Liberal Party conservatives are demanding Malcolm Turnbull allow so-called clean coal to qualify as a low emissions fuel and be eligible for incentives if he wants party room support to implement a Clean Energy Target.
The moves put hopes of bipartisan support for the Finkel review and an end to the climate wars in doubt because Labor, which is prepared to drop its support for a more robust emissions intensity scheme and negotiate a CET, will not back the coal demand.
After former prime minister Tony Abbott hit out on Monday, labelling the CET advocated by Chief Scientist Alan Finkel as a “magic pudding” and a “tax on coal”, shadow energy minister Mark Butler demanded the Prime Minister rein in the rebels.
“If Malcolm Turnbull doesn’t pull his party room into line, pretty quickly, he’s going to completely lose control of this process before it even begins,” he said.
In an interview with The Australian Financial Review, Dr Finkel said a CET placed no prohibition on coal but during the preparation of his report, the modelling showed there was little investment appetite for coal-fired power because the economics did not stack up.
Dr Finkel also defended his work from attacks by conservatives, including Senator Eric Abetz, who accused him of using dodgy modelling to back his claim that a CET was the best option in terms of lower power prices. It would have slightly more effect than an emissions intensity scheme in lowering prices and would make power about $90 a year cheaper than the current approach of doing nothing.
“I’m as confident as I can be but I do realise that models are as good as the assumptions on which they are based,” he said.
“We tried to be extremely open. We tried to be as open as we can, as thoughtful as we can.”
He said, for example, that the business as usual scenario was based on currently legislated policies and “sensible” interest rates “and we did not assume we would be saved by commercially unproven technology”. These include geothermal technology and carbon capture and storage, which other studies have claimed will be producing up to 40 per cent of power by 2050.
In a report to government on Friday, Dr Finkel recommended a CET be adopted after 2020 to ensure a stable transition towards cleaner energy sources while Australia still met its Paris agreement of reducing emissions by 26 per cent to 28 per cent on 2005 levels by 2030.