Following last week’s news of a cap on gas prices, the question of whether the Federal Government would follow suit with coal seems to have been answered.
Prime Minister Anthony Albanese has asked state and territory governments if they can recall their parliaments before the end of the year to implement a cap on coal prices, with the hopes to drive down spiralling energy costs.
The Federal Government’s long-signalled coal intervention always represented a more difficult proposition than capping the price of gas, given it would require the cooperation of state governments.
“There are limits to what the Commonwealth can do on its own,” Albanese said on the weekend.
Figures in the October federal budget indicated power prices would rise by 56 per cent and gas prices by 44 per cent over the next two years, driven primarily by Russia’s invasion of Ukraine. The price of coal has soared to more than $US400 a tonne in 2022.
Intervention in the coal market will no doubt be at the top of the agenda when the country’s leaders hold a national cabinet meeting on Wednesday.
The idea of a cap on coal prices represents a particular issue for coal-producing states Queensland and New South Wales, whose budgets would be significantly affected by any reduction in revenue.
The NSW Government has indicated it would consider the plan, but the state must be compensated for lost royalties, as rising energy costs are a national issue.
“The Prime Minister and the Federal Government (have) come out and said that they will provide solutions to reduce the cost of living across the country, and we support that,” NSW Premier Dominic Perrottet said last week.
“But, ultimately, it’s a matter for them to come up with those solutions.”
Queensland Premier Annastacia Palaszczuk has previously warned the Federal Government to “keep your hands off our generators”.
“Let me state categorically in this house again today that, in relation to our coal-fired power generators, we will not jeopardise the direct household benefits that we are able to give Queenslanders that ease cost-of-living pressure,” Palaszczuk said last week.
“We can do that because our assets are in public hands.”
Albanese told 5AA radio on Monday that he understands states’ concerns, but action must be taken on energy prices.
“Unless we act there will be a considerable increase in the cost of power for both individuals and businesses,” he told 5AA radio.
“What we aren’t sympathetic for, though, is the idea that we have these massive windfall gains, and somehow that is occurring at the same time as businesses and people are doing it tough.
“We’ll talk through cooperatively with the state and territory governments.”
On the industry side, NSW Minerals Council chief executive officer Stephen Galilee said a cap on coal prices would have limited effect on energy prices.
“Imposing price caps on coal sales in New South Wales will have little impact on energy prices but will cause significant damage to the sector, regional mining communities and the New South Wales economy,” he said.
“The New South Wales Government needs to carefully consider the full implications.”