The Albanese government has scrapped the Coalition’s electricity underwriting scheme. Critics had warned it could cost billions to prop up fossil fuels and would push up power prices.
On Monday, the industry minister, Ed Husic, repealed the instrument that enabled federal funding for energy generation projects, a pet scheme of the former Liberal energy minister Angus Taylor.
The program was widely panned for delays in implementation, exposing taxpayers to billions of dollars worth of liabilities by guaranteeing a minimum price for dispatchable power, and competing with new-generation investments including the Snowy Hydro 2.0 project.
Taylor and the then prime minister, Scott Morrison, announced the electricity underwriting scheme in December 2018, prompting criticism from the Australian Industry Group for its “inadequate approach to integrating emissions and energy policy”.
In March 2019, the Morrison government announced a shortlist of 12 projects including six pumped hydro plants, five gas generators and an upgrade to the Vales Point coal-fired power plant proposed by coal baron and LNP donor Trevor St Baker.
But three years later, industry and energy department officials conceded no projects had been funded through the scheme.
The explanatory memorandum for the repeal confirms that “no projects have been delivered and no underwriting commitments have been made”.
“The [underwriting] program has now been closed because it was unlikely to achieve its objectives,” it said.
In March 2022 Labor and the Greens voted in the Senate to disallow the program’s funding, but were blocked by the Coalition and One Nation.
Labor’s Louise Pratt said the program “lacks both transparency and integrity”.
“It has given disgraced minister Angus Taylor a blank cheque to fund pet projects without due process,” Pratt told the Senate.
“Industry and experts tell us that it will push up power prices and expose taxpayers to risky investments.”
Pratt noted the Business Council of Australia had warned that “ad hoc intervention in the energy market, such as underwriting generation investment … will only result in less investment in energy generation, less reliable energy and ultimately higher prices”.
“We support the role that gas will play in a transition in energy but support for any projects – gas or pumped hydro – needs to be considered through a proper process, not through a Coalition slush fund such as this one.”
The Australian National Audit Office is considering an audit of the electricity underwriting program after a referral from independent MP Zali Steggall.
