By Mike Foley
Peter Dutton’s opposition has opened a new front in its campaign against the Albanese government’s renewable energy plans, pledging that it would use taxpayer funds to expand the role of gas in the electricity grid.
All fossil fuels, including natural gas, are excluded from accessing public funds through the government’s Capacity Investment Scheme, which underwrites renewables projects and dispatchable assets such as big batteries and hydroelectricity that can plug gaps when it’s not sunny or windy.
Energy policy has become a major point of difference between Opposition Leader Peter Dutton and Prime Minister Anthony Albanese.Credit: Alex Ellinghausen
However, the Coalition on Tuesday said gas would be “here to stay” if it won the next election, due by May, and pledged to open the underwriting scheme to new and existing gas power plants.
The Coalition’s energy policy includes abandoning Australia’s target to slash emissions by 43 per cent by 2030 and instead building up to seven nuclear power stations to achieve net zero emissions by 2050.
The opposition has not said how much of the grid would be powered by renewable energy. Opposition energy spokesman Ted O’Brien has previously said the Coalition supported the “optimum amount” of renewables.
“We take an ‘all-of-the-above’ approach to energy whereas Labor takes an ‘all-eggs-in-one-basket’ approach,” he said.
The Capacity Investment Scheme was launched by Energy Minister Chris Bowen last year to encourage private companies to build energy projects. In return, the companies are guaranteed their project profits will be supplemented by the Commonwealth if they don’t reach a predetermined threshold.
The government supports the development of new gas fields and infrastructure under its Future Gas Strategy.
However, Bowen said gas was too expensive to win competitive bids for public funding, pointing out that while the fuel was included in a similar scheme in NSW, it “never won a single auction”.
“Why is he proposing to provide windfall gains to existing gas producers who are already operating?” Bowen asked. “Why would any new gas get support in the CIS when it is so much more expensive than renewables?”
Energy companies that are building wind and solar farms and batteries have called for gas plants to be included in the scheme, arguing the plants would be needed only on rare occasions when wind and solar power was lacking, limiting their ability to turn a profit.
Grattan Institute energy program director Tony Wood supported the inclusion of gas in the scheme to cut greenhouse gases from the energy grid.
“We can have a certain amount of gas, and reduce our emissions dramatically from where they are now,” Wood said.
Climate Council spokesman Greg Bourne said coal and gas plants were being undercut by cheaper renewables.
“The amount of gas that we need for those peak [periods] over this next decade is getting less and less ... underwriting more is folly,” Bourne said.
Australian Energy Producers chief executive Samantha McCulloch, who represents the gas industry, said it was a mistake to exclude gas from the scheme, and opening it up “was an important lever to support this necessary investment”.
Gas peaking plants can respond almost instantly during periods of extreme demand or low renewable generation, especially in winter when less wind and sunshine coincide with cold weather and households switch their heaters on all at once.
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