Australia: Government defends Coal and Gas

Australia's coalition government proposes a subsidy for coal and natural gas-fired power generation.| Australia's coalition government proposes a subsidy for coal and natural gas-fired power generation.

Share:

Australia is proposing a subsidy for coal and natural gas-fired power generation.
The aim is to solve a problem which, according to the country’s energy market operator, does not exist.

Australia relies on coal and natural gas production

The Liberal-National Conservative coalition government of Australian Prime Minister Scott Morrison is backing a plan to introduce a Physical Retailer Reliability Obligation (PRRO) mechanism whereby electricity retailers would be required to pay generators for unused capacity if and when necessary.
Federal Energy Minister Angus Taylor announces that payment for unused capacity is necessary to ensure that the electricity grid is stable and has sufficient supply, and that the PRRO would be technology-neutral in that battery farm and pumped hydro operators would also be eligible to receive payment.

Unused coal and gas capacity

In fact, the vast majority of Australia’s unused capacity on the electricity market in the populous eastern and southern states comes from aging coal-fired generators and often idle natural gas power stations.
Australia’s electricity system is divided into two parts.
On one side is the NEM, which connects the most populous states of New South Wales, Victoria and Queensland.
As well as Tasmania, South Australia and the Australian Capital Territory.
On the other hand, the State of Western Australia and the Northern Territory operate separate power grids from the NEM.
They are unable to export or import electricity from the rest of the country.

Government refuses to commit to carbon neutrality by 2050

Prime Minister Morrison and members of his government have refused to commit to a net zero emissions target by 2050, putting Australia out of step with much of the rest of the world.
However, even the current target of keeping emissions 26-28% below 2005 levels by 2030 will be difficult to achieve.
Unless more coal and natural gas leave the electricity grid.
The AEMO report clearly indicates that the energy market is in transition.
4.4 GW of new utility-scale generation and storage capacity is expected online over the next five years.
Much of which will come from renewable energies.
Another 8.9 GW of residential and commercial rooftopsolar is also expected to be added to the market, according to the report.

Renewable energies can replace coal

This will be more than enough to offset the planned retirements of coal-fired power plants, states AEMO in its 2021 State of Electricity Opportunities report.
What the market operator does recommend is to work on improving the transmission network to cope with the growing share of renewables in the market.
In the run-up to COP26, the world’s 15th-largest CO2 emitter must therefore pledge its climate commitments to the international community.

Nearly USD92bn will be invested by major American and international groups in new data centres and energy infrastructure, responding to the surge in electricity demand linked to the rise of artificial intelligence.
Nouakchott has endured lengthy power interruptions for several weeks, highlighting the financial and technical limits of the Mauritanian Electricity Company as Mauritania aims to widen access and green its mix by 2030.
Between 2015 and 2024, four multilateral climate funds committed nearly eight bn USD to clean energy, attracting private capital through concessional terms while Africa and Asia absorbed more than half of the volume.
The Global Energy Policies Hub shows that strategic reserves, gas obligations, cybersecurity and critical-mineral policies are expanding rapidly, lifting oil coverage to 98 % of world imports.
According to a report by Ember, the Chinese government’s appliance trade-in campaign could double residential air-conditioner efficiency gains in 2025 and trim up to USD943mn from household electricity spending this year.
Washington is examining sectoral taxes on polysilicon and drones, two supply chains dominated by China, after triggering Section 232 to measure industrial dependency risks.
The 2025-2034 development plan presented by Terna includes strengthening Sicily’s grid, new interconnections, and major projects to support the region’s growing renewable energy capacity.
Terna and NPC Ukrenergo have concluded a three-year partnership in Rome aimed at strengthening the integration of the Ukrainian grid into the pan-European system, with an in-depth exchange of technological and regulatory expertise.
GE Vernova has secured a major contract to modernise the Kühmoos substation in Germany, enhancing grid reliability and integration capacity for power flows between Germany, France and Switzerland.
The National Energy System Operator forecasts electricity demand to rise to 785 TWh by 2050, underlining the need to modernise grids and integrate more clean energy to support the UK’s energy transition.
Terna has signed a guarantee agreement with SACE and the European Investment Bank to finance the Adriatic Link project, totalling approximately €1bn ($1.08bn) and validated as a major transaction under Italian regulations.
India unveils a series of reforms on oil and gas contracts, introducing a fiscal stability clause to enhance the sector’s attractiveness for foreign companies and boost its growth ambitions in upstream energy.
The European Commission is launching a special fund of EUR2.3bn ($2.5bn) to boost Ukraine’s reconstruction and attract private capital to the energy and infrastructure sectors.
Asia dominated global new renewable energy capacity in 2024 with 71% of installations, while Africa recorded limited growth of only 7.2%, according to the latest annual report from IRENA.
US President Donald Trump's One Big Beautiful Bill Act dramatically changes energy investment rules, imposing restrictions on renewables while favouring hydrocarbons, according to a recent report by consultancy firm Wood Mackenzie.
On July 8, 2025, the Senate validated the Gremillet bill, aimed at structuring France's energy transition with clear objectives for nuclear power, renewable energies, and energy renovation.
Brazil, Mexico, Argentina, Colombia, Chile, and Peru significantly increase renewable electricity production, reaching nearly 70% of the regional electricity mix, according to a recent Wood Mackenzie study on Latin America's energy sector.
The Canadian government announces an investment of more than $40mn to fund 13 energy projects led by Indigenous communities across the country, aiming to improve energy efficiency and increase local renewable energy use.
The German Ministry of Economy plans to significantly expand aid aimed at reducing industrial electricity costs, increasing eligible companies from 350 to 2,200, at an estimated cost of €4bn ($4.7bn).
A major electricity blackout paralyzed large parts of the Czech Republic, interrupting transport and essential networks, raising immediate economic concerns, and highlighting the vulnerability of energy infrastructures to unforeseen technical incidents.