News Service from House Harris

Fed: Coal gas to get green credits under "Mad Hatter" scheme

CANBERRA, Aug 17 AAP - Electricity bills are likely to rise to cover extra payments to coal mining companies because their product is "renewable".

The federal government has decided to grant the payments to companies who trap methane, a byproduct of coal mining, and burn it to generate electricity.

The decision places coal waste gas on a par with clean energy sources like wind and solar power.

Greenpeace said it was strange that coal was no longer a fossil fuel.

"This would make the mad hatter proud," said Greenpeace's Jeremy Tager.

Australian Greens Senator Christine Milne said the Renewable Energy Target (RET) scheme should not be used to increase the profits of the coal sector.

"Coal seam methane is not a renewable energy source, it is a waste stream from coal mining," she said.

The government is trying to pass a scheme through parliament under which 20 per cent of electricity will come from renewable sources by 2020.

Under the scheme, which is separate to emissions trading, companies who generate electricity from sources like wind and solar will get credits, which translate into money.

Electricity companies will have to buy a certain amount of the credits. This will push up the price of electricity for customers.

The government amended its scheme on Monday to allow coal gas to get the credits. They changed the language of the bill so that it removes the word "renewable" from key paragraphs.

The amended bill passed the House of Representatives just before 10pm (AEST) and will go to the Senate on Tuesday.

Climate Change Minister Penny Wong conceded that coal gas was not renewable.

"Waste coal mine gas is not a renewable energy source and is not intended to contribute to the 20 per cent target for renewables in 2020," Senator Wong said.

She said the change was transitional and would allow coal gas projects, which had received support under a previous, NSW clean energy scheme, to stay solvent.

The coalition supported the change.

Independent MP Rob Oakeshott asked why coal was being treated as a renewable source when it was not.

"I ask the minister what on earth is going on," he said during the debate in the House.

The RET scheme has moved a step closer to reality with its passage through the House.

The government and opposition have been working on a deal to get the bill through parliament.

The government has given ground to the opposition on two factors - coal gas, and separating the RET from the emissions trading scheme (ETS), which was announced on the weekend.

The opposition and the Greens are expected to move more amendments to the scheme in the Senate.