The immediate answer is gas ?  

The SMH has an article arguing the gas lobby's case for gas as a "transition fuel" to a clean energy future (part of the ongoing fight between the gas and nuclear power industries as they try to retain dominance while holding off the renewable energy industry for as long as possible) - Coal and nuclear just hot air, the immediate answer is gas.

Western Australia at least has avoided this path. On Thursday the state's energy retailer Synergy, after tendering for 638 megawatts of generation capacity from 2011, rejected proposals to build new coal-fired power stations including listed the Aviva Corporation's Coolimba coal-fired plant with CCS at Eneabba, between Perth and Geraldton, and Griffin Energy's Bluewaters projects at Collie.

State-owned Verve Energy, which is building two high-efficiency 100MW gas turbines at its Kwinana power station, won the tender instead. Synergy said it was considering wind farm proposals to meet the state's 20 per cent renewable energy target. It has signed agreements with geothermal and wave developers including Carnegie Wave Energy, which will build its first commercial 5MW wave power station at Garden Island, south of Fremantle.

But new coal-fired power stations are still proposed elsewhere. The Queensland Government has backed the Wandoan Power Project to build a new, 400MW integrated gasification combined cycle coal-fired power station, which it is hoped will capture and store 90 per cent of its CO2 emissions - somewhere, at some stage. Wandoan is one of the projects likely to receive funding under the Federal Government's $2.4 billion CCS Flagships program, and if it goes ahead construction will be completed in 2015-16.

More substantially the NSW Government, as part of its electricity privatisation, plans two major new baseload power stations to be built at Mount Piper near Lithgow and Bayswater near Muswellbrook. It's still not decided whether these new stations, each of about 2000MW capacity, will be fuelled by gas or coal - if the later, again, supposedly ''CCS-ready''.

The Business Spectator blogger Keith Orchison called this the largest electricity generation development in the state for almost 20 years and, quoting an unnamed industry source, observed drily a decision to build a new coal-fired power station in NSW would be a "a dog fight with a large audience".

Let us pray for sanity and assume these new stations are built with gas turbines, following the pattern of recent years in which ever-larger projects have been commissioned, such as Origin Energy's 630MW gas-fired power station at Queensland's Darling Downs or its 1100MW power plant at Mortlake, south-western Victoria.

The second challenge is to retire the worst polluting coal-fired power stations, principally the old brown-coal fired power stations in Latrobe Valley, Victoria, such as Hazelwood and Yallourn. In an outrageous request on the public purse, the owners of these power stations, including the foreign giants International Power and China Light and Power, want a ''bail-out''. They argue that if they get an additional $6.5 billion or so of taxpayers' money, on top of the $3.5 billion in free permits they are getting under the proposed emissions trading scheme, they may reinvest some of it in new gas turbines. They should get short shrift; better off building the new plant ourselves and floating it, just like the new broadband network. But given our debased emissions trading negotiations, they will probably get everything they want and repatriate the money quick smart.

There is no doubting the benefits of a switch to gas, as part of a transition to renewables. Mark Wakeham of Environment Victoria says converting Hazelwood to gas could be done in two years and would reduce plant emissions by 75 per cent, from 17 million tonnes to just 4 million tonnes of CO2 a year, and greatly reducing water use.

It would cut Victoria's emissions by more than 10 per cent in one fell swoop. The problem is, converting to gas-fired power stations in the Latrobe Valley will employ fewer people because there will be no need to mine brown coal. Hence the State Government's urgent need to pretend something better can be done with the stuff. Turn it to fertiliser? Dry it out and ship it to India? Never mind the environment, hard heads doubt these proposals can ever stack up commercially.