contribute to the electricity system. This work has been driven primarily by concerns from financial regulators, which are ramping up efforts to understand the potential effects of climate change on the economy.

“Even at current levels of warming, some of the most significant risks to the national electricity market come from Australia’s old coal-fired power plants struggling with extreme heat,” the Australian Conservation Foundation’s climate and energy campaigner Suzanne Harter said.

“It’s not surprising financial regulators are concerned about the overall risks to the financial system related to coal assets. As the world moves away from fossil fuels, coal-fired power stations are increasingly risky investments that represent rising risks to the national electricity market.”