A former Clean Energy Finance Corporation head says the Federal Government could expose itself to risk if it indemnifies coal-fired power stations against future carbon emissions.
Former CEFC chief executive Oliver Yates says the government would effectively be subsidising coal.
Last month, Energy Minister Angus Taylor suggested the government is considering guaranteeing coal projects against a future carbon risk. Taylor said the government should carry risk necessary to ensure reliable power supply.
Coal-fired power stations may expose taxpayers to risk
However, Yates told the Sydney Morning Herald the government should not take a risk that the private sector would not accept.
“If [Angus Taylor] thinks the taxpayer should take a risk that the private sector is unwilling to take, then that’s extraordinary,” Yates said.
“Is it irresponsible for the government to take that risk? In this circumstance it is.”
Market intervention against Liberal values
This is not the first time that Coalition members have suggested taking an active role in the electricity market.
In early 2018 the Coalition pressured AGL to either sell its Liddell coal-fired plant or keep it open for longer. The plant is due to close in 2022, a schedule to which AGL remains committed.
In May, former PM Tony Abbott even suggested that the Turnbull Government acquire the plant compulsorily then sell it to another energy company.
Abbott compared AGL to a “militant union” and said its decision to close was “self-interest” designed to increase power prices.
However, then energy minister Josh Frydenberg rejected the call to acquire the plant. He pointed out that market interference of that type went against Liberal values.
Global financial analyst says coal is a bad investment
Both cost and environmental impact make coal a poor choice, according to financial analysis giant S&P Global.
In a September report, S&P said private investment in coal-fired power plants is highly unlikely due to poor investment returns. The credit ratings agency says the worldwide push for lower carbon emissions is also making coal less attractive.
It said renewable energy like solar power backed by battery storage or gas offers the most prudent investment for the future.
Forcing old coal-fired plants to stay open could make them unsafe, the analyst warned. Rising maintenance costs would then make them uneconomical.
Taylor will meet with electricity retailers today to discuss lowering power costs, including plans for a regulated default power price.