“Fiscal vandalism:” Queensland doubles down on coal and gas after transmission, hydro cost blowouts

The Queensland Liberal National government has flagged a new five-year energy plan for the state that will focus on propping up its coal plants, investing in new gas power and pushing ahead with select pumped hydro projects.

The announcement – and the coal closure deferals and new gas investment – came as the LNP government announced significant cost blowouts of both the Copperstring transmission line – which will now be cut in half pending a further review – and in the Borumba pumped hydro project.

Queensland treasurer and energy minister David Janetzki lamented the “fiscal vandalism” of the previous Labor government, and announced a five year plan that includes refurbishments for the ageing Callide B and Tarong coal fired power stations, some new gas fired power stations, and a small pumped hydro project.

Renew Economy understands that the life of the Callide B coal plant will be extended from its 2028 closure date to at leat 2030 or 2031, and it is looking at life extensions for other major coal generators. Callide B was to be the next coal fired power station to close.

“We’re taking an approach based on economics and engineering, not ideology,” Janetzki said, using awfully similar language to the leader of the federal opposition, Queensland-born Dutton, in a speech to the Queensland Energy Club on Tuesday

“Our five-year plan must ease pressure on our balance sheet, de-risk our energy future, and add significant generation capacity. It will involve the private sector and must work for our communities.” The speech made no mention of wind, solar or storage, and focused only on coal, gas and hydro.

The estimated costs of the Copperstring transmission project – which was to have linked Townsville with Mt Isa – have blown out to nearly $14 billion, and the state government says it will now only go ahead with a first stage from Townsville to the Hughenden renewable energy hub.

A further review will be conducted on the economic value of the second stage from Hughenden to near Mt Isa – a link considered crucial to unlock vast mineral reserves and new wind and solar projects.

The new five year plan will be finalised at the end of the year, and will almost certainly include the repeal of Labor’s legislated renewable energy targets, which aimed for a 50 per cent share by 2030, and 80 per cent by 2035.

Queensland remains the most coal dependent grid in Australia, with a coal share of 65 per cent in the last 12 months. It has the numbers in parliament to repeal that legislation.

Top of the agenda revealed by Janetzski on Tuesday is a splurge on propping up the state’s aging and increasingly temperamental coal power fleet, as part of the $1.4 billion five year “energy maintenance guarantee” announced last year.

Janetzki says $400 million has already been tipped into maintenance of the government-owned generators, including completion of the refurbishment of the cooling tower at Tarong Power Station, and upgrades of the Callide B1 and B2 units, whichever due to hit the retirement age of 40 in 2028. 

Reports have emerged on Tuesday that a three-year delay to its 2028 closure date has now been locked in. Renew Economy is seeking confirmation from the government.

The 1,544 megawatt (MW) Callide Power Station has two plants, Callide B and Callide C, each with two generating units (B1 and B2, C3 and C4). The government’s plan is to keep the 700 MW, 1988-commissioned Callide B plant – which is fully owned by CS Energy – open past its 40-year use-by date.

Last year, Callide B had a capacity factor of just 53 per cent. The younger Callide C was the location of the May 2021 explosion and fire that caused extensive damage to the plant and resulted in a blackout to half a million homes and businesses in Queensland and NSW.

A recent report from the Queensland Conservation Council (QCC) says keeping Callide B open past 2028 could cost Queensland taxpayers up to $420 million, while driving up electricity prices and damaging grid reliability.

The QCC study used data pulled from the annual reports of CS Energy to show that the power station, which is ultimately owned by the Queensland taxpayers, has recorded a real loss of $120 million over the last five years, an average of $24 million/year.

QCC director Dave Copeman said on Tuesday that the LNP’s decision to keep Callide B open – and potentially other coal plants in the state – is “playing dangerous politics” with Queensland’s energy system and breaking its promise on real climate action. 

“This announcement shows that the Crisafulli Government is intent on throwing good money after bad and locking us into more dirty, unreliable coal and polluting gas,” Copeman said.

“The uncertainty we’re seeing from the Crisafulli government on energy and climate action is ultimately harmful for consumers, businesses, and our environment. 

“Strong climate action, such as the 75 per cent emissions reduction target, is critical for the survival of the Great Barrier Reef.

“We’re urging the state government to keep Queenslanders safe by maintaining Queensland’s emission reduction and renewable energy targets and delivering comprehensive plans to meet them.”

Queensland’s former Labor government handed over to the LNP with ambition renewable energy and climate targets, including to cut greenhouse gas emissions by 75% by 2035, that were written into law in April of 2024 after being voted through parliament, although without the full support of the LNP.

The two “landmark pieces of legislation” also locked in Queensland’s three renewable energy targets of 50% by 2030, 70% by 2032 and 80% by 2035 and emissions reduction targets of 30% below 2005 levels by 2030 and net zero by 2050.

But none of this gets a mention in the prelude to the new energy plan, which appears to be focused on fossil fuels, some transmission and pumped hydro.

The state’s focus on fossil fuels, and pumped hydro, contrast with the actions of Rio Tinto, which has made clear the future of its giant aluminium smelters and refineries at Gladstone will depend on transition from coal to wind, solar and storage.

It has already signed contracts for three large wind, solar and solar and battery projects, and has made it clear that coal is too dirty, and too expensive, for the smelters to continue into the next decade. It says this can only be done with cheaper and cleaner renewables and storage.