Australia’s resources minister, Matt Canavan, has flagged subsidising a “clean” coal baseload power plant from the government’s $5bn northern Australia infrastructure fund, and says the government has already heard from an interested party.



Canavan on Friday suggested a potential investor in a new power station was eyeing off development in the Galilee Basin, the planned site of the Adani coal mine – and he said cheap power had been the key to opening up the Bowen basin in Queensland in the 1960s.

He dismissed the energy industry’s views that coal was a legacy technology with little or no prospect of commercial viability, and accused companies, including AGL and Energy Australia, of trying to lock out competition.

“With all respect to those very eminent companies, we wouldn’t take advice from Coles and Woolworths on whether we should allow Costco to come into the Australian market,” Canavan told the ABC.

“I’m not surprised that existing generators don’t want another large-scale baseload power station to come into the market, particularly in an area like north Queensland where they are making good money selling electricity now at very high prices.

“Good luck to them. What I’m about is the national interest.”

Government sources have told Guardian Australia that Canavan is a driving force internally behind Malcolm Turnbull’s pivot this week to “clean” coal, which the prime minister executed during a scene-setting speech at the National Press Club on Wednesday.

The prime minister lamented the fact that $590m had been spent on clean-coal trials and demonstration, and yet Australia lacked an efficient, low-emissions, coal-fired power plant with carbon capture and storage.

“Who has a bigger interest than us? We are the biggest [coal] exporter. And yet we don’t have one power station that meets those requirements,” Turnbull said on Wednesday.

He said it was time to develop a technology-neutral approach to the energy market and “strip the ideology out of this debate”.

This was followed by the deputy prime minister, Barnaby Joyce, saying it would be “morally prudent” for Australia to build new coal fired power plants, potentially with taxpayer support.

Several ministers have signalled over the course of the week that such projects could be funded by the Clean Energy Finance Corporation.

The Coalition has opened the new political year determined to position itself as the party of low power prices, and the party of energy security, to make a partisan point about Labor’s commitment to ambitious renewable energy targets in Canberra and the states.

Consumers are concerned about rising power prices, and the energy issue is a red hot one in the heavily contested state of South Australia.

The Nationals, like Canavan, are also feeling the heat in the regions from the One Nation insurgency. The One Nation leader, Pauline Hanson, tweeted after Turnbull’s address this week that it was good to see the government “come around to One Nation’s position”.

It seems Turnbull has come around to One Nation's position & now supports more baseload coal power & affordable energy- Good to see #auspol — Pauline Hanson (@PaulineHansonOz) February 1, 2017

But despite the renewed political positioning, the evidence cuts across the government’s arguments that “clean” coal plants will produce cheaper energy, as well as provide secure baseload power.

The evidence says such plants are very expensive to build, and have long construction lead times.

Industry estimates put the power costs from ultra super critical coal plants at between $80 and $100/MWh – which is no cheaper than power from renewable technologies – and the price of renewables has dropped significantly in recent years, and is trending down.

Canavan told the ABC on Friday that refineries in Townsville and a smelter in Gladstone were struggling under high power prices.

He said there was no baseload power station north of Rockhampton, and industrial consumers in north Queensland were paying twice the price for power compared with businesses in southern Queensland “because of the cost of transporting the electricity to the north”.

Canavan, who is also the minister for northern development, said there was “no reason why we shouldn’t have a very vibrant metals manufacturing industry with good high-paying jobs for people”.

“We’ve got the minerals. We’ve got the cheap coal. The clean coal technologies are proven. We should be smart enough to do it like other countries are,” he said.

Queensland’s energy minister, Mark Bailey, rejected Canavan’s analysis, and argued north Queensland was “benefitting from a boom over the next year and a half as a raft of new clean energy power stations are built and come on line at Kidston, Lakeland, Clare, Collinsville and Mount Emerald.”

He said the $380m Mount Emerald wind farm would generate enough output to power a city the size of Mackay.

“There’s also FRV’s 100MW Clare Solar Farm near Ayr, MSF Sugar’s 24MW bagasse generation plant at its Tableland Mill, Genex’s Kidston 50 MW Solar Project and pumped hydro for baseload plus Edify’s 58 MW Whitsunday Solar Project - to name only a few,” Bailey said.

“North Queensland currently has two large-scale hydro facilities – Kareeya and Barron Gorge – which together provide over 150 MW of renewable energy capacity. A third major hydro facility is proposed for North Queensland through the Kidston Project, which could deliver 250 MW of pumped-storage hydro-electric power to the region.”

During his interview on the ABC, it was pointed out to Canavan that climate scientists believed there should be a moratorium on coal to ensure that Australia and the rest of the world met the emissions reductions targets agreed at the Paris climate conference.

In response, Canavan drew a comparison to Japan, saying it had a similar Paris target to Australia and was investing in “clean” coal in order to meet its target.

“They are meeting their Paris targets by investing in these technologies and there’s no reason why we couldn’t do the same,” he said.

He did not point out that Japan was investing in super critical coal because it took the decision after the Fukushima disaster to phase out nuclear power.

The Australian Financial Review reported on Friday that Australia’s chief scientist, Alan Finkel, told a forum in Brisbane on Thursday evening that comparisons with Japan were not valid because Australia was in a different situation.

“Japan is in a different situation because they are taking nuclear out of the mix. They are in a situation where they are facing demand growth,” Finkel is reported to have said.

“If you have demand growth, that needs to be filled and Japan are doing what really India and China are doing. They are investing in ultra super-critical coal. Australia is not seeing demand growth.”