The Morrison government is staring down calls from former prime minister Malcolm Turnbull to revive a key policy to reduce greenhouse gas emissions in another flashpoint over its shift in direction since the August leadership spill.
The government insists the National Energy Guarantee will not be revived despite a public call from Mr Turnbull to rethink its approach, amid warnings its stance will increase household prices.
Labor used the dispute to challenge Scott Morrison on the policy in Parliament, prompting the Prime Minister to warn of a hit to the economy from deeper cuts to greenhouse gas emissions under a Labor government.
Mr Turnbull is blamed by some for abandoning the policy in his final weeks as leader, but he called yesterday for it to be restored.
"My concern is that in the absence of the National Energy Guarantee people will say that we'll end up with both higher emissions and higher electricity prices," Mr Turnbull said.
"It’s no longer a situation where more renewables mean higher prices.
"Renewable energy backed by storage is the cheaper form of new electricity generation – that's clear. But what we’ve got to do is have the political consensus and degree of certainty, backed by industry and business, to enable that to happen."
Mr Turnbull fuelled the debate over energy policy with a major speech on Tuesday, one day after he used a radio interview to criticise Mr Morrison for intervening in a Liberal Party preselection to save backbencher Craig Kelly, a critic of the NEG and a supporter of the leadership challenge launched by Home Affairs Minister Peter Dutton.
The Turnbull government developed the NEG in the hope it could mandate benchmarks for electricity reliability and emission reductions, but it changed the plan to avoid a humiliation in Parliament if and when conservative critics crossed the floor to vote against the scheme.
Mr Turnbull, Mr Morrison and Mr Frydenberg announced on Monday, August 20, that they would not proceed with legislation to cut emissions as part of the NEG on the grounds they could not be sure of the numbers in Parliament.
"Our energy policy remains the same but we’re not going to present a bill into the House of Representatives until we believe it will be carried," Mr Turnbull said on that day.
Mr Morrison secured the leadership four days later and declared "the NEG is dead" on September 8.
Mr Turnbull said the politics within the respective party rooms made it "very, very hard" to reach a resolution on energy.
"I have to say I gave this my best shot with the National Energy Guarantee, working with Josh and with Scott and the cabinet.
"We got support from the states, support from obviously the cabinet but support from the party room on three occasions.
"But in a House of Representatives where you had a majority of one, which is what we had at the time, obviously a small minority can effect enormous leverage. And that is a candid explanation of the challenge."
In an important shift on energy policy, Treasurer Josh Frydenberg and Energy Minister Angus Taylor added a check on their policy to force energy companies to divest certain assets.
Rather than giving the treasurer the power to order a divestment, the ministers said the power would be exercised by the Federal Court after a referral from the treasurer, which would be based on advice from the Australian Competition and Consumer Commission.
Former foreign affairs minister Julie Bishop and other Liberal MPs warned against the divestiture in the Coalition party room meeting on Tuesday morning.
Mr Frydenberg acknowledged he wanted the NEG to go ahead earlier but he defended the government’s current policy.
"I’ve said publicly in the past no one was more disappointed than myself that the National Energy Guarantee didn’t proceed," he said.
Mr Frydenberg warned of a 45 per cent cut to emissions under Labor compared to the government's 26 per cent by 2030.
"They have a recklessly high 45 per cent emissions reduction target. They haven't produced any modelling to say what the costs on the economy will be, but the Business Council of Australia has said that it will be an economy-wrecking target," Mr Frydenberg said.
"So don't let Labor off the hook here. They are the alternative government of Australia. Bill Shorten is the alternative prime minister of Australia.
"He has to explain to the Australian people what the true cost of his recklessly high, virtue-signalling emissions reduction target."
Labor energy spokesman Mark Butler said the NEG was worth pursuing but only if it was endorsed by both major parties.
"The only value lies in bipartisanship," he told Sky News.