AGL proposes building and operating a $400 million 250 megawatt gas-fired power station at Tomago, just outside of Newcastle in New South Wales.

Tomago is an industrial area that for the most part services the coal mining industry yet AGL is not prepared to utilise the abundant supplies of coal in the nearby area for its new power station.   

The Newcastle Power Station is intended to be operated as a peaking plant; however, AGL reckons it will be designed for continuous operation to maximise operational flexibility.

It said the NPS would only be operated continuously if requisite circumstances arose in the National Energy Market.

AGL seems to have buckled under pressure from activists to not generate power using coal and opt for gas instead.

This is strange, considering gas is also a fossil fuel and it actually is in short supply in NSW because environmentalists succeeded in stopping most coal seam gas developments in the state.   

One of the few remaining possible coal seam gas projects in NSW is Santos' planned Narrabri project in the state's northwest, which would sink up to 850 wells through the water resources of the Great Artesian Basin.

Environmentalists, including the vocal Lock the Gate Alliance, have targeted this project and deemed it bad for the nearby farmers.

So gas is not really a solution to climate change in NSW yet it is being touted as a being a better alternative to coal.

A more inclusive energy policy that could combine the benefits of both coal and gas is needed.

Fortunately, the National Hydrogen Strategy released by the COAG Energy Council last week offers a glimmer of hope.

The plan has highlighted the vital role of coal with carbon capture, utilisation and storage in ensuring a central role for Australia in the growing global clean hydrogen economy.

Coal21 CEO Mark McCallum said technology already in use around the world could support the use of Australia's significant coal resources to produce clean and affordable hydrogen at scale after gasification.

Current cost estimates indicate that using coal with the CO2 removed via carbon capture produced hydrogen up to 13 times more cheaply than hydrogen produced by curtailed renewable energy sources, and up to three times cheaper than grid-electricity.

Hogsback hopes innovative power generation solutions such as hydrogen will continue to harness Australia's abundant supplies of coal.