The problem is the ongoing uncertainty created by “the lack of clear climate change policy that’s stuck” from either side of federal politics, Grattan Institute energy program director Tony Wood says.
The government is exploring how it can allow the Clean Energy Finance Corporation (CEFC) to invest in ultra-supercritical coal-fired power plants and carbon capture and storage, with the latter requiring legislation.
It has been promoting high efficiency, low emissions coal-fired generation to shore up the national energy grid but has had pushback from an energy sector that doesn’t want to build new coal plants.
Wood says changing that won’t be easy.
“But of course not that many years ago there wouldn’t have been appetite for putting large amounts of money in to wind and solar without strong government support,” he told ABC radio on Monday.
For private sector investment to be viable, there would have to be clear arrangements to mitigate the risk.
However, at the moment even the newest technology coal plants are dirtier and more expensive than gas-fired power.
“It doesn’t make sense to introduce … supercritical power stations without carbon capture and storage,” Wood said.
Labor frontbencher Andrew Leigh ridiculed the focus on carbon capture and storage, which he said was decades away from being viable.
“The trouble is, like cold fusion, it’s a technology that hasn’t lived up to its boosters,” he told Sky News.
“This isn’t a technology that the private sector is backing, it’s not a technology the rest of the world is piling into, it’s not a proven technology.”
CEFC chief Oliver Yates has told politicians it would be very difficult to find a commercial investor deciding to invest in a coal-fired power station in the Australian market today.
Finance Minister Mathias Cormann disagreed.
“The reason why there’s been obviously no appetite for private sector investment is because of the policy settings that have been progressively put in place by Labor and Green governments,” he told ABC radio.
Wood said if any federal government set a steady climate policy to cut emissions, it would make sense for states to move away from their individual renewable energy targets.
“They’d effectively be unnecessary because renewable energy would be playing its part in reducing greenhouse gas emissions,” he said.
Greens energy spokesman Adam Bandt said the government’s move to put taxpayer money into coal was dumb and dangerous.
“Subsidising coal through the green energy bank is like subsidising asbestos through the health budget,” he said.
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