"Clean coal" plants that the Turnbull government has flagged could get clean energy subsidies are more expensive than solar, wind and gas-fired power and would lead to higher electricity price rises, analysts have warned.
Support for "clean coal" stations, known as ultra-supercritical technology, would also be at odds with a 2015 OECD agreement under which Australia agreed not to fund coal power in developing countries if cleaner options were available.
New technology means coal will play a role in electricity generation long into the future, says Malcolm Turnbull. Courtesy ABC News 24.
An analysis by Bloomberg New Energy Finance to be released on Friday found "clean coal" plants, known as ultra-supercritical technology, were the most expensive and dirtiest source of mainstream electricity supply available.
Across their lifetime, the most efficient modern coal plants would cost a minimum $134 per megawatt hour of electricity generated, and possibly as much as $203.
Wind ($61-118 per megawatt hour), baseload gas ($74-90) and large-scale solar ($78-140) were much cheaper.
The analysis found the cost of building new coal could fall to $94 per megawatt hour if the government were to take on all risk across its decades-long lifespan.
That would either require taxpayers to fund a multi-billion dollar plant outright, or the Coalition to guarantee that Canberra would cover all costs over coming decades should future governments introduce carbon policies to meet Australia's international climate commitments.
In a separate analysis, the Climate Institute estimated the guarantee necessary would be equivalent to $0.9-$1.5 billion a year. For a plant the size of Hazelwood in Victoria, it would mean $27-45 billion over 30 years.
Bloomberg New Energy Finance Australian chief Kobad Bhavnagri said if new coal were to be built in Australia, electricity prices would be substantially higher than under a combination of gas and renewables – assuming governments opened up gas markets so supply was readily available.
"New coal is not cheap, it's inflexible and unnecessary and it's certainly not clean," Mr Bhavnagri said.
"It's impossible to imagine a private market participant investing in such a project."
Government ministers have stressed the need for Australia's electricity supply to be reliable and affordable as the country meets emissions targets.
It's impossible to imagine a private market participant investing in such a project.
Kobad Bhavnagri, Bloomberg New Energy Finance
In a speech to the National Press Club, Prime Minister Malcolm Turnbull this week called for a "technology agnostic" approach to energy, and said Australia needed more baseload power and had a vested interest in developing "state-of-the-art clean coal-fired technology".
He also announced funding for large-scale energy storage and flexible generation projects such as pumped hydro-power, called on Labor states to lift bans on gas exploration and criticised the opposition's uncosted target of 50 per cent renewable energy by 2030.
Resources Minister Matt Canavan said on Friday the $5 billion Northern Australia Infrastructure Fund would be opened to "clean coal" applications.
In November 2015, Australia signed up to an OECD (Organisation for Economic Co-operation and Development) agreement to limit public funding of coal plants in developing countries.
Under the deal, 34 OECD members agreed proposals for export credit agency funding would be assessed to see if they were the cleanest alternative available and whether they were consistent with the country's climate change plan.
The Bloomberg New Energy Finance analysis says black coal plants emit 0.76 tonnes of carbon dioxide for every megawatt hour generated – less than existing plants, but twice the amount of baseload gas. Wind and solar generation are emissions-free.
In brown coal-rich Victoria and South Australia, it has been estimated a new plant would at best have an emissions rate of 0.93, higher than some black coal plants operating today.
On reliability, the analysis found coal plants were an inflexible form of generation not suited to a modern power grid drawing electricity from a range of sources, including intermittent renewable energy and battery storage.
Baseload gas can start and stop much more quickly than coal, which basically needs to run constantly, even not when required.
Australia's leading energy companies have said they had no plans to invest in new coal, and some business groups have expressed scepticism.
Australian Energy Council chief Matthew Warren said Australia needed a national energy plan that allowed the industry to invest in the new power plants needed.
"These are long-life assets and the risk is you make things worse if you don't have a plan," he said.
"I don't think the banking sector and the industry are looking to build coal-fired power stations for the foreseeable future."
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