Malcolm Turnbull says coal, CSG and renewables vital for energy future

In an appeal to the hip pocket of voters and a push against Labor's plans for a 50 per cent renewable energy target, Mr Turnbull also commissioned work on large-scale storage facilities so that energy generated by the wind and sun could be stored.

Declaring he was a pragmatist and "no political hack", the Prime Minister called for an end to the ideology surrounding the energy debate and for the adoption of all technologies that would ensure supply, at low cost, and still enable the country to meet its greenhouse gas reduction targets.

"The next incarnation of our national energy policy should be technology agnostic," he told the National Press Club on Wednesday in his year-opening address.

"It's security and cost that matter most, not how you deliver it.

"The battlelines have been drawn – it's clear that the Coalition stands for cheaper energy."

The mining sector welcomed the re-embrace of coal, which only last year the government deemed was becoming obsolete and that gas should be used to provide baseload power while the reliability of renewables was further developed.

But energy companies gave the coal proposal the cold shoulder saying it was expensive and obsolete.

Mr Turnbull said on Wednesday clean coal, also known as high efficiency, low emission (HELE), was also needed to ensure baseload supply because gas was too expensive and renewables too intermittent.

Mr Turnbull said increasing gas supply by lifting moratoriums on coal seam gas extraction was "vital for our energy future and vital for industries and jobs but state bans on onshore gas development will result in more expensive and less reliable energy".

"We are willing to sit down with the states to determine the right incentives to enable desperately-needed sustainable onshore gas development," he said.

Industry Minister Arthur Sinodinos said one option was to give the states money which would then be passed on to farmers as compensation for their land being accessed for CSG extraction.

And he also suggested that the Clean Energy Finance Corporation, a $10 billion loan facility established by Labor to fund clean energy projects, could be used to subsidise the construction of a clean-coal power station.

"There are ways at which you might look at how that might be done," he said. Barnaby Joyce also backed subsidies.

Mr Turnbull did not abandon renewable energy, citing energy storage as a priority.

He has asked clean energy agencies ARENA and the CEFC to work on large-scale storage so energy generated by wind and solar could be stored and used when the the sun isn't shining and the wind not blowing. He also listed pumped hydro, in which water would be pumped back uphill to be released into a hydroelectric generator when wind and solar power was not delivering.

"Large-scale storage will support variable renewables like wind and solar, it will get more value out of existing baseload generation and it will enhance grid stability," he said.

"So here's the current picture. Old, high emissions coal-fired power stations are closing down as they age, reducing baseload capacity.

"They cannot simply be replaced by gas, because it's too expensive, or by wind or solar because they are intermittent. Storage has a very big role to play, that's true. But we will need more synchronous baseload power and as Australia is a big exporter we need to show we are using state-of-the-art, clean coal-fired technology.

"Coal will have a role to play for many decades in the future".

The Climate Institute welcomed the commitment to storage technology but said the overall policy was not a coherent path towards a low carbon, clean-energy future.

"It is clear that (clean) coal, without carbon capture and storage, won't cut it in modernising and decarbonising our electricity system - it's emissions are still higher than gas, and analysis by business groups shows there is no economic reason to invest in this technology, absent significant government subsidy," said the institute's John Connor.

Australian Industry Group chief executive Innes Willox welcomed the commitment to reliable, affordable, and clean energy but questioned whether anyone would want to build a coal-fired power station. He too called for a market mechanism with bipartisan political support.

"While private investment in new coal-fired power stations would be difficult, it is important that energy policy be technology neutral and open to all options that can deliver the reliable, affordable and clean energy we need. Market mechanisms have the greatest potential to meet the test of technology neutrality," he said.

Mr Turnbull also used his speech to ramp up the rhetoric in support of his company tax cuts. He declined to say whether the government would keep the entire 10-year package as policy if, as anticipated, the Senate passes just the first phase of the plan which would give a 27.5 per cent rate to businesses with annual turnovers capped at $10 million.

Mr Turnbull remained hopeful the Senate could be convinced to pass the whole package which will drop the rate from 30 per cent to 25 per cent for all companies by 2026.

He has used Treasury modelling to claim the average worker would be $750 a year better off under a 25 per cent rate. Labor scoffed at the claim.

"He says he will give $2 a day to workers, extra in 20 years' time. That's Mr Harbour-side Mansion's plan for Australia, an extra $2 a day in 20 years' time for Australian workers," said Labor leader Bill Shorten.

"This really is trickle-down economics, this is Malcolm Turnbull's crumbs from a rich man's table economics. What he is basically asking Australians to believe is complete rubbish."

Mr Turnbull said jobs would be created and workers better off.

"Company tax is overwhelmingly a tax on workers and their salaries," he said.

He also hit Labor and others who have been espousing protectionism in the wake of Donald Trump's election.

"We cannot retreat into the bleak dead end of protectionism," he said.

This articel first appeared in the Australian Financial Review