Renewables lobby says coal generators should pay carbon price to stay open beyond stated closure dates

The Smart Energy Council, one of the country’s key renewable energy lobby groups, has called for a carbon price to be imposed on coal fired power plants that continue to generate beyond their previously agreed closure dates.

The SEC argues that coal-fired generators should be brought “properly” under the country’s Safeguard Mechanism, which seeks to put a form of carbon pricing on major polluters, and which is currently under review after being criticised as effectively toothless by many in the industry.

The SEC proposal would seek to draw a firm line under repeated extensions to coal closure dates, as witnessed with the country’s biggest coal generator Eraring, which was to close in 2025, but has seen successive extensions to 2027 and 2029, and many still believe it could be extended again.

The uncertainty – with Eraring and other closures – is enough to cause doubt about market pricing models and business cases for new generation, and even storage, making it difficult to secure finance and investors for new projects. It is cited as one of the main barriers in the Australian market.

“Renewable energy, storage and transmission projects require billions of dollars of long-term investment,” SEC chief executive David McElrea said in remarks prepared for the opening of the Queensland Smart Energy Summit in Brisbane on Tuesday. A copy of his speech was released beforehand.

“Investors and lenders need to know when replacement power will be required. Every time a coal closure date is pushed back, that investment becomes harder to finance.

“That delays new generation, delays jobs and creates worker uncertainty, and leaves consumers exposed to the cost and unreliability risks of ageing coal.”

Queensland is another state where the timing of coal closures is now clouded, although that is considered a deliberate strategy by an LNP government that has already ripped up the state’s renewable energy targets and erected barriers to major new wind, solar and battery projects.

The state LNP government has promised to keep coal generation in the market until the late 2040s, or even the 2050s, and last week dropped plans replace its bus fleet with electric vehicles and has put out a tender for more than 600 new diesel buses.

McElrea says the SEC is not seeking to order a coal-fired power station to close, or prevent it from operating when needed to support reliability. But it argues that if a coal plant does operate beyond its previously proposed closure date, it should no longer receive a free pollution allowance, as it does now.

Instead, its owner would be required to use Australian Carbon Credit Units (ACCUs) to cover every tonne of pollution counted under the Safeguard Mechanism.

“If a coal station remains necessary beyond its earlier closure date, it can continue to operate. But extending its life should not also extend its right to pollute for free,” he said.

“This is not an overnight shutdown. It is a clear market signal that allows replacement generation to be planned, financed and built before it is needed.”

The SEC proposal is one of a number of different ideas being put forward to the review in the Safeguard Mechanism. Others suggest that renewable energy projects should be able to access ACCUs to bridge the gap between costs and the current wholesale price forecasts.

ACCUs currently trade around $38, and the SEC suggests that a coal generator extending its closure date should be required to use an ACCU for ever tonne of its covered emissions after the closure date. It also argues for a zero Safeguard baseline for every remaining coal-fired generator by 2035 “at the latest.”

It says this would prevent a government or generator from resetting the Safeguard clock simply by announcing a later closure date; and would preventing coal generators from actually earning Safeguard credits and revenues merely because they reduce production or close.

The SEC says grid-connected generators currently face no individual obligation while their combined emissions remain below 198 million tonnes a year. They produced 133.7 million tonnes in 2024–25, effectively giving them a free pass on emissions.

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