by Phillip Coorey
Treasurer Scott Morrison says the era of cheap, coal-fired power is coming to an end and anyone claiming it is the sole solution to the nation's energy dilemma is propagating a myth.
In comments that push back at calls by Tony Abbott and others that Australia should ditch its commitments to greenhouse gas reduction and just build coal-fired power stations, Mr Morrison said that would not work.
New coal-fired power was much more expensive than that being generated by existing power stations which were nearing the end of their lives, he told a private policy forum over the weekend.
Current coal generators produce power at a cost of between $10 and $40 a megawatt hour whereas the newer, high-efficiency, low-emission plants (HELE) generate power at about $70 to $110 a megawatt hour.
Doubling down on the need for the federal government to adopt a technology agnostic policy approach, in conjunction with a clean energy target (CET), Mr Morrison said the only ultimate solution to price and stability was long-term policy certainty for investors.
"To solve the problem we need to have certainty around investment rules and conditions to enable that capital flow," he said. "That capital is there but it will not come without that certainty and we're working to achieve that.
'System in the future'
"If a HELE plant stacks up or a carbon capture and storage with HELE stacks up, by all means knock yourself out, but let's not think that there's cheap new coal, there's not."
"And [HELE] takes seven years to turn up, so if we think that is all of a sudden going to make your power bills cheaper next month, it won't.
"Whether it's a part of the system in the future, I think the rules will define that, but new cheap coal is a bit of a myth."
Earlier this year Mr Morrison passed a lump of coal around Parliament and said coal has "endured for over 100 years that Australia has enjoyed an energy competitive advantage that has delivered prosperity for Australian business".
On the weekend, he said there was "cheap old coal" coming out of existing stations such as Bayswater and Liddell and it was important the lives of these stations were prolonged to provide adequate base-load power while the sector transitioned.
Mr Morrison's comments came in a speech over the weekend to the Wombat Hollow Forum, a monthly ideas forum featuring high-profile guest speakers. The comments are consistent with other interventions in recent weeks by Mr Morrison as the Coalition girds itself for an internal battle over the design and adoption of a CET.
A CET would apply post-2020 and mandate that a certain percentage of energy be generated from sources designated as clean.
At a minimum, Coalition conservatives want HELE, or so-called clean coal, designated along with renewables and gas while hardliners such as Mr Abbott now insist emissions reductions should not be a policy consideration, dismissing it as "green theology".
Mr Morrison took issue with this, saying "we've got to get rid of the 'ology' when it comes to how we deal with the energy debate".
"Everyone's got an ology ... climatology, coalology, whatever it is, everyone's got some sort of religious view when it comes to dealing with the energy market," he said.
"What we're focused on is the engineering and the economics and the ideology frankly has to take a leave pass because that doesn't solve the problem.
"If we stay focused on just one part of it, what's the price of this or let's build this, that doesn't, of itself, and arguably even at all, I think, really address the issue."
He said there was no turning back from cleaner energy sources and the intermediate challenge was reliable base-load power until renewables were more reliable.
"The only new power that is coming into the system ... is largely in the renewables area and we know that on the renewables front the system stability elements of that are not anywhere near where they need to be to have the certainty you need to run a proper energy system.
"But that said, we need to ensure that we get the rules right so people can have confidence investing in new energy supply. I don't care what they invest in, if they invest in coal or they invest in wind."