Coalition pledge to subsidise Australia's most
expensive form of energy makes 'no sense', Labor
says
================================================

Labor says a Coalition pledge to offer subsidies
to existing and new gas power plants makes "no
sense" and would ensure fossil fuel plants that
are already in the grid receive windfall gains.

In a speech to an Australian Pipelines and Gas
Association Convention in Adelaide, the
opposition's climate change and energy
spokesperson, Ted O'Brien, said that gas would
be "here to stay" under the Coalition.

He said a Dutton government would include it in
the capacity investment scheme, a program that
the Albanese government is using to underwrite
32 gigawatts of solar, wind and battery storage
as it aims to meet a target of 82% renewable
energy by 2030.

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O'Brien said the Coalition would hold annual
auctions to underwrite new and existing gas
power, with the amount and timing of capacity
and the structure of contracts to be determined
in government. He said the contracts would
include obligations to ensure lower electricity
prices for consumers.

Gas is the most expensive form of electricity
generation in the national grid, and responsible
for about 21% of Australia's emissions. O'Brien
did not say how including it in the capacity
scheme would lead to lower prices or how much
additional greenhouse gas may be emitted.

But he said the plan was part of a suite of
policies that would send a message to industry
and Australia's trading partners that "the
Coalition backs gas".

The minister for climate change and energy,
Chris Bowen, said while the opposition was
planning to subsidise existing gas plants, the
capacity investment scheme was about bringing
new energy supply into the system. He said fast-
starting gas plants had a role to play to back
up renewable energy when needed, but did not
need government support.

"Mr O'Brien has a couple of questions to answer.
Firstly, why is he providing a windfall gain for
gas companies who are already producing
electricity? Secondly, how would his auction
work when renewable energy is the cheapest form
of energy and will beat a gas proposal in any
auction under consideration?" he said.

Gas power provided about 5% of generation in the
national electricity market, which covers the
five eastern states, over the past year.

According to the Australian Energy Market
Operator's integrated system plan - its
blueprint for a future grid - gas capacity is
expected to fall in the second half of the
decade as more renewable energy comes online. It
is expected to increase above existing levels in
about 2034 and then dip again after about 2043.

Dylan McConnell, an energy systems researcher at
the University of New South Wales, said the
market operator's analysis showed the country
did not need additional gas capacity now. "It is
potentially an issue, but not until the 2030s,"
he said. "There may be a need, but it doesn't
have to be fuelled by fossil gas. If we are
going to put public funding towards solving this
challenge, I would be supporting low carbon
alternatives such as methanol or other hydrogen
based fuels."

Tony Wood, from the Grattan Institute, said
Labor's underwriting program should drive
investment in renewable energy and storage,
which were needed. He said the country would
also need a policy to ensure there was enough
"firm" support to back up renewables over long
periods, and that should be open to gas-fired
power. He said the second policy was not needed
yet, but should be designed now.

Greenpeace campaigner Geoff Bice said the
Coalition's policy would benefit gas
corporations, not consumers. "A recent US study
shows the total climate pollution from
[liquified natural gas] is 33% greater than coal
over a 20-year period," he said. "The Coalition
needs to get its head out of the sand and stop
ignoring the massive climate footprint of
Australia's gas industry."

The Greens leader, Adam Bandt, said there was no
justification for new gas subsidies. "More gas
will not bring down power bills, it will just
cook the planet," he said.



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