A Coalition government would need to subsidise ageing and new coal-fired power stations

With its decision to dump net zero by 2050, the only way the Liberal Party could provide for Australia’s future electricity needs is by nationalising new power generation.

So much for the party of free enterprise.

While dumping net zero by 2050 doesn’t exclude Australia from the Paris Agreement, it sends a strong signal to the private sector about the extreme risk of investing in renewable energy.

And investors have long memories about the history of carbon pricing in Australia – the Coalition voted against it during the term of the Rudd government, campaigned against it during the Gillard prime ministership and scrapped it when the Abbott government took office.

The Liberals even got rid of Malcolm Turnbull as leader in 2018 over his commitment to action on climate change, as they had done in 2009 when he supported a carbon price.

These historical actions, followed by Wednesday’s party room decision and Thursday’s shadow cabinet decision, confirm that a majority of the parliamentary Liberal Party and an even greater majority of the parliamentary Nationals oppose effective action on climate change.

So where does that take energy policy under the Coalition?

Consider a renewable energy company contemplating investing in Australia.

If the Coalition looked like it might form government, the company would be anxious about investing in wind, solar or pumped hydro, worried about a Coalition government using taxpayer funds to subsidise coal-fired generation to out-compete its renewable project.

This is not a fantasy. The Morrison government actively considered and funded a feasibility study for a new coal-fired power station at Collinsville in Queensland.

Coalition frontbenchers have already announced they will “sweat” existing coal-fired power stations – meaning they will keep them going past their economic lives. That can be achieved only through taxpayer-funded subsidies for coal-fired generation.

The youngest coal-fired power station in Australia was commissioned in 2007. Most are much older. Their average age is almost 40 years. It is generally accepted that their economic life is 42 years.

That’s a lot of taxpayers’ money to be devoted to keeping coal-fired power stations operating if the Coalition were to form government.

As a Coalition government subsidised coal-fired generation, investors in renewables would know they could not compete against these subsidies.

Any realistic prospect of a Coalition government therefore would stall investment in renewables. And if it won government, it would necessitate taxpayer-funded subsidies to keep existing coal-fired power stations operating.

Even then, taxpayers would be called on to pay for one or more new coal-fired power stations, just as the Morrison government entertained supporting the construction of one at Collinsville.

A Coalition argument would be that electricity is cheaper – but that would require taxpayers to pay for the plant upgrades and new coal-fired capacity.

The chilling effect on investment in renewables if the prospect of a Coalition government were real would create a genuine energy crisis in Australia.

If the Coalition was elected and Australia failed to meet its Paris commitments, we would be locked out of lucrative export markets.

To illustrate, the European Union has introduced a Carbon Border Adjustment Mechanism. If we sought to export products whose production involved lots of carbon emissions, those products would be required to bear heavy import duties.

Other decarbonising countries will also introduce variations of CBAMs so that their low-emissions industries are not undercut by imports from high-emissions countries.

The uncertainty for investors created by a Coalition government that subsidised refurbished and new coal-fired power stations would be very costly for Australian taxpayers.

So much for the Liberals being the party of free enterprise.