Skip to content

$2.5bn on a coal-fired power station? That’s good old pork barrelling

The Guardian/26 September 2017

The Queensland Liberal-National party (LNP) are promising that if they are elected to government they’ll build a new coal power station in northern Queensland. And just this week the prime minister, Malcolm Turnbull, announced that if Queenslanders elected the LNP at the next state election, all Australian taxpayers would help fund it.

It’s important to note that this would involve a serious amount of taxpayers’ money, because banks and power companies have made it clear they aren’t remotely interested in funding such a plant. The coal plants the government seems to fancy (known as ultra-supercritical) tend to come in just one size – extra big. The last coal plant built in Queensland was a single supercritical pressure 750MW unit – the biggest in Australia. According to analysis for the Australian Energy Market Operator such a plant would cost taxpayers $2.5bn. That’s half a billion more than the 2000MW Snowy 2.0.

Such a move by state and federal governments to build a major power station represents an extraordinary break from two decades of policy consensus that government should leave electricity generation to the private sector. The Queensland LNP just one government term ago, was actually planning on divesting itself completely out of the power business. At the time it argued the private sector would be far more efficient at running such assets. At a federal level the Liberal-National government just a few years ago was handing out bonus payments to the states to encourage them to sell out of power and other infrastructure assets.

So you’d think such a radical break from a long-standing and strongly held policy position would be backed by some very hefty justification. Especially when it involves $2.5bn.

Well we’ve heard a lot of teeth gnashing from the Coalition about the need for more “baseload” power in order to keep the lights on. But the Liberal-National Coalition needs to address some very simple maths that suggest such an argument just doesn’t apply in Queensland:

  • Queensland’s overall electricity demand over the year averages out at less than 6,000MW and according to the Energy Market Operator it isn’t likely to grow much;
  • Meanwhile it has 8,186MW of coal power plant capacity, not to mention another 3,297MW of gas.

Over the past four years Queensland’s biggest coal power station – Gladstone – has been operating at less than half its capacity. Several other Queensland coal power stations are running at about two-thirds of their capacity. As a yardstick comparison Victorian coal generators run close to 90% utilisation on average. Given we’re barely making effective use of the existing Queensland coal power stations, you have to ask why would we want to tip $2.5bn in to build another one?

The LNP might respond: but Liddell is closing down in NSW, and that comes on top of Hazelwood in Victoria, so Queensland can export the power south. But if that’s the case then why do you want to build a new coal power station near Townsville, which would suffer huge losses transporting the power over 1,000km to NSW?

Another possible justification the government might suggest is that we need a new Queensland coal generator to increase competition and push down wholesale power prices from record-high levels. Turnbull pointed out that two power companies – CS Energy and Stanwell – who dominate ownership of generating capacity in Queensland, have been using “that market power to bid up electricity prices and basically line their own pockets at the expense of consumers.”

One problem though – Stanwell and CS Energy are owned by the Queensland government that will be building the new coal generator. So it will just make their market power even worse.

So why do the Liberal-National party want to throw $2.5bn into a power station we clearly don’t need and one which is completely incompatible with Australia’s emission reduction commitments?

You guessed it: good old electoral pork barrelling.

The area around Townsville is home to several marginal parliamentary seats both at a state and federal government level. Winning these seats is vital to the Coalition’s electoral prospects.

It’s also a region where coal mining is an important part of the local economy and one that has been hit hard by the collapse in mining investment. Coal is not a dirty word here.

The beauty for the LNP of a promise to build a coal-fired power station in northern Queensland is that they know Labor can’t match it. While a promise to build a coal power station might work well in Townsville, it is electoral poison in the inner city seats where Labor ministers are threatened by the Greens.

That’s why the LNP think spending $2.5bn of our money on a power station that doesn’t make environmental or economic sense, still makes perfect political sense.


News Source: The Guardian

HTML Snippets Powered By :