Exclusive: as the Coalition prepares for criticism by conservative MPs, chief scientist says a scheme to incentivise the use of coal-fired energy is unlikely

This article is more than 3 years old

This article is more than 3 years old

The chief scientist, Alan Finkel, says he doesn’t know if Australia can meet its Paris commitments under the 28% emissions reduction target he has floated for electricity.

He also says it would be “surprising” if governments ultimately implemented a new clean energy target which “incentivised” building new coal-fired power stations.

The landmark Finkel review has faced criticism since it was unveiled last week for proposing a clean energy target where emissions from electricity would be cut by 28% on 2005 levels by 2030 – a target environment groups and some experts believe is too low for Australia to meet its Paris commitments.

In an interview with Guardian Australia, Finkel said 28% was not a hard recommendation, it was a figure modelled by his review. “We didn’t recommend 28%, that’s just what we modelled. If governments want to do more once they’ve considered the whole of economy’s needs, so be it for them.”

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Asked whether Australia could met its Paris targets under a 28% target for electricity, Finkel said: “I genuinely don’t know.”

The chief scientist also used the interview to signal it was unlikely a new coal station would be built in the system envisaged by his review.

Asked whether he believed anyone would build one, Finkel said: “The answer is I don’t know. I can tell you under the [review’s] modelling, none came in. Under the modelling, none came in”.

Finkel said there were absolutely no prohibitions under the proposed clean energy target for new coal stations in the national electricity market – but he said he would be surprised if any government actively sought them.

“If [proponents] can get legal permits from governments to build a coal station, they can go out and do that, but it would be surprising if governments were to endorse a ... scheme that incentivised them,” he said.

Finkel’s comments came as Coalition MPs prepared to meet in Canberra on Tuesday morning to consider his review of the national electricity market.

Facebook Twitter Pinterest Hazelwood open-cut mine and power station in Victoria. Photograph: Keith Pakenham/CFA via AAP

The energy minister Josh Frydenberg was expected to outline the major elements of the Finkel review to government MPs now back in Canberra for the parliamentary sitting fortnight.

Conservative government MPs, from the deputy prime minister down, have already signalled a viable future for coal is a key component for broad acceptance of the new scheme in government ranks.

Internal opposition

Ahead of Tuesday’s meeting, the former prime minister, Tony Abbott, has been steadily upping the ante on the issue. On Monday he said the clean energy target sounded like a “magic pudding”, adding that the Coalition must not adopt a new tax on coal.

The concerns about the Finkel blueprint in government ranks extend significantly further than Abbott, who used a fight over emissions trading in 2009 to take the Liberal party leadership from Malcolm Turnbull.

Some Coalition MPs returning to Canberra for the last parliamentary sitting fortnight before the winter break are nervous that history could be about to repeat itself, with energy policy triggering another major split in government ranks.

One MP told Guardian Australia on Monday Turnbull lost the fight over emissions trading in 2009 not only because of the internal opposition to carbon pricing, but because of how he handled the dissent. “The question is, has he learned the lesson?”

The chairman of the Coalition’s backbench committee on climate change and energy, the conservative MP Craig Kelly, told Guardian Australia on Monday “there is real concern about what [the report] will do to energy prices, and to the competitiveness of our industries”.

Kelly said the detail of the Finkel review was worse than he expected. The proposed clean energy target would “lock in high energy prices”, Kelly said, and the new system was “a de facto 42% renewable energy target”.

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Labor warned Turnbull on Monday to pull the dissenters into line. The party’s climate change spokesman, Mark Butler, said Turnbull was in danger of losing control of this process “before it even begins”.

“Malcolm Turnbull has to stand up in his party room and stare down Tony Abbott and if he doesn’t, this process is not going to go very far,” Butler said.



While government MPs were lining up in advance to declare that the Finkel report goes too far and will push up power prices, the chief scientist has faced a backlash from environment groups and some energy experts concerned about the review’s lack of ambition for emissions reduction.

The chief scientist said the review modelled a 28% reduction in the absence of clear guidance from the Turnbull government about how Australia intended to meet its Paris obligations.

“In the absence of that, we are recommending a mechanism but not the numbers,” Finkel said Monday. “We modelled what we felt was the only reasonable thing to model given those circumstances ... which was a smooth trajectory.

“We are strongly of the opinion that one has to be planning and implementing a trajectory towards zero rather than fixed targets”.

“So instead of thinking about 2030 as a fixed target then getting there and saying, ‘hey what next’ – we are looking at a trajectory towards zero emissions in the second half of the century that passes through a 28% target in 2030 off the 2005 baseline.”

Finkel said it was not up to his review to make an arbitrary decision about whether electricity should do more of the heavy lifting than other sectors of the economy in meeting Australia’s Paris commitments. This would have been “jumping the gun”.

He said: “People could argue that electricity should do more than its fair share, but we can’t make an arbitrary decision on that, that has to be done in the context of a whole of economy plan.”

A plan for the whole economy

The review had recommended the government determine an economy-wide plan for emissions reduction by 2020.

Asked to explain why some previous modelling had indicated the electricity sector would need to reduce emissions by more than 60% to hit the Paris commitments, and that he had brought forward a 28% target, Finkel said some previous studies contained assumptions that he was not prepared to adopt.

He said some previous analysis had assumed Australia’s energy mix by 2050 could include generation from geothermal, or nuclear power, or coal of gas with carbon capture and storage.

The current review “made a decision in our modelling not to assume any of those. None of them can be assumed with confidence”.

We’ve had 10 years of policy uncertainty. The national electricity market has not developed in the way you would hope”

“We did not make assumptions that we would be rescued by technology ... that aren’t either politically or commercially, yet, viable. We set ourselves a much higher challenge. There is realism in our assumptions”.

Asked whether Australia could meet its Paris emissions reduction target if the electricity target was legislated at 28%, Finkel said: “I’ve got more optimism that we can improve the efficiency of our transport system than I have optimism that we will ever get geothermal to work.”

Asked whether this observation meant the government may need to pursue more ambitious emissions reductions proposals in transport, rather than energy, Finkel said: “They might. It’s important the government be given the opportunity to take a whole of economy approach in its thinking, and to see our blueprint for the future as a significant input to their planning.”

Finkel made it clear that future governments could adjust the level of ambition in the clean energy target, and he said there was nothing to stop state governments pursuing their own state-based renewable schemes to supplement the national scheme.

Cautious approach

The chief scientist did warn that ratcheting up the ambition in the national scheme needed to be approached with caution. The review had not modelled cost and network security outcomes on a higher trajectory.

“What I would recommend is whatever they do is well-considered and long-term. We certainly don’t want to go to a situation where the parameters keep changing in an uncertain fashion. It needs to be well-thought through”.

On the future of the state-based schemes, Finkel said: “I think states have state rights that shouldn’t be questioned. I don’t question those state rights.”

He said his core recommendation was for a national framework, but “if a state wanted to go beyond that, the reliability obligations [in the review] will help preserve reliability in their state.”

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“But you would expect the cost on consumers would be somewhat higher.”

Finkel was asked about a campaign by the resources sector to set the baseline for the CET sufficiently high to allow high-efficiency coal to be eligible for certificates.

He said his report modelled a scheme where the CET threshold was set at 0.6 tonnes of CO2 per megawatt hour. “I don’t have a strong view about where it should be set: 0.5, 0.6, 0.7 would be the sorts of numbers that are reasonable”.

Finkel seemed perplexed by a push to have the threshold set at 0.7 to favour coal. “It’s not going to be transformational, unless the threshold was set remarkably higher.

“Your guess is as good as mine as to whether governments would ever set the threshold remarkably higher.”

Finkel rejected Abbott’s characterisation of the CET as a “magic pudding” or a new tax on coal.

The chief scientist said it was a mechanism to “incentivise new, cleaner, reliable generation into the market”.

He said “uncertainty” over a decade had led to insufficient investment in thermal generation. “What we are recommending is a package of approaches that will provide the certainty and incentive to encourage new low emissions generation into the market.”

While leaving the final decisions in the lap of the government, Finkel did warn Australia’s political parties not to waste the chance to develop a new consensus on climate policy.

Asked whether he felt there was a danger of the perfect being made the enemy of the good, Finkel said: “Perfection is in the eye of the beholder.

“If in pursuit of perfection our recommendations are not adopted by government, then the question is what do you go back to?

“We’ve had 10 years of policy uncertainty and that has affected the system. The national electricity market has not developed in the way you would hope.”

He said commentators had pointed out the response to the review was the government’s best shot for a decade in calling a truce in the climate wars. Finkel also warned if the review was rejected: “I’m not sure whether we’d be going back to business as usual. It could be worse.”