Energy and Emissions Reduction Minister Angus Taylor says the federal government is deadly serious about building a gas-fired power station at Kurri Kurri if the private sector does not commit by the end of next month to replacing the capacity of Liddell power station.
Mr Taylor, who was in the Hunter yesterday, stressed that the government's preference was for private sector investment in power generation, while confirming that the Coalition stood behind the $610 million Kurri plan developed by the Commonwealth-owned Snowy Hydro.
At the former Kurri aluminium smelter site chosen by Snowy Hydro yesterday afternoon, Mr Taylor and the government's patron senator for the Hunter, Hollie Hughes, spoke with Snowy Hydro chief executive Paul Broad about the state of the electricity market, and the government's concerns that solar and wind will not be able to reliably and affordably fill the gaps as coal plants retire, starting with Liddell in 2023.
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Yesterday morning, Mr Taylor and Senator Hughes toured a pilot "carbonation" plant at Shortland, which is developing methods to turn carbon dioxide gas into magnesium carbonate - thereby fixing or "sequestering" the carbon into a solid form that can be then used industrially, in cement and other construction processes.
Speaking at the Mineral Carbonation International (MCi) plant at the University of Newcastle's Newcastle Institute for Energy and Resources (NIER), Mr Taylor formally launched a $50 million Carbon Capture, Use and Storage (CCUS) fund, and encouraged firms such as MCi to apply for grants.
"As a government were focused on technology not taxation when it comes to reducing CO2 emissions," Mr Taylor said.
"Decarbonisation doesn't need to destroy industry, it can support the creation of productive technologies, and here in the Hunter."
Technology not taxation . . .Energy and Emissions Reduction Minister Angus Taylor on the government's carbon-reduction approach
On the Snowy Hydro plan, Mr Taylor answered critics of gas investment by citing chief scientist Alan Finkel, who said last year that gas would play a "critical role" for decades to come as the grid transitioned from coal to renewables.
Mr Taylor said he hoped that either AGL's Tomago gas plant or Energy Australia's expansion of its Tallawarra plant would go ahead, but if industry did not commit to another 1000 megawatts of "dispatchable" or "on demand" capacity, then the government would step in.
Mr Broad, a Novocastrian who ran Hunter Water and Sydney Water before moving to the power sector, said Snowy Hydro had been working on expanding its gas-fired generation before the impending closure of Liddell focused minds on the state of the power market.
Mr Broad said the ultimate investment decision lay with Snowy Hydro's owner, the government, but he was adamant the project stacked up financially and would help government aims of lower power prices, reliable electricity supply and lower emissions, while making a profit.
Mr Broad said that if the government gave the go-ahead in April, the Kurri plant could be operational by mid-2023. It could generate up to 750 megawatts of power through two "heavy duty, open-cycle" gas turbines that would be "hydrogen capable" if global research on commercialising hydrogen as a fuel bore fruit.
He said Liddell generated 13 per cent of NSW power.
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