The Morrison government wants coal and gas power plants across the country to keep running unless there is a compelling plan for like-for-like replacement.
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This puts it at odds with its own top energy adviser, who says extending the life of coal-fired power stations is ill-advised.
Energy Minister Angus Taylor says the industry has to make the most of what it has and not get overly excited about "fashionable acronyms" - naming the ill-fated CET, NEG, CPRS and ETS policies.
"In an ideal world, policymakers should design the market to focus on the needs of customers, and then let the market rip without any further changes," he told industry experts in Sydney on Wednesday.
The energy sector has been crying out for the past decade for a stable government policy basis that would allow it to invest in new power generation and replace ageing, polluting plants.
Mr Taylor maintained the coalition's commitment to carbon-heavy power generation and described Labor's emission reduction targets as "policy insanity".
Existing on-demand generation - power that is able to be sent into the grid when demand peaks, mostly coal and gas - couldn't be allowed to shut down unless there was a compelling plan to fill the gap, he said.
"We need either like-for-like replacement, in terms of reliability and affordability, or life extension," he told the National Energy Summit.
"Some vague hope of transmission, intermittent generation and demand management filling the gap is not good enough.
"For too long this industry has suffered from the triumph of hope over reality. Not this time."
The address puts him at odds with the government's top energy policy adviser, Kerry Schott, who says extending the life of coal-fired power stations is ill-advised.
"This discourages firms from giving adequate notice of closure, and it discourages new investment in firm and flexible plants," she writes in the Australian Financial Review.
Ms Schott, who heads the Energy Security Board, says it will be more difficult for coal plants to stay commercially viable as wind and solar energy projects surge forward.
She pointed to large-scale batteries, like one in South Australia, which could help maintain reliability.
Mr Taylor dismissed new technology zero-emissions storage options - such as batteries and hydrogen - as still immature outside of niche applications.
Ms Schott also suggested the government help transition coal-fired generator workers, and workers of closing mines, to new employment.
"Australia has managed major industry changes well previously, and it is time to brush off these policy manuals again," she said.
Australian Associated Press
