The coal industry believes it's got a "strong future" alongside renewable alternatives, despite claims from climate groups and think tanks that coal's on the way out.
Australia can't have a reliable, clean energy grid if investment in coal continues, Australia Institute executive director Ben Oquist believes.
But the Minerals Council of Australia is fighting back, arguing coal has a "strong future".
A new group within the coalition has formed to promote ongoing investment in coal-fired power, focusing toward more modern high efficiency low emission (HELE) plants.
The so-called Monash Forum is said to include more than 20 government members including former prime minister Tony Abbott and Nationals MPs George Christensen and Barnaby Joyce.
Among their apparent proposals is Hazelwood 2.0, a "clean coal" replacement for the privately owned Victorian Hazelwood power station, decommissioned last year.
But Mr Oquist says coal is increasingly unreliable - citing 43 power plant failures between December and March - and as a technology it's "on the way out".
"Along with storage technology, whether it's battery or pumped hydro, it means Australia can have a modern, reliable and cleaner energy grid," Mr Oquist said.
"But it won't come if we invest in new coal."
Mr Oquist said the HELE plants, backed by certain coalition backbenchers, were 41 per cent more expensive than traditional coal.
But a Minerals Council spokesman said a report commissioned by the council and the Coal 21 Fund found HELE black coal is the lowest-cost generation option.
The study costs were similar, ranging from $40-78 per megawatt hour for HELE coal power, compared to $69-$115 for gas-powered electricity and $64-115 for wind power.
"As well as being Australia's second-largest export earner, coal continues to make a significant contribution to the domestic economy including providing 75 per cent of generation in the National Electricity Market," the spokesman said.
"Australian coal has a strong future which can meet the requirements of a modern economy."
The Climate Council has hammered the Monash Group's proposals, echoing Mr Oquist's view that coal has had its day.
"By 2040, 70 per cent of the coal fleet in the National Electricity Market will be 50 years or older," Professor Andrew Stock said.
"The transition to renewables and storage is more important than ever."