Labor Kurri Kurri gas plant flip to cost extra $700m

Labor’s pledge to revamp the a taxpayer-funded gas plant in Kurri Kurri will push the project’s cost up to $1.3bn, more than double the funds needed for the Morrison government’s proposal.

Labor climate change spokesman Chris Bowen. Picture: Gaye Gerard

Labor’s pledge to revamp the a taxpayer-funded gas plant in Kurri Kurri will push the project’s cost up to $1.3bn, more than double the funds needed for the Morrison government’s proposal.

Anthony Albanese and Labor climate change spokesman Chris Bowen on Tuesday backflipped on their opposition to the taxpayer-funded generator, declaring Labor would spend even more money on the project to expedite its transition to being sourced by zero-emissions hydrogen.

While Mr Bowen last year lashed out at the government for committing $600m to the plant in the Hunter Valley seat of Paterson, on Tuesday he committed a further $700m to ensure it is fully powered by green hydrogen “as soon as possible”, potentially by 2030. “We’re going to do it better,” Mr Bowen said.

“We are going to make sure this is a win-win situation, a win for the climate, a win for the Hunter and a win for the workers.”

Energy Minister Angus Taylor said the proposal – which included immediate modifications to the design so the plant was 30 per cent powered by hydrogen – risked the commercial viability of the project and could force up electricity prices.

He said the government wanted to see the project eventually powered by hydrogen “but in a way that is economic, commercial and technically feasible”.

“Forcing it in a way that’s going to cost either taxpayers or electricity consumers doesn’t make sense,” he said on ABC.

Grattan Institute director Tony Wood said even by 2030, hydrogen would be double the cost of gas, at about $2 a kilogram.

“Since (the plant) was announced I’ve been against it in principle. Whatever fuel it’s using the market never needed this,” Mr Wood said. “It’s a political issue and Labor doesn’t want to be accused of creating sovereign risk and tearing up contracts.”

Mr Bowen faced internal revolt after he opposed using government funds to build the gas plant to replace the Liddell coal-fired power station, due to close next year. Hunter MP Joel Fitzgibbon and Paterson MP Meryl Swanson last year publicly railed against Mr Bowen’s opposition to the plant, which was endorsed by Mr Albanese and shadow cabinet.

“I didn’t hold back,” Ms Swanson told The Australian.

“I was dissident for a while and it was good people could hear reason and understand.”

Mr Bowen denied Coalition claims Labor changed its tune to ward off a Coalition campaign in the seats of Hunter, Paterson and Shortland. He said what had changed since Labor voiced criticism was that the government “signed the contracts for this”.

“Incoming Labor governments don’t rip up contracts signed by previous governments … that creates too much uncertainty and instability for the economy. But … we will improve the way the government’s doing it.”