The Coalition has been forced to ditch its controversial “big stick” divestiture bill after deciding it no longer has the numbers in the House of Representatives following the landmark defeat over the so-called “medevic” bill earlier this week.

The reported abandonment of the bill represents a major backdown for the Coalition and energy minister Angus Taylor.

They insist it has not been dropped from the official program, but will now not run the risk of defeat in parliament, choosing instead to promote it as a policy in the lead up to the election, which is likely for mid May. It turns out that the backdown has been forced on the Coalition by the Greens.

The proposal – which would allow heavy intervention into the wholesale market, and the potential to force utilities to sell assets that the Coalition did not want to see closed – is the only policy proposal of substance put forward since Taylor took over after the coup against Malcolm Turnbull.

However, the bill received near universal condemnation, from big and small retailers alike, consultants and international companies, which warned that it was “unworkable” and would likely bring a halt to new investment, particularly in “dispatchable” generation that the Coalition insists is so essential.

The Coalition has sought to take direct control over the nature of that new investment through its proposed underwriting of “24/7” dispatchable power generation, in what is widely seen as a rushed process to support favoured projects before the next election.

An informal registration of interest process attracted around 66 proposals,. including 10 coal projects.

The Coalition team is now refining the criteria for a more formal tender on the basis of these proposals. It is widely viewed as a push to support new coal investment, even though multiple projects involving wind, solar, pumped hydro and batteries have also been put forward, such as a major proposal from UK steel billionaire Sanjeev Gupta.

It was this pursuit of coal that inspired the Greens to put in an amendment to the big stick legislation that would have banned the government from funnelling money to any generation that had emissions of more than 620g/tonne – effectively ruling out coal.

That won the support of Labor and the cross-bench, and after the defeat of the government in the Medivac amendments, the Coalition decided not to risk their underwriting program by pushing the bill through the house.

“The Parliament was about to support a Greens amendment to prevent the conservatives using public money over the next few months to bankroll coal,” Greens climate spokesman Adam Bandt said.

“Rather than face a repeat of the refugee vote, the government has pulled its legislation. The conservatives are so desperate to bankroll coal and avoid action on climate change that they’ll pull a signature piece of legislation.”

The legal status of that underwriting proposal is also under a cloud. Labor, while celebrating the dumping of the “big stick” legislation, made it clear on Thursday that any contracts signed by the Coalition before the care-taker period begins (likely in mid April) would be honoured.

However, there is a rider to that commitment. Labor believes any such deal will require legislative approval, and that will not be given if Labor and the independents have their way. Presumably, Taylor’s team are desperate to find a way around that restriction.

The dumping of the “big stick” bill, however, is sure to revive tensions within the Coalition, with many insisting that coal generators like Liddell not be allowed to close down, despite the soaring costs of keeping the ageing and increasingly decrepit power plants on line, and calling for the likes of AGL to be forced to sell the business if they did wish to close them.

AGL has proposed to replace Liddell with a mixture of wind, solar, demand management, battery storage, pumped hydro, possibly a new gas plant and some upgrades to the Bayswater plant.

AGL argues that a mixture of renewables and storage will be significantly cheaper than keeping an old plant alive, an observation confirmed by the federal government’s own energy retailer, Snowy Hydro, with its recent tender, and by a major new study by the CSIRO and the Australian Energy Market Operator.

Labor climate change and energy spokesman Mark Butler suggested that the Coalition government was “crab-walking” away from the underwriting agreement.

“One of the greatest failing of the is the complete lack of an energy policy,” Treasury spokesman Chis Bowen said. “Now they are to even bringing on their fig leaf of a policy to a vote. It is a bad policy, a bad idea, poorly executed.”

The Coalition produced the policy after dumping Turnbull, despite his last-minute dumping of his National Energy Guarantee. Now prime minister Scott Morrison promised that Taylor’s only target was to bring wholesale prices down.

In the following quarter, according to new AEMO data, wholesale prices reached a record high – caused by higher prices demanded by coal and gas fired generators.