The funding scheme is designed to underwrite new energy generation projects, using taxpayer money to support new power plants, which controversially includes new coal projects. 

 

Federal energy minister Angus Taylor called for expressions of interest in the scheme in December, allowing industry to pitch its proposals for just two weeks before the registration deadline closed. 

 

During the Registration of Interest period, 66 submissions were received consisting of what the government called a "balanced mix of sources of generation" largely coal, gas and pumped hydro. 

 

Under the Morrison government's plans, industry would receive hundreds of millions, if not billions of dollars' worth of funding to develop and construct new power plants, without the parliament authorising the spending.  

 

However advice provided by barristers, senior counsel Fiona McLeod, and litigation specialist Lindy Barret, found that Taylor does not have constitutional authority over electricity, nor does the minister hold authority to fund new energy generation projects as proposed under the scheme. 

 

"The government requires new or amended legislation to proceed and, without a legislative basis, the program is open to a High Court challenge," the advice said. 

 

The only existing avenue for the appropriation of funds without parliament's blessing, is via the Clean Energy Finance Corp which restricts energy funding to renewable energy projects or low-emissions technologies excluding coal and gas. 

 

The Labor opposition has continually opposed the government underwriting scheme and last week shadow treasurer Chris Bowen said if the party wins government at the next election, it would not honour the contracts awarded under Taylor. 

 

Crossbencher Kerryn Phelps has also recently said she would not vote in favour of new coal projects. 

 

"This is another blow to the Federal Government, that their signature program to fund electricity is destined for the shelf - along with the rest of the Government's energy policies," Australian Institute energy program director Richie Merzian said. 

 

The government is currently considering each of the 66 projects proposed but has not announced which will receive financial support. 

 

Prime Minister Scott Morrison and energy minister Taylor have been at pains to keep details of the proposed projects hidden from public scrutiny, however power giant Trevor St Baker has said it proposed the development of two new coal plants at a cost of A$6 billion. 

 

There are no figures on the number of gas-fired power plants tenders. 

 

The legal advice is just the latest energy headache for the government, which abandoned its ‘Big Stick' energy policy last week, pulling the highly-criticised divestment bill from a vote at the very last minute and instead opting to take the bloodied remnants of the policy to the next election.  

 

Labor and cross-benchers have been critical of the government's divestment bill since it was announced, so had the bill gone before the parliament it is entirely likely that it would have been voted down.