Queensland’s New Government: An Energy Policy Pivot

Following the recent state election in Queensland, the Liberal National Party (LNP) under David Crisafulli has set a new course for the state’s energy policy, one that emphasises cost control, energy reliability, and the preservation of coal as a primary energy source. This shift departs from the previous Miles Government’s ambitious renewable targets, with the LNP expected to instead place a strategic focus on smaller hydro projects and coal continuity as the backbone of the state’s energy supply. The LNP’s approach holds both short-term appeal for affordability and stability, while creating potential friction with Australia’s broader renewable energy and emissions goals.

Abandoning Large-Scale Pumped Hydro: A Move Toward Smaller Projects

One of the most significant changes under the new Crisafulli Government is the decision to halt the Pioneer-Burdekin pumped hydro project, an estimated $14 billion initiative previously deemed critical by the outgong Labor Government for storing renewable energy and stabilising Queensland’s grid[i]. The project, which aimed to capture excess renewable energy from solar and wind sources, was presented as a component of Queensland’s shift toward sustainable energy solutions.[ii] Questions over the project were raised by environmental groups. local communities and energy experts, including on its technical and cost challenges. The LNP framed the project as an unsustainable financial commitment, with Crisafulli describing it as a “multi-billion-dollar fantasy” likely to impose higher energy costs on Queenslanders. Citing rising costs, the LNP has opted to focus on smaller-scale, more affordable hydro projects distributed throughout the state​.

By pivoting to these smaller hydro projects, the LNP hopes to spread investment risk and create scalable, lower-cost energy storage solutions. While this approach reduces upfront investment, it yet to be seen if smaller projects will deliver the same capacity. Smaller, distributed projects could also introduce additional grid-balancing complexities. It will be interesting to see whether this decision will see AEMO remodel the Optimal Development Path in the ISP to take into account the shift.

Moderating Ambitions for Renewable Energy Targets

The LNP has signalled its intent to scale back on previous renewable energy ambitions, particularly those championed by the outgoing Labor government, which included a very ambitious target of achieving 70 per cent renewable energy by 2032. While Crisafulli’s administration supports Australia’s net-zero goal by 2050, it remains sceptical of the feasibility of interim state-specific renewable targets. Crisafulli has stated that the LNP will prioritise a “balanced approach” in which renewables will play a role, but not as the primary driver of the energy mix. Instead, the party favours an energy portfolio that combines fossil fuel generation with selective renewable projects​.[iii]

This tempered approach aims to emphasise grid reliability and economic stability, especially in rural areas where coal and gas industries provide significant employment. The LNP is open to supporting hybrid projects that integrate renewables with traditional energy sources, which could help balance emissions reductions with economic considerations. However, energy analysts argue that by deprioritising renewables, the state may miss out on opportunities to invest in cost-competitive renewable technologies that have shown increasing scalability and affordability,[iv] and potentially delay progress toward broader national decarbonisation efforts.

Securing Baseload Power Through Coal and Gas

Queensland’s coal dependency remains central to the LNP’s energy policy, as Crisafulli has emphasised the role of coal and gas in ensuring stable, affordable baseload power.[v] For the LNP, coal plants are essential for maintaining energy reliability, particularly as renewables alone currently lack the capacity to support Queensland’s growing energy demands consistently. The LNP has committed to keeping these plants operational until viable alternatives can replace them, supporting the transition to a diversified energy mix without immediately sacrificing coal’s reliability​.[vi]

This reliance on coal, however, presents challenges on both state and federal levels. As Australia’s federal government pursues ambitious emissions targets and incentivises renewable energy development, Queensland’s coal-intensive grid may create tensions within Australia’s national policy landscape. Crisafulli’s Government could face pressure to adapt to cleaner energy sources or risk clashing with federal initiatives aimed at reducing emissions. This will be a balancing act between maintaining a coal-dependent economy and aligning with federal emissions targets.

The Nuclear Conversation Resurfaces

Although Crisafulli ruled out nuclear energy, including small modular reactors (SMRs), during the campaign, the incoming government may be more open to dialogue than previously thought. Key LNP figures, including David Janetzki and Amanda Stoker, have hinted at considering SMRs, aligning with growing advocacy for nuclear energy within the federal Coalition.[vii] Federal Opposition Leader Peter Dutton has positioned SMRs as a viable option for stabilising the grid and reducing emissions without compromising reliability, signalling a potential shift in Australia’s energy policy conversations​.  And federal Nationals leader David Littleproud has made clear he would expect all states, including Queensland, to fall into line should the Coalition win a nuclear mandate at the next federal election[viii].

While nuclear energy is currently illegal in Australia, the ongoing conversation could open doors for future legislative changes. For Queensland, SMRs could eventually offer a low-emission alternative for baseload power, especially if smaller-scale hydro and renewables prove insufficient for the state’s needs, although the technology is still to be proven commercially. However, adopting nuclear energy would entail significant regulatory, financial, and social hurdles, including overcoming any public resistance and concerns over safety. The LNP may contribute to the national dialogue on nuclear energy, especially if the Coalition returns to power at the federal level, but it remains cautious given the current regulatory landscape​.

Affordability

Affordability is also central to the LNP’s energy strategy, reflecting the administration’s commitment to reducing energy costs for consumers facing high electricity prices. It will need to balance this commitment with the need for ongoing investments and changes in the grid. 

[i] https://www.epw.qld.gov.au/__data/assets/pdf_file/0015/39201/qejp-2023-update.pdf

[ii] https://www.energycouncil.com.au/analysis/queensland-s-pumped-hydro-plans/

[iii] https://reneweconomy.com.au/queensland-lnp-to-ditch-state-renewable-targets-may-nix-wind-projects-altogether/

[iv] https://www.irena.org/News/pressreleases/2022/Jul/Renewable-Power-Remains-Cost-Competitive-amid-Fossil-Fuel-Crisis

[v] https://reneweconomy.com.au/queensland-oppositions-coal-keeper-plan-could-cost-taxpayers-420-million-a-year/

[vi] https://www.theguardian.com/australia-news/2024/oct/01/queensland-state-election-lnp-coal-power-extension-steven-miles-david-crisafulli

[vii] https://www.abc.net.au/news/2024-10-27/coalition-confident-new-queensland-government-will-back-nuclear/104523790

[viii] Coalition confident new Queensland government will back nuclear power