The Clean Energy Finance Corporation has said it is “very unlikely” it would invest in new coal-fired generators and poured cold water on the federal government’s push to support “clean coal” technology.
The CEFC’s hostile approach to the sustainability and commercial viability of new coal plants means the government will have to change CEFC’s investment rules or directly subsidise new coal plants if it wants to support them.
In recent weeks the deputy prime minister, Barnaby Joyce, has advocated building new coal power stations, including by giving government subsidies.
The resources and Northern Australia minister, Matt Canavan, has flagged using the government’s $5bn northern Australia infrastructure fund to provide a subsidy.
Federal ministers have suggested that ultra super critical coal power stations, which more efficiently generate steam to create power, should be considered a clean technology because they generate up to 30% less emissions than older coal plants.
On Friday in Canberra the Greens senator Sarah Hanson-Young asked the CEFC at the Senate committee examining the resilience of electricity infrastructure if it would fund new coal-fired power plants.
Oliver Yates, its chief executive, said it was required to operate “sustainably and commercially”.
“To be honest in a market of such volatility, it would be very difficult to find a private operator or commercial investor investing in coal-fired power stations in the Australian market today,” he said.
“We, like a commercial investor, are very unlikely to find circumstances in which that would be an appropriate investment to expose taxpayers to.”
Yates said that if coal power stations could generate electricity creating 50% fewer emissions than electricity currently in the grid without carbon capture and storage such an investment would technically fit into the CEFC’s rules.
But he said coal was “seriously challenged” as a commercial investment because the price of renewables was declining so there was “no point” building ultra super critical coal stations that were likely to provide electricity at a higher price.
Yates said unless ultra super critical coal plants could be built such that they generated much lower emissions “it’s not really a technology which would be likely to have a long-term path”.
He concluded by saying he would not recommend investment in coal power plants, which he described as “very risky” for taxpayers.
Hanson-Young, the committee chair, told a press conference the CEFC’s evidence showed clean coal was “a unicorn dream ... that doesn’t stack up”.
She said it was “lunacy” to invest in coal and the government should be upfront about what a subsidy to build coal stations would cost.
On Friday the prime minister, Malcolm Turnbull, told FiveAA Radio in Adelaide that Australia should have “a technology-agnostic and all-of-the-above approach to energy policy”.
“We need to have energy, electricity that is affordable, that is reliable – you know what unreliable energy is like in South Australia – and of course we meet our emission reduction obligations,” he said, referring to blackouts in the past two days due to a nationwide heatwave.
Asked whether turning the second Pelican Point gas generator on could have averted outages, Turnbull said gas can provide a backup but is “very expensive”.
He suggested pumped hydro technology could avoid outages by using power from wind or coal power plants created off-peak to pump water uphill to generate hydroelectric power on peak.
Turnbull accused the South Australian government of being “lazy” for not developing an electricity plan to deal with its high mix of renewable energy and planning for the intermittency of wind power.
He said the other failure in the energy market was “the failure to recognise that if you restrict the access to and supply of gas, the price of gas will go up”. He blamed policies such as Victoria’s ban on gas exploration which he said prohibited not only coal seam gas but also conventional onshore gas.
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