Energy Minister Angus Taylor says the government's position on the closure of Liddell power station has not changed following the release of a new discussion paper about alternative energy sources to assist in the reduction of emissions.
While the Technology Investment Roadmap flagged an increased role for gas in the nation's energy mix in coming years, Mr Taylor said coal would remain essential.
"Our position on Liddell has always been clear - we need either like-for-like replacement or life extension," Mr Taylor told the Newcastle Herald.
"You cannot just shut a major coal-fired power station, or any power station for that matter, without increasing electricity prices for households and businesses.
"Gas and coal are going to continue to play a really important role in our system for many years, and as the Technology Investment Roadmap highlights gas has a particularly important role in our energy system now and into the future."
The government is awaiting the final report of the Liddell Taskforce, which was set up to investigate options for extending the ageing power station's life beyond 2023.
However, it is already estimated it would cost about $300 million to keep it open for an extra three years.
In the meantime, the plant's owner, AGL, says it is taking significant steps to offset the loss of Liddell's 2000 meagwatts with a range of renewable projects around the country.
These include the proposed $400 million Newcastle gas-fired power station near Tomago, which is designed to increase firming capacity in the electricity market. The project is currently on public exhibition.
The company also recently completed the Barker Inlet Power Station in South Australia.
The $295 million plant provides 210 megawatts of dispatchable power via the largest gas engine on the market and is capable of reaching full-capacity in five minutes.
AGL has also signed an agreement with Idemitsu Australia Resources to undertake an engineering feasibility study for a proposed 250-megawatt pumped hydro project at Bells Mountain, near Muswellbrook.
Environment groups have also urged for Liddell power station to be closed as soon as possible.
They point to a study by Newcastle-based epidemiologist Dr Ben Ewald who calculated in 2018 that air pollution from Liddell Power station would cause an additional 41 premature deaths if it remained open for an extra three years.
The extension would also cause an additional 33 low-birthweight babies and 51 additional cases of type 2 diabetes from exposure to pollutants such as sulfur dioxide and nitrogen dioxide.
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