Energy suppliers have criticised the prime minister’s threat to intervene in the market by building a gas-fired power station and investing in new pipelines.
Gas and energy providers say Scott Morrison’s plan is overkill and will distort the market.
Mr Morrison has given power giants seven months to present a plan on replacing the energy gap that will be left by the closure of the Liddell coal-fired station.
Otherwise, the federal government will step in and build a gas plant of its own.
Andrew Liveris, who chairs a coronavirus manufacturing task force, had Mr Morrison’s ear when the government put together its gas plan.
The prime minister was told: “If you want to change manufacturing in this country, you’ve got to deal with gas.”
Mr Liveris, who sits on the board of a Saudi oil and gas company, said the fossil fuel would be an important resource in the shift from coal to renewables.
He says the government’s gas push is focused on boosting Australia’s manufacturing.
“We are importing all the products we could be making locally here that create jobs,” Mr Liveris told the National Press Club on Wednesday.
Mr Liveris said companies would look to expand in Australia if the price of gas reduced to $4 per gigajoule, but questions have been raised over whether that price is achievable without government help.
In documents received by Greenpeace through Freedom of Information, Queensland Premier Annastacia Palaszczuk was advised in the lead up to a meeting with Mr Liveris the $4 price was an “unrealistic prediction”.
The Department of Natural Resources, Mines and Energy advised the premier the price couldn’t be achieved without “significant government subsidies and implications of supporting a domestic reservation policy”.
A recent competition watchdog report found there was no shortfall in gas supply but the government wants to increase supply in order to force the price down, luring companies with the promise of low bills.
Tech billionaire Mike Cannon-Brookes said the prime minister’s plan would backfire.
“This intervention will drive up the energy prices for consumers and businesses, not drive them down,” he said.
It will lock in that gas plant for another 40 years. This is not the cheapest long-term plan for our grid at all.
“All of the experts, all of the engineers that write those reports have said that. He needs to listen to the experts.”
EnergyAustralia managing director Catherine Tanna said two of her company’s planned projects would fill the gap left by Liddell’s closure.
“Governments should enable the future energy system – they don’t have to build it. Smart use of taxpayers’ money is crucial as we get Australia’s economy back on track,” she told the Australian Financial Review.