The head of the federal agency tasked with financing clean energy projects has told a Senate estimates hearing that a new coal-fired power station would not be “financeable” unless the government indemnified it against future carbon risk.
Clean Energy Finance Corporation chief executive Oliver Yates made the comments on Monday in response to questions from New South Wales Senator Sam Dastyari about what it would take for a coal-fired power station to be financially viable.
“I do not think one would be financeable without the government providing an indemnity as to future carbon risk,” Mr Yates said.
“It would be subject to significant uncertainty in relation to its cost structure because we do not know what the future price of carbon would be.
“Therefore, in my view, it would be very challenged as a financeable proposition.”
When Senator Dastyari asked if he was referring to the ability to secure finance, Mr Yates said “correct”.
“No bank that I am aware of would be very interested in lending to an organisation which was going to be unviable in the future, so therefore they assess the viability of that project,” he said.
The corporation returned to the spotlight last month when Energy Minister Josh Frydenberg flagged issuing a ministerial directive for it to consider investing in ‘clean coal’.
During the hearing, Senator Dastyari asked if ‘ultra supercritical’ coal technology, which is cleaner than traditional methods of generating electricity from coal, would meet the corporation’s guidelines.
Projects funded by the corporation are meant to produce 50 per cent less carbon dioxide than the national electricity market average.
The 2016 average was 820 grams of CO2 per kilowatt/hour.
“If I were to go from the World Coal Association fact sheet for an ultracritical or supercritical, you are lucky to get to 670 or 700 (grams of CO2 per kilowatt/hour),” Mr Yates said.
“It is probably only 70 to 75 per cent of (the average).”