There’s room enough for coal and gas: Finkel

The nation’s chief scientist rejects fears his sweeping ­energy reforms will block new coal and gas power stations.

Australia’s chief scientist Alan Finkel.

The nation’s Chief Scientist has rejected fears his sweeping ­energy reforms will block new coal and gas power stations amid a growing political fight over his plan for a clean energy target that favours wind and solar generators.

Alan Finkel insisted there would be no mechanism to allow or veto new coal generators in the new energy scheme, leaving the Turnbull government or its successors free to back an ­advanced coal power station if they chose.

In his first response to critics of the blueprint he unveiled on Friday, the Chief Scientist also countered attacks from environmental groups by declaring his task was to help fix the security of the $11.7 billion electricity market rather than recommending the climate change targets they wanted.

Dr Finkel called for the rapid adoption of his reforms, including state agreements to scale back their renewable schemes in favour of a national regime, while also calling for legislation with “teeth” to stop the sudden closure of coal-fired power ­stations.

“This has to truly meet all of the objectives: security, ­reliability and affordability as well as lower emissions,” he told The Australian. “And afford­ability is key — people are frustrated, deservedly so. There are many people who think that business as usual is the key to lower prices but there is no ­evidence of that. In fact, the evidence is to the contrary.”

Parliament resumes tomorrow with political leaders at odds over the reform plan as Malcolm Turnbull faces pressure from conservatives to ensure the changes encourage coal while Bill Shorten faces calls from the Greens to avoid a deal that allows more coal and gas power.

The Prime Minister will gauge the response from MPs in the ­Coalition partyroom meeting tomorrow before deciding whether to embrace the blueprint, which needs state support by August to meet a timeline for reform.

With Liberal MP Craig Kelly warning against any damage to the economy and former minister Eric Abetz dismissing “creative ­assumptions” in the plan, the Chief Scientist moved to defend the document and fend off claims it would punish coal.

“There is no aspects of allowance or permission here. Permission comes from government. Permission is not decided by the clean energy target at all. So it’s just not right when people say it’s not allowing something,” he said.

At issue is a key benchmark in the new scheme, known as the emissions intensity threshold, to decide whether a power generator qualifies for a certificate that gives it a ­financial reward from electricity retailers.

The Finkel report concludes that households would pay less for electricity under a clean energy target compared with existing rules, using modelling that assumes an energy intensity threshold of 0.6 tonnes of carbon emissions per megawatt hour — high enough for some gas providers to qualify but too low for coal power stations.

“The reduction in emissions needs to be delivered with optimised security, reliability and ­affordability,” Dr Finkel said. “So when people say we’re knocking out gas, for instance, the fact is there’s nothing in there that deliberately knocks out gas.”

He cautioned against making too much of the difference between an emissions intensity threshold of 0.6 or 0.7 tonnes, given that the rewards from the scheme would be proportional to the emissions.

Under a threshold of 0.7 tonnes, for instance, a gas generator would “earn” the difference between the threshold and its output of 0.62 tonnes, leading to a calculation that would give it one-tenth of a certificate. Only those producing no emissions would get a full certificate. “The threshold is a parameter inside the clean energy target mechanism and it’s not one that I think is worthy of a lot of debate or consideration,” he said.

“I don’t know exactly what the changes would be if you changed it from 0.6 to 0.7 or from 0.6 to 0.5 — there would be impacts but they would not be substantial.”

Business groups have issued a rare joint statement with the ACTU, the National Farmers’ Federation and major energy customers in urging the “full and fair consideration” of Dr Finkel’s key recommendation for a clean energy target that encourages new projects that generate electricity with the lowest emissions.

Energy Minister Josh Frydenberg yesterday said he had held a “constructive and friendly” discussion with former prime minister Tony Abbott, who has warned against reforms that hurt coal power.

“As Dr Finkel said, it’s totally conceivable that there could be a new coal-fired power station” under the scheme, Mr Frydenberg told ABC TV.

The blueprint is under fire from both ends of the political spectrum as the Greens warn it will encourage gas power and environmental groups complain that it has failed to set out a new climate change ambition and instead applied Australia’s existing policy to reduce emissions by 26 to 28 per cent by 2030 compared to 2005 levels.

“In the absence of any guidance, we did our modelling based on what we thought was the most important thing — which is a smooth trajectory that has to be accepted by all the governments,” Dr Finkel said.

“I don’t know how we could have chosen a different set of numbers or a different slopes — higher or lower — in the absence of further guidance. But what is important is that we have used those numbers for our modelling but we have not indicated that governments should use those numbers for their final decision.”

He acknowledged that the thresholds to be set in a clean ­energy target could be tightened over time to favour renewables, an option for a future Labor government. “One thing I would caution against is rapid change to agreed parameters. Industry needs to see things play out and then get gradually adjusted where there’s room for that adjusted to be implemented without too many negative side effects,” he said.

Dr Finkel also acknowledged that his proposal to force coal power stations (and other large generators) to give at least three years’ notice of any closure would have to come with financial penalties on those who did not give enough notice.

State energy ministers will consider the Finkel report at a meeting to be hosted by Mr Frydenberg before August, with a key issue being whether they will scale back their state-based renewable energy targets and back a national scheme.