Coal-fired power stations in Australia will need to shut at the rate of about one a year between now and the mid-2030s for the country to meet the commitments made in Paris, a Senate hearing has been told.

Witnesses also told the hearing that since Australia’s coal-fired power stations are now very old – mostly built in the 1970s and 80s – they would be shutting in the coming decades regardless of climate policy, further highlighting the need for a transition plan.

Olivia Kember from the Climate Institute said: “For emissions reductions consistent with the 2C goal, Australia’s existing coal stations essentially needed to have closed by the early 2030s and what that works out to is roughly the rate of the equivalent of a Hazelwood a year.”

“The 2035 deadline is interesting because it keeps coming up in a whole lot of independent studies,” she told the Greens-Labor inquiry.

Erwin Jackson, also from the Climate Institute, told the hearing that many power stations had already said they would be shutting. “We are going to see closures quite soon. Liddell is going to shut down in New South Wales, which is a 2000MW station, in the early 2020s, and Bayswater in 2025 – AGL have already put it on the record.”

He continued: “To have a sensible conversation about how we do the transition, we need an agreement from both sides of politics that we have to have the transition. And we currently don’t have that.”

Jackson said the lack of a transition plan was making the transition more expensive regardless of what outcome was pursued. “Regardless whether you’re building a renewable plant, or you want to upgrade a thermal generator, the lack of policy predictability going forward is hampering investment. If we do get an investment it’s going to be more expensive than it would have been otherwise because investors will need to factor in a high level of risk.

“This again points to the need to having a sensible national policy where investors can think about how they’re going to manage the transition over the long term.”

James Paterson, a Liberal senator, asked the witnesses how the closure of coal power stations would affect electricity prices. The closure of Hazelwood last week was thought to have raised prices in Victoria by between 4% and 8%.

Jackson said since the coal power plants were old and going to close anyway, price rises were inevitable. “Electricity prices are going to have to go up anyway. Because if you are shutting down plants – and they will shut at some point – then the replacement plants are more expensive than the current plants we’re operating at the moment.”

Paterson said: “Is another option other than just closing these power plants, replacing them with other more efficient coal-fired power plants?”

Frank Jotzo from the Australian National University responded: “In the short term, as a thought experiment, if you replaced the La Trobe generators with ultra supercritical [efficient coal power stations], you’d make something like a saving of 50% in emissions in rough terms. But of course you’re locking in that investment for a long time and that’s fundamentally incompatible even with the existing Australian national 2030 emissions target.

He continued: “Stepping back from environmental policy objectives, the current levelised cost of electricity – in terms of new build – of renewables and coal, are just about on par … The capital costs of coal power stations are essentially not changing over time whereas the renewables cost is falling.”

“I would judge it highly unlikely you would see commercial investment in coal-fired power in Australia.”

The hearing comes after a series of reports urged the government to plan for the inevitable closure of coal power stations.

On Monday 17 prominent Australians, spearheaded by the Australian Conservation Foundation, presented the energy minister, Josh Frydenberg, with a “clean energy blueprint”. It urged the Turnbull government to extend and expand the national renewable energy target and create a market mechanism to govern an orderly phase-out of coal-fired power in Australia. That blueprint also called for a just transition.

On Tuesday the Australian Council of Trade Unions released a report calling for a plan for a plan that ensured that the costs didn’t fall on the shoulders of workers and communities that rely on the coal-fired power industry.

All this comes before the government’s review of its Direct Action policy in 2017, as well as a review of the national energy market led by Australia’s chief scientist, Alan Finkel.



The Finkel review followed a political battle between the Turnbull government and state governments, with Malcolm Turnbull launching a rhetorical assault on state-based renewable energy targets after a statewide power blackout in South Australia in September.