More than half a billion in taxpayer money will go towards building a gas-fired power station in NSW, despite a landmark report calling for an end to investments in fossil fuels.
The Morrison government argues the $600 million project will be necessary to keep power prices down when AGL's Liddell coal-fired power station closes over the next few years.
Government-owned Snowy Hydro will build the 660 megawatt open cycle gas turbine at Kurri Kurri in the NSW Hunter Valley, on the site of an old aluminium smelter
Prime Minister Scott Morrison said the Kurri Kurri station, coupled with EnergyAustralia's Tallawarra gas plant in Wollongong, would fill the gap left by Liddell.
Mr Morrison insists gas is important to help backup renewable power sources.
"Battery development is still at a very early stage," he told reporters in Melbourne on Wednesday.
But power company AGL is building a grid-scale battery in Adelaide, the fifth either operating or under development in South Australia.
The Victorian government is building a huge battery to back up its power grid, which will be the biggest in the southern hemisphere.
The Morrison government's announcement comes just days before a state by-election in the Hunter, but Energy Minister Angus Taylor insists the timing is irrelevant.
Mr Taylor has defended the market intervention.
"There are times when governments need to step in to make markets work," he told ABC radio.
Labor energy spokesman Chris Bowen said the government's decision looked cynical, pointing to industry experts who have questioned whether such an amount of gas is needed.
The government insists Kurri Kurri will create many more jobs than figures outlined in the project's environmental impact statement reveal.
That document says some 250 jobs will be created during construction, but there will be just 10 ongoing roles.
The power station may be powered by diesel fuel for the first six months because infrastructure connecting it to gas might not be ready for it in 2023.
Snowy Hydro says the plant will eventually be able to use hydrogen.
The project announcement comes as the
International Energy Agency said reaching zero net emission by 2050 would require a massive transformation of the global energy sector.
New investment in fossil fuel projects would have to stop immediately, it said.
Two-thirds of the world's energy would be based on wind, solar, bioenergy, geothermal and hydropower by 2050, while cars would almost all be fuelled by electricity and air travel with biofuels and synthetic fuels.
Bruce Robertson from the Institute for Energy Economics and Financial Analysis said the report signalled the end of gas.
"The report finds that no new gas fields are needed and neither are many of the liquefied natural gas liquefaction facilities currently under construction or in planning," he said.
Climate Council research head Simon Bradshaw said the report added to a growing body of evidence that Australia's gas-fired recovery was "unnecessary and dangerous".
"Australia has everything we need to be a global renewable energy superpower and create good jobs in new clean energy industries," he said.