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Clean Energy Target 'not an easy nut to crack', concedes Malcolm Turnbull

Clean Energy Target 'not an easy nut to crack', concedes Malcolm Turnbull

A Clean Energy Target will fail unless it is designed to provide stable baseload power during the transition to lower-emissions sources, Prime Minister Malcolm Turnbull says.

As industry begged politicians to end their "child-like squabbling" and just settle on a CET, the Prime Minister effectively confirmed the CET as modelled by Chief Scientist Alan Finkel was dead as a policy option and that the eventual policy would have a significant coal component.

Mr Turnbull told Parliament trying to come up with a policy that ensured reliability while meeting environmental demands was "not an easy nut to crack".

"A Clean Energy Target depends for its operation entirely on its design, but if it is to be effective in delivering not just a reduction in emissions but affordability and reliability, it has to have built into it measures which support ... baseload power, which support affordability and reliability," he said.

Despite Mr Turnbull's initial enthusiasm for the CET as modelled by Dr Finkel, the government never pledged to adopt it. That model counted gas and renewables as clean energy sources, but not so-called clean coal.

A CET would mandate a certain percentage of power generated each year be fuelled by a designated clean source. Dr Finkel's model would result in coal contributing to 53 per cent of generation by 2030 and renewables 42 per cent.

Without change coal, which currently generates 66 per cent of energy, would generate 57 per cent by 2030 and renewables 35 per cent.

Elements of the Liberal backbench, as well as the Nationals, have long made it clear than any policy that does not embrace coal will cause a revolt and people to cross the floor.

One of the dissenters, former prime minister Tony Abbott, will address a climate change denial forum in London next month.

It is no longer certain that the policy will be called a clean energy target.

Nationals leader Barnaby Joyce confirmed on Wednesday that the eventual policy had to have a coal component.

Labor has long been prepared to consider a CET, which made an allowance for coal, in the belief the market would never build a coal-fired power station anyway and the point would be moot.

But an Opposition source said if the government pushed the policy too far, it risked destroying the in-principle support Labor had pledged.

"It looks like they'd rather have a fight than a solution," he said.

Australian Industry Group chief executive Innes Willox said the "child-like squabbling" among MPs needed to end.

"It's not unanimous, but there is very broad support around the concept of a clean energy target," he said.

"For most people they see the Finkel report as the way out of a dark tunnel – it's not the perfect solution ... but it gives business something to work."

Energy Minister Josh Frydenberg and Mr Joyce have both claimed in recent days that the energy market regulator report released last week caused a rethink.

"We are considering the CET recommendation put forward by Dr Finkel in the context of all the other advice we have recently received from AEMO...and our priorities, which are about the affordability and the reliability of the system," he said.

The AEMO report warned the closure of the Liddell power station in 2022 would cause a 1000 megawatt gap in baseload power in NSW an Victoria.

But it also warned the biggest threat was having no policy in place.

Australian Financial Review

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