ACCC energy report: Michael McCormack says there is a ‘green light’ for government-investment in coal

Deputy PM Michael McCormack says there is a “green light” for government-investment in new coal projects after this week’s ACCC report.

Deputy Prime Minister Michael McCormack has declared there is a “green light” for government-investment in new coal projects, as a senior cabinet minister left open the possibility of a royal commission into the electricity sector “down the track”.

The competition watchdog’s key recommendation in its landmark report released this week could see the government underwrite and potentially subsidise new “firm” cheap power generation for industrial and commercial users, which may include coal.

Asked on Sky News if this gave the “green light” for underwriting new coal-fired power plants, Mr McCormack said: “Well indeed.”

“The ACCC (Australian Competition and Consumer Commission) has said where possible and where appropriate the government should look to helping to supporting that ability to buy, pay for, support baseload power and that’s got to be seen as a good thing.”

.@M_McCormackMP: @acccgovau has said, where possible and where appropriate, the government should look to helping support the ability to buy, pay for and support baseload power.

MORE: https://t.co/sCAQyN3F4B #FirstEdition pic.twitter.com/3qCnVvsT3B

— Sky News Australia (@SkyNewsAust) July 12, 2018

Pressed on whether he believed the recommendation “definitely” referred to coal or also included gas or other dispatchable power sources, Mr McCormack said the Coalition was “technology agnostic”.

But he again said the report had provided an incentive to embrace coal — a power source championed by the Nationals and numerous Liberal MPs.

“The ACCC has suggested … it could be coal, it could be gas, whatever it is, though the fact is the ACCC says it’s there, the government should and could support it where appropriate,” Mr McCormack said.

“Coal can be part of the mix, coal should be part of the mix, there are thousands of jobs, particularly throughout Queensland, in the coal industry. We’ve got plenty of it, we’re exporting plenty of it, why don’t we use more of it for are own domestic energy power needs? The ACCC report gives the confidence in the sector to be able to say to investors you can invest in coal, you can invest in any technology.”

Defence Industry Minister Christopher Pyne rejected claims the ACCC had suggested subsidising coal-fired power stations, after the watchdog’s chief Rod Sims yesterday reportedly said the recommendation was not targeted at coal.

“The ACCC didn’t suggest the subsidy of a coal fired power station. What it said was that the national energy guarantee, which is the government’s policy, is the best chance we have to have affordable energy, reliable energy and fulfil our responsibilities under the Paris agreement to reduce our carbon emissions,” Mr Pyne told the Nine Network’s Today program.

“The ACCC basically endorsed exactly what the government is trying to do. Not being ideological, being technologically agnostic, supporting all forms of energy production that produces dispatchable power at lower prices, not being ideological about picking one over the other.”

Mr Pyne, a senior moderate Liberal MP, said a royal commission into the electricity sector — which is being pushed by several conservative Coalition backbenchers — “sounded” great but slowed down the process to reduce power prices.

However he said the idea could be visited in the future.

“Maybe there might be such a thing down the track, but we are focusing on the national energy guarantee,” Mr Pyne said.

“People reach for the royal commission far too easily in Australia. Royal commissions have their place, but governments have got their policies. We have the right policy, we just need to see it being supported.”

South Australian Liberal MP Tony Pasin said it was “more likely” the government would help extend the lives of existing coal-fired power plants following the release of the ACCC report than invest in new “clean” coal projects.

“That’s something the government should be looking at in my view, very clearly, because what it will do is put downward pressure on prices and we need to maintain that focus around price,” he told Sky News. “That’s more likely than greenfield development of new coal-fired power stations.”

The ACCC’s report recommended the government enter into low, fixed-price agreements for advance, “new generation” projects. “In doing so, project developers will be able to secure debt finance for projects where they do not have sufficient offtake commitments from C&I (commercial and industrial) customers for later years of projects. This will encourage new entry, promote competition and to enable C&I customers to access low-cost new generation,” the report states.

Finance Minister Mathias Cormann claimed “words” were being placed in Mr McCormack’s mouth, insisting his colleague was talking about underwriting baseload power and not specifically coal.