An Australian industry body is proposing that energy companies pay fees if they continue to operate coal-fired power stations past their scheduled closure dates. The Smart Energy Council argues this measure would prevent the delay of renewable energy investments and support regional communities.
The proposal, set to be launched at the council's Brisbane conference, calls for amendments to the Safeguard Mechanism, which regulates emissions from major Australian polluters. Under the suggested changes, any coal-fired power station operating beyond its intended closure date would be required to account for all its emissions under the Safeguard Mechanism. Owners would need to purchase Australian Carbon Credit Units for each tonne of emissions produced after that extended period.
Smart Energy Council chief executive David McElrea stated that the proposal does not aim to force power stations to close but would eliminate their pollution allowances. "Keeping ageing coal operating is not free," McElrea said. "If a coal station remains necessary beyond its earlier closure date, it can continue to operate, but extending its life should not also extend its right to pollute for free."
McElrea believes that implementing this change would provide greater certainty for companies considering investments in renewable energy and for the affected regional communities. "Every time a coal closure date is pushed back, that (renewable energy) investment becomes harder to finance," he explained. "That delays new generation, delays jobs and creates worker uncertainty, and leaves consumers exposed to the cost and unreliability risks of ageing coal."
Under the Smart Energy Council's proposal, all coal-fired power stations would have a zero-emissions allowance by 2035.
Tim Buckley, director of Climate Energy Finance, indicated that while the proposal would require ambition from the federal government, it could enhance investor confidence. "We need to have the certainty that the coal plants are going to go offline, that they're not going to be allowed to continue to pollute forever," Buckley told AAP. "It aligns with the need for the broadening of the Safeguard Mechanism and its strengthening."
Buckley suggested that the government could reference closure deadlines outlined in the Australian Energy Market Operator's Integrated System Plan. He also noted that the changes could be introduced gradually, allowing all parties to plan accordingly. "They could do it in a slow, measured way, consistent with the Safeguard Mechanism review, which would mean it doesn't kick in until 2030 or thereafter," he said. "It could provide a clear policy signal that's going to disincentivise them constantly kicking the can down the road."
The federal government's review of the Safeguard Mechanism is ongoing, with public consultation closing on September 18. A report on the review is expected in early 2027. This proposal comes weeks after the government launched its review and following extensions to operations at several coal-fired power stations, including Eraring in New South Wales.