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.
“I’m basically saying that we need to transition in an affordable way with reliable energy supply,” he told ABC radio on Wednesday.
“And if we don’t tap the gas reserves of this country, shame on us.
“If renewables could give us 100 per cent reliable energy today, I’d be saying that, but you can’t get 100 per cent renewables at the right price on a reliable basis.”
Tech billionaire Mike Cannon-Brookes, a leading advocate for renewables, said there were many other solutions to fill the looming gap in the electricity grid.
He has spoken to fellow green energy guru Elon Musk about other options.
Mr 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.
She said the sector was struggling to make investment decisions in an environment of ongoing policy uncertainty.
“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,” Ms Tanna told the Australian Financial Review.
“There are no material reliability concerns that would warrant this kind of interventionist approach, and there are already mechanisms in place to address any shortfall identified.”