Climate change is second only to the Labor Party staying in power

Criticism or not, Chris Minns always intended to provide Eraring with a lifeline. Just weeks before taking office, he made it clear that NSW Labor was on board to step in to keep Australia’s largest coal-fired power station running. It suits him, therefore, that a review commissioned by his government came to precisely this conclusion.

“I will not negotiate with the opposition private company, but I will not accept it either [buying it] off the table,” Minns said on radio station 2GB in early March when asked if Labor would buy Origin Energy’s Lake Macquarie power plant.

Credit: Bloomberg

On Tuesday, the government released its much-anticipated energy check. Not surprisingly, one of the recommendations in the report was that NSW should “work with” Origin to extend the lifespan of Eraring beyond its proposed August 2025 closure date. The report did not recommend a takeover, but made it clear that without earnings, NSW faces reliability risks and price spikes.

The inquiry was conducted by Cameron O’Reilly, the former head of the now defunct Energy Retailers Association, who was also a former Labor Party employee and senior officer in the energy department. O’Reilly did not publicly comment on Tuesday when his report was released, but stressed in an interview with ABC Radio National Wednesday morning that the terms of reference asked him to look for reliability and affordability. The environmental impact of extending Eraring’s life was not within his remit. The key elements of his job were stopping the lights and dealing with the rising cost of living.

The respected left-wing Labor elder Penny Sharpe, who holds the dual role of Energy and Environment Secretary, has not put a price on how much a bailout could cost taxpayers or how long Eraring would need to stay open to plug the obvious gaps in the electricity grid, while renewable energies are catching up. But supporting the expansion to a coal-fired power plant doesn’t seem to come naturally to Sharpe.

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Despite her protestations that she doesn’t want the power station to stay open a day longer than necessary, Sharpe has sent a clear message to Origin (and potential new owners, Canadian wealth giant Brookfield) that NSW is ready to keep charcoal for so long burn takes time. O’Reilly’s report suggests this could take some time.

“Some have argued that Eraring’s potential closure in 2025 would require state-by-state acceleration [renewables] infrastructure construction. In view of the diverse headwinds, the chances of success are slim. The cost to consumers could be high. Long-term social license in the REZs [renewable energy zones] may be at risk,” the report said.

Sharpe, the consummate team player, wants to reiterate the urgent need to move away from coal energy, but also maintains Minns’ narrative that the primary focus must be on keeping the lights going. No one argues against the need for energy reliability, but Minns has set himself on a collision course with environmental groups, the Greens and even his party’s left, while working to keep the right flank happy.

Justin Scaccy

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