Resources minister says proposal to use funds from northern Australia infrastructure fund is not redundant

This article is more than 3 years old

This article is more than 3 years old

Subsidies for coal-fired power stations have not been made redundant by the federal government’s plan to spend $2bn increasing the capacity of pumped hydro power storage in the Snowy Mountains, Matt Canavan has said.

The minister for resources and northern Australia told the ABC’s Insiders program on Sunday the so-called Snowy Hydro 2.0 plan would be an important addition to Australia’s energy supply but “would not make a huge difference” in northern Queensland.

Canavan also backed Nationals leader Barnaby Joyce’s call for states to follow South Australia’s plan to pay royalties as compensation to landholders for gas development.

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On Thursday Malcolm Turnbull unveiled the plan to produce a feasibility study for and then build an expansion aimed at adding 2,000MW to the Snowy Mountains hydro scheme’s 4,100MW capacity, enough to power 500,000 homes.

Increased energy storage from batteries or pumped hydro will allow power generated off-peak to service peak demand, which could pave the way for a reliable 100% renewable energy grid.

On Sunday, Canavan, who has suggested using funds from the $5bn northern Australia infrastructure fund to subsidise new coal power plants, said he did not think the pumped hydro expansion made his proposal redundant.

“We’re a big diverse country with big diverse needs in terms of our energy supply,” he said, criticising what he called an “obsession” that there was one solution to a shortfall in power supply.

“We don’t have a base load station north of Rockhampton here. I want to continue to grow the economy ... We’re going to want a base load power station at some time in the future.

“We have got coal up here, the new clean coal technologies can [generate power] at a reliable price, affordable power and lower emissions. We should look at bringing those technologies in.”

Despite Canavan’s enthusiasm for a coal power plant, the Clean Energy Finance Corporation has warned private investors are “very unlikely” to build them because coal plants are a risky investment and would therefore require direct subsidies from taxpayers.

Canavan noted that 8,000MW of coal-fired power – or 20% of Australia’s energy supply – is facing retirement in the next 10 years.

“Some of that hopefully will get replaced by gas but that’s proven challenging, given the gas supply situation,” he said. “I don’t think that all of it can be replaced by renewables.”

Canavan said Australia should consider building ultra-super critical coal power stations “to continue to provide reliable and affordable power”.

Earlier on Sunday, Joyce told ABC News Breakfast that farmers needed greater financial incentive to support gas development on their land, arguing it was unfair they get “a case of beer or $200” for a well that can earn between $60,000 and $700,000 a day.

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Joyce has backed the South Australian government’s scheme to increase such incentives.

“If we get a fair payment back to the farmer, it will completely change the dynamics of the debate because therefore the community becomes economic beneficiaries of that wealth,” he said, adding that developments are not on prime agricultural land or destroy an aquifer.

Canavan also welcomed South Australia’s position and criticised the Victorian government for its moratorium on gas development.

But he noted gas is “the state’s resource” and he would not be prescriptive about how incentives could be introduced.



“Clearly, there was a groundswell of opinion in regional areas that is not that supportive of gas development,” he said. “So we need to try and find ways to unlock that support, to give people a better share of the development of the industry that happens on their land, in their communities.”

He cited the American system in which landowners share in royalties as something worth considering.

Earlier the former environment minister Greg Hunt told Sky News the government supported better returns for farmers and landowners.

While jurisdiction over gas “strictly falls to the states”, Hunt suggested the federal government could “advocate and support measures that will encourage them to open up exploration”.