Op-ed: If coal won’t quit, it should pay

Jackie Trad - Clean Energy Council CEO

Originally published in The Australian Financial Review.

If Australia wants to keep the lights on, announced coal retirement dates must mean something. That is why the Clean Energy Council has used the current Safeguard Mechanism review to recommend a new approach to the federal government. The mechanism, legislated under the Abbott government, gives Australia a practical way to put that accountability into the system.

More than 200 of Australia’s biggest industrial facilities already have emissions limits that tighten over time. If they go over those limits, they have to pay for the extra emissions. Coal-fired power stations are different. They share one limit across the entire electricity sector, which means an individual plant can stay open longer without facing the same consequences.

If a coal power station says it will close in 2032, it should have to pay for the pollution it produces if it stays open beyond that date. Changing its closure date should come at a cost.

It builds in a financial imperative for coal-fired generators to close when they say they will, while giving investors confidence that the market they are investing into will not be upended by another last-minute extension. It also stops governments having this wicked problem where they risk having to underwrite more new generation simply to guarantee enough capacity is there when it is needed, while also paying to keep old coal stations running because the replacement has not arrived.

Policy decisions like this must be made with Australia’s energy security in mind. Coal becomes less reliable as it ages, with outage rates rising sharply after plants pass their 30-year engineering design life and again beyond 50 years. The data shows that at the half-century mark, they will fail to produce electricity for a quarter of the year.

Building the replacement renewables will require a lot of capital, but that does not mean expensive electricity. The International Energy Agency found Australian wholesale electricity prices fell in 2025 and were around 40 per cent lower than in the European Union thanks to our huge influx of solar and batteries.

The incredible build-out of solar, wind and batteries is a shared national project, and a triumphant one at that. It is much like when Australia built new power stations, transmission networks and the Snowy Mountains Scheme after World War II to support a growing population that was determined to build its economic capacity.

Australia is again entering a period of enormous growth in electricity demand, and the task is much the same: build the energy system the country will need before the one we inherited reaches the end of its life.

Companies are entitled to change their plans when circumstances change. But when the rest of the electricity system and our national prosperity are being planned and financed around a committed closure date, changing that date cannot be consequence-free.