“I congratulate the Gallop Government for recognising the many benefits that a gas-fired power station will deliver to the people and environment of Western Australia,” APPEA chief executive Belinda Robinson said yesterday.

“From an environmental, cost and efficiency standpoint, there is no substitute for gas,” Robinson said.

WA premier Geoff Gallop said the decision was based on commercial considerations but he was pleased that the best commercial outcome also produced the best environmental outcome.

"The gas option has proved cheaper than the coal options and will produce about half the greenhouse gas emissions," Gallop said.

"That saves one million tonnes of greenhouse gas emissions every year. This outcome is more power, cheaper power and cleaner power."

But the coal unions were angered by the government's decision.

Unions in the south-west coal mining town of Collie have threatened industrial action.

Construction, Forestry, Mining and Energy Union mining and energy division secretary, Gary Wood, said more than 100 mining jobs could be lost and the future of at least one colliery was now in doubt.

Wood accused the government of turning away from its balanced fuel policy. He claimed the state would be dependent on gas.

But coal looks like still having a strong place in the power generation mix.

Griffin Coal has said it would continue with plans to build a 200MW coal-fired plant at Collie, and Wesfarmers has announced a 25-year contract to supply Western Power's existing coal-fired plants.

Environmentalists welcomed the decsion to go with gas. Australian Conservation Foundation climate change campaigner Tristy Fairfield said opting for gas over coal was a key move towards a cleaner future.

"We need to be moving away from coal-fired power generation," she said.

APPEA said the gas-fired plant would be up to $150 million cheaper to build than a similar-sized coal-fired plant and would also be cheaper to operate.

The plant could also be built as much as 12 months sooner than a coal fired plant – a very important point in a state that had widespread blackouts only 18 months ago.

“The WA Government has made a commonsense decision that confirms natural gas as a fuel of the future in a world demanding lower greenhouse gas emissions from electricity generation,” Belinda Robinson said.

“With the vast gas resources held by Western Australia, this vote of confidence by the State Government in gas as a future fuel stock can only lead to more investment and job security.”