Scott Morrison's plan to expand the gas industry will initially take $53 million from the public purse but the prime minister cannot say what the final price tag will be.
The money earmarked in next Tuesday's federal budget will primarily go towards planning, on unlocking five gas basins and identifying priority infrastructure.
Mr Morrison has given power companies seven months to present a plan on replacing the energy gap that will be left by the closure of the Liddell coal-fired station in NSW.
Otherwise, the government will step in and build a gas plant of its own.
"The interventions that we may undertake are interventions that we would prefer to be done in the market sector," he told the National Press Club on Thursday.
Mr Morrison believes there are strong commercial reasons for expanding gas infrastructure.
"But at this point, the gaps in that and the costs of that are yet to be determined. And so we will consider that at the time," he said.
"I don't think these are easy assessments.
"There will be plenty of models that make all sorts of punts. Those models I think will struggle in the current environment to make a lot of sense."
The Australian Energy Market Operator is preparing for about 70 per cent of the electricity supply to come from renewable sources by 2030.
Over the next 20 years 63 per cent of the coal fleet will retire because of age.
They will be replaced with wind and solar and paired with a flexible source such as storage or gas, depending on the price.
But Mr Morrison says batteries cannot yet support heavy industry.
"Gas not only provides the energy support, but it provides the feed stock," he said.
"You can't make plastic with wind. You can't make plastic with solar. You make it with gas. You can make it with hydrogen as well."
Rather than investing in gas, Greenpeace is urging Mr Morrison to instead put money towards supporting infrastructure to boost supply of renewable energy.
"Spending on new gas infrastructure, when the industry is a key driver of climate change, is irresponsible and could see taxpayers' money wasted on polluting, expensive stranded assets, pushing up electricity prices and deterring investment right across the economy," they said.
Australian Associated Press
