$5bn fund at top of Nationals’ demands for Turnbull on energy

The Nationals want the creation of a fund of up to $5bn that would deliver government money for new baseload generators.

Deputy PM Michael McCormack. Picture: AAP

The Nationals have drawn up a set of demands for Malcolm Turnbull, headlined by the creation of a fund of up to $5 billion that would deliver government money for new baseload generators, including coal-fired power.

Deputy Prime Minister Michael McCormack was charged with raising a set of “discussion points” directly with the Prime Minister, after the Nationals spent 90 minutes discussing energy policy in their partyroom meeting on Monday.

A Nationals MP told The Australian it was a “test case” for the junior Coalition partner’s new leader, with the proposals meant to have been raised before the joint partyroom meeting on Tuesday morning.

Nationals MPs are increasingly concerned the government’s national energy guarantee will not do enough to reduce prices for households and businesses. They also fear that Mr Turnbull’s signature energy policy will fail to drive investment into new baseload power generation.

It was unclear last night if Mr McCormack had already met Mr Turnbull and Energy Minister Josh Frydenberg to discuss the two-page document approved by the Nationals partyroom.

As revealed by The Australian, Mr Frydenberg has already signalled to the Coalition backbench that he is prepared to provide an “add-on” to the ­energy guarantee that would ­include more coal and gas.

Labor has indicated that it could vote against the national energy guarantee if Mr Turnbull agrees to a new mechanism that would subsidise coal-fired power generation to head off an insurgency from a core group of ­Coalition backbenchers.

Opposition energy spokesman Mark Butler said Labor was not “going to agree to a model that seeks to fly in the face of all of the expert advice”. He warned that building new coal-fired power stations would prevent Australia from meeting its target under the Paris Agreement of reducing emissions by 26 per cent on 2005 levels by 2030. Mr Butler also said Mr Turnbull was wrong for telling parliament that coal-fired power could be part of Australia’s ­energy system “forever” — a statement he described as an ­“extraordinary proposition given all of the advice globally”.

Tony Abbott and Barnaby Joyce have both threatened to cross the floor on the energy guarantee because of concerns it will not provide enough price ­relief for households or lead to more coal being brought into the mix. The former prime minister said yesterday he was unconvinced by business and industry leaders who this week urged ­Coalition backbenchers to support the policy or risk taking a wrecking ball to the economy.

“So many of these businesses and business groups last time they came to town were urging us to back Labor’s emissions trading scheme,” Mr Abbott told Ben Fordham’s 2GB radio program. “So I’m a little sceptical about businesses, particularly businesses that have got a vested interest in gaming the system.”

Mr Abbott said he remained sceptical about Mr Frydenberg’s claim that coal would be part of the energy mix under the NEG. “I have a lot of respect for Josh, but when he says that the government is technology neutral, he’s wrong,” he said.

Bill Shorten sought to press Mr Turnbull in question time on his commitment to coal, noting that Snowy Hydro boss Paul Broad had warned a new coal-fired power station would undermine the business case for the pumped hydro project. Mr Turnbull hit back by saying the energy guarantee was technology agnostic and coal would continue to be a “big part” of the energy mix “for a very long time”.

The Australian understands the document approved by the Nationals with their demands has been given to every member of the minor Coalition party.

Additional reporting: Rachel Baxendale