30 May, 2017

Phillip Coorey

Courtesy of the AFR

 

The Turnbull government will enshrine its belief in coal as an ongoing source of power generation by introducing legislation to enable the Clean Energy Finance Corporation to invest in carbon capture and storage.

The CEFC is a $10 billion taxpayer-funded loan facility established by Labor to invest in the development of renewable and clean energy sources.

Months after first flagging the move, Energy Minister Josh Frydenberg has announced the government will legislate to expand the CEFC’s mandate so it can invest in carbon capture and storage technology which, if ever successfully developed, will enable emissions from coal-fired power stations to be kept out of the atmosphere. The CEFC will not be investing in other so-called clean coal technology such as the construction of a High Efficiency Low Emissions (HELE) power station.

More pressure for EIS

The move comes as the government prepares to receive the final report into energy reform by its chief scientist Alan Finkel.

His key recommendation is likely to be an emissions intensity scheme, as advocated by business, industry, the energy market regulators and Labor, to bring down emissions over time and create investment certainty for the energy sector.

But in the Coalition party room on Tuesday, Malcolm Turnbull ruled it out, saying there would neither be an emissions trading scheme nor an EIS.

On Tuesday, The Australian Financial Review revealed Glencore was threatening to cease its copper smelting and refinery operations in Queensland due to volatile power prices and the investment climate.

The federal government blamed state Labor’s 50 per cent renewable energy target for the Glencore threat while federal Labor said it underscored the need for the Turnbull government to adopt an EIS.

“Industry as well as experts are crying out for an emissions intensity scheme for the electricity sector, to end uncertainty and fuel new investment, but Turnbull and Frydenberg have made it clear they will continue to put the interests of the hard right of their party above what is best for the country,” said shadow energy minister Mark Butler.

“This isn’t good enough. Not just Glencore, but thousands of other jobs and whole industries are at stake.”

It’s ‘not the renewable energy finance corporation’

Mr Frydenberg said coal had a future, more so if emissions could be reduced using CCS technology. He said CCS was a proven technology with two large-scale projects either in operation or under construction overseas.

“Given that CCS technology has received such strong support from the likes of the International Panel on Climate Change and the International Energy Agency internationally as well as the Chief Scientist and the CSIRO here at home, it is now only appropriate that we unshackle the CEFC and allow it to support this low emissions technology,” he has told The Australian Financial Review.

“The CEFC is after all not the renewable energy finance corporation, but one that is explicitly encouraged under part six of the Act to also invest in energy efficiency and low emission alternatives.

“It’s time Labor put aside their mistakes of the past and joined the Coalition government to support this important legislative change.

“Labor’s 2016 election plan after all did say: ‘Labor will restore flexibility to the CEFC by broadening the investment mandate to make it technology neutral’.”

The Greens ruled out immediately supportng the change, describing it as “utter lunacy”.

Originally, the Coalition tried to abolish the CEFC, saying taxpayers should not be underwriting investments the private sector will not touch

On Tuesday, Trade Minister and Queenslander Steven Ciobo blamed the Glencore threat on the “crazy” policy of the state Labor government “which are forcing up the costs of electricity much higher”.

Mr Frydenberg also said he had asked the Australian Energy Regulator to investigate claims that the two state government owned coal generators in Queensland were price gouging by holding back production.