Following a short campaign by the coal industry, the Prime Minister argued on Wednesday for new coal-fire power stations to replace ageing plants in Australia. They would be more expensive than renewables and carry a huge carbon liability. Major Australian energy companies have ruled out building new coal plants. Banks and investment funds would not touch them with a bargepole.
Only subsidies could do it. It may seem absurd to spend large amounts of taxpayers' money on last century's technology that will be costlier than renewable power, and that would lock Australia into a high carbon trajectory.
More Environment News Videos
'Clean coal' makes a comeback
New technology means coal will play a role in electricity generation long into the future, says Malcolm Turnbull. Courtesy ABC News 24.
But the government is raising the possibility of government funding for new coal plants. The suggestion, somewhat ironically, is to use funding from the Clean Energy Finance Corporation.
It will come to nothing, if we can trust that minimum standards of sensible policy will prevail. But an ill wind is blowing in Australia's energy and climate policy debate. The situation in Parliament is difficult, and Donald Trump's presidency gives the right wing in the Coalition a boost.
![Renewable power in the 2020s will almost certainly be cheaper than new coal, and possibly by a wide margin.](/web/20170202130550im_/http://www.smh.com.au/content/dam/images/g/u/3/w/b/f/image.related.articleLeadwide.620x349.gu3vqr.png/1486033323716.jpg)
Proponents of new coal plants call them "clean coal". They have appropriated a term that normally means burning coal in power stations with carbon capture and storage, a technology that filters out most of the carbon dioxide but is expensive and has made little progress.
But what is suggested is simply to build the latest generation of conventional coal-burning plants. They are not clean, only marginally less polluting than the old plants running now.
A new high-efficiency coal plant run on black coal would emit about a quarter less carbon dioxide than an equivalent old plant. It emits up to twice as much as a gas-fired plant, without the advantage of flexibility that gas plants give. It emits 10 times or more what a carbon capture and storage plant would.
There is no chance of meeting the national 2030 emissions reduction target this way, and it effectively rules out the much deeper reductions needed by mid-century. Making up for the extra coal emissions by doing more in industry, transport or agriculture would be difficult and costly.
![Barnaby Joyce and Malcolm Turnbull have both expressed support for building new coal-fired power plants.](/web/20170202130550im_/http://www.smh.com.au/content/dam/images/g/t/2/5/3/a/image.related.articleLeadwide.620x349.gu3vqr.png/1486033323716.jpg)
What if you don't care about the climate?
Building coal-power plants is expensive, even more so if financing costs are high given the risk of future carbon liabilities. The cost per unit of power produced is even higher if the plants end up not being fully utilised, as is already the case for coal plants on the grid, or if they are shut down before the 2070s.
Wind farms now get built at an average cost of power production well less than what it would cost to build and run new efficient coal plants. The costs for solar are falling rapidly, and by 2025 the cost for both wind and solar might be just half the averaged lifetime costs of new coal plants. It takes a long time to plan and build a coal plant, so that is about the right time frame for comparison.
There are extra costs for storing electricity to smooth out the intermittency of wind and solar. This can be done, for example, through pumped hydro-storage. Smoothing can also be achieved through gas-fired peaking plants. It'll add some cost, but far less than the underlying cost of renewables.
It may seem absurd to spend large amounts of taxpayers' money on last century's technology that will be costlier than renewable power.
Renewable power in the 2020s will almost certainly be cheaper than new coal, and quite possibly by a wide margin. The difference could in the billions of dollars over a plant's lifetime.
So to get them up, massive subsidies would be required. Billions of dollars from the taxpayer, to supply power at high carbon emissions, locked in for half a century. It shouldn't happen in a country that prides itself on rational economic policy.
Instead, the government should set its sights on the long-term economic opportunities for Australia in a low-carbon world, and chart a path for the transition of the energy system.
Malcolm Turnbull referred to Australia's position as a coal exporter in his call for building new power plants. But a revolution is under way in global energy technologies. Coal will still be used in existing plants, but the times of growing coal use are over. Already, more than 70 per cent of the world's annual power sector investment goes to renewables.
Australia is lucky in that there are no limits to the amount of renewable energy we could produce. New industries can be built around it. We should invest in the technologies of the future, not sink more money into the technologies of the last century.
Frank Jotzo is a professor at the Australian National University's Crawford School of Public Policy.