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PM is chuffed about his rooftop PV and storage, and so he should be. Installations like that will be of greater value to the grid than Liddell, which is a similar age and condition to the Hazelwood generator Turnbull admitted was "very old" and no longer viable.

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It is the worst of all worlds: a market-based system but with extensive and unpredictable intervention by governments that tend to undermine investor confidence

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Environmentalists campaign against the proposed wind back of protection within Australia's marine reserves.

The International Space Station and an advanced weather satellite capture the deadly hurricane over Earth.

For a long time, Australian governments have believed that the private sector should run the electricity sector. And successive governments have used market instruments to incentivise reducing emissions, by supporting renewables, discouraging coal use, or both.

Now things seem inside out: uncertainty about energy policy mechanisms is pervasive, and the federal government is attempting to broker a deal for the ageing Liddell coal plant to stay open past its planned decommissioning date. It’s possible the plan will require government payments – amounting to a carbon subsidy.

Read more: AGL rejects Turnbull call to keep operating Liddell coal-fired power station

Fear of supply shortages and an appetite for coal have combined with an inability to resolve the political side of energy and climate policy.

Power companies see coal as a technology of the past, but the government seems unready to accept that wind and solar technologies (already the cheapest option for new capacity in Australia) are the future of Australia’s power.

Read more: The day Australia was put on blackout alert

The latest suggestion amounts to deferring serious investment in renewables for a while, fixing up some of the old coal plants up so they can run a few more years, and buying time in the hope of keeping power prices down. Chief Scientist Alan Finkel has backed the idea, at least in principle.

The cost of delaying the inevitable

Commissioned in 1972, the Liddell power plant is the oldest of Australia’s large coal-fired stations (after the closure of the Hazelwood station). The New South Wales government sold it to AGL in 2014, at an effective price of zero dollars.

AGL announced some time ago that it will close the plant in 2022 and has considerable financial incentive to do so. This week AGL reiterated this. The latest suggestion is that Delta Electricity might buy and continue to operate Liddell.

What might be the benefits and costs of keeping Liddell running for, say, another decade? We do not know the plant-level technical and economic parameters, but let’s look at the principles and rough magnitudes.

Keeping the plant running longer will require refurbishments, defer the investment costs in renewables, and result in additional emissions, both in carbon dioxide and local air pollutants.

Refurbishment is costly. Finkel put refurbishment costs at A$500-600 million for a 10-year extension. Such refurbishment might achieve an increase in efficiency – as GE, a maker of power station equipment, recently argued – but perhaps not by much for a very old plant like Liddell.

Read more: Coal and the Coalition: the policy knot that still won’t untie

And refurbishment might not work so well, as the experience with the Muja plant in Western Australia shows: A$300 million was spent on refurbishment that ultimately failed. Spending big money on outdated equipment is not a particularly attractive option for energy companies, as AGL’s CEO recently pointed out.

Liddell’s power output during 2015-16 was around 8 terawatt hours – about 10% of present NSW power supply (it was more in 2016-17, and less in previous years). It might well be lower as the plant ages.

Ironically, the reduction in the Renewable Energy Target, from 41 to 33 terawatt hours per year, almost exactly matches Liddell’s present power output. With the original RET target, new renewables would have covered Liddell’s output by 2020.

Liddell emitted around 7.5 million tonnes of carbon dioxide per year in 2015-2016. With the assumed reduction in output and some improvement in CO₂ emissions intensity, the carbon dioxide output might be in the order of 5-6 million tonnes per year, or 50-60 million tonnes over ten years.

If the government were to pay for the refurbishment, as has been suggested, this would equate to subsidising CO₂ emissions at a rate of perhaps $10 per tonne, compared to the alternative of replacing Liddell with renewable power.

Read more: FactCheck Q&A: is coal still cheaper than renewables as an energy source?

At the same time, the government is paying for projects to reduce emissions, at average prices of around $12 per tonne of carbon dioxide, under the Emissions Reduction Fund. The contradiction is self-evident. Furthermore, keeping more coal plants operational deters commercial investment in any kind of new plants.

Of course this needs to be seen in the context of supply security, any subsidies that might be paid in future to renewable energy generators, and the possibility that a Clean Energy Target will determine overall emissions from electricity production irrespective of whether Liddell operates or not. It’s complicated. But the fundamental point is clear: paying for an old coal plant to operate for longer means spending money to lock things in, and delay the needed transition to clean power.

A possible compromise might be to mothball the Liddell plant, to use if supply shortages loom, for example, on hot summer days. But such a “reserve” model could mean very high costs per unit of electricity produced.

It is not clear that it would be cheaper than a combination of energy storage and flexible demand-side responses. And it may be unreliable, especially as the plant ages further. During the NSW heatwave last summer Liddell was not able to run full tilt because of technical problems.

A market model to pay for reserve capacity would surely do better than government direction.

Australia’s energy companies have been calling for a mechanism to support new clean investment, such as the Clean Energy Target. And many would no doubt be content to simply see a broad-based, long-term carbon price, which remains the best economic option. If the policy framework was stable, private companies would go ahead with required investment in new capacity.

Read more: Finkel’s Clean Energy Target plan ‘better than nothing’: economists poll

Meanwhile, federal and state governments are intervening ad-hoc in the market – making a deal to keep an old plant open here, building and owning new equipment there. It is the worst of all worlds: a market-based system but with extensive and unpredictable intervention by governments that tend to undermine investor confidence.

Frank Jotzo is in charge of research funded by different bodies including the Australian government. None of the research funding constitutes a conflict of interest for this article.

Zeba Anjum does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Australia’s overall greenhouse gas emissions last financial year were the highest since 2011, despite the closure of the Hazelwood coal-fired power plant

Emissions from the electricity sector in the three months to June dropped by the biggest amount on record, as the effect of the Hazelwood coal-fired power station closure is seen for the first time in quarterly projections produced exclusively for the Guardian.

But even that drop wasn’t enough to stop Australia’s overall greenhouse gas emissions from continuing to rise. Emissions from almost every other sector – industrial energy, transport, industrial heat and agriculture – all rose. They are the highest levels seen since before the carbon tax was repealed, according to projections by consultants at Ndevr Environmental.

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Joe Corré accuses multinational petrochemical company of ‘bully boy tactics’ to prevent legitimate protest against its fracking activities in the UK

An environmental campaigner is challenging the legality of a wide-ranging injunction obtained against protesters by a multinational firm that he criticised as being “draconian, anti-democratic and oppressive”.

Joe Corré accused petrochemical giant Ineos of using “disgusting bully boy tactics” against campaigners who want to protest against the firm’s fracking operations.

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Northumberland coastline famed for Arctic terns and Atlantic puffins granted greater protection by Natural England

A stretch of coastline which is one of the most important sites in the UK for seabirds such as Arctic terns and Atlantic puffins has been given greater protection.

The newly-designated Northumberland marine special protected area (SPA) stretches 12 miles from the coast into the North Sea, covering an area larger than 120,000 football pitches, government conservation body Natural England said.

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Lithium-ion batteries that are resistant to exploding or igniting have been developed by scientists in the US.

It came without warning, and without equivalent. Now a flash drought is fueling fires and hurting the lives of those who work the land

When Rick Kirn planted his 1,000 acres of spring wheat in May, there were no signs of a weather calamity on the horizon. Three months later, when he should have been harvesting and getting ready to sell his wheat, Kirn was staring out across vast cracked, gray, empty fields dotted with weeds and little patches of stunted wheat.

“It’s a total loss for me,” said Kirn, who operates a small family wheat farm on the Fort Peck Reservation, an area of north-eastern Montana that lies right in the heart of the extreme climactic episode. “There’s nothing to harvest.”

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Government data reveals Tesco deducted administration costs from plastic bag sales, unlike other major supermarkets, angering senior MPs

Millions of pounds in administration costs were deducted from the charitable donations made by Tesco using funds generated from the plastic bag tax, government data has revealed. No other major supermarket made any such deductions, leading senior MPs to urge Tesco to follow their lead.

The 5p charge for plastic bags was introduced in England in October 2015 and has led to an 83% reduction in their use, equivalent to 9bn fewer bags. It is also credited with a drop by nearly half in plastic bags found littering beaches.

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How much does climate change have to do with the recent hurricanes in North America and the Caribbean?

What would the world be like if we weren’t dependent on oil? Photographer Richard Allenby-Pratt imagines a deserted Dubai in which the wealthy have fled, leaving giraffes and zebras to wander the alien landscapes

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As AEMO works to shore up Australia's grid, fossil fuel proponents are barracking for "a giant blackout on a super hot day this coming summer.”

London-based designer Ryan Yasin used his background in aeronautical engineering to develop sustainable clothing to fit babies through to toddlers

An origami-inspired range of children’s clothing made from a durable pleated fabric that expands to fit growing babies and toddlers has won its 24-year-old designer a prestigious James Dyson award.

Ryan Yasin devised the material using scientific principles he studied for his aeronautical engineering degree, after noting the lack of sustainability in the clothing industry and being frustrated by how quickly his baby niece and nephew outgrew garments he bought for them.

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Retailer Flow Power signs PPA with Ararat wind farm to pass on cheap renewable energy to business customers. It aims for 1,000MW of such contracts.