27 October 2009 17:01 [Source: ICIS news]
By John Richardson
SINGAPORE (ICIS news)--Debates over emission-reduction bills often lead to huge amounts of horse-trading and compromise, high levels of emotion – and in Australia’s case possibly an early general election.
The “Lucky Country” might also see an erosion of its competitive advantages, which include low-cost energy and huge natural-resource exports - with a potential impact on the local liquefied natural gas (LNG) industry.
“The proposed Australian emissions-trading scheme (called the Carbon Pollution Reduction Scheme) is a disaster,” said an Australian oil-products industry source.
“It will cost industry a lot of money and will achieve absolutely nothing in terms of reducing global carbon-emission levels.
“What we are planning might make a difference if we had a population comparable to the ?xml:namespace>
One of the compromises being discussed by the Australian Senate reportedly involves increased concessions for coal-fired power stations.
Prime Minister Kevin Rudd’s ruling Labor Party needs the support of seven MPs from other parties to get the proposed legislation through the Upper House.
The Senate has already rejected the bill once - in August.
A second rejection would force an early general election, which must in any event be held on or before 16 April 2011.
Opposition amendments to the bill would raise retail power costs by 5% as against 20% under the government’s plan, claims Malcolm Turnbull – leader of the Liberal Party/National Party opposition.
“Australia needs to have an informed debate about the national allocation the government is proposing to negotiate in Copenhagen, “said Michael Hitchens, CEO of the Australian Industry Greenhouse Network (AIGN) in a recent press release.
This would allow fair comparisons on the cost of compliance compared with other economies such as the EU, the
AIGN is a network of industry associations and individual businesses established to promote joint action on climate change.
Members include Australian cracker operator Qenos, ExxonMobil
The “national allocation” Hitchens mentioned relates to Australia’s commitment to reduce emissions by 25% over 2000 levels if the world reaches a deal to stabilise global greenhouse gas levels at 450ppm of CO2-e (carbon dioxide equivalent) or lower.
If such a deal - which seems very unlikely - isn’t reached, the government says it will unconditionally cut emissions by 5 -15% from 2000 levels by 2020, and 60% by 2050.
The problem with this approach is that while these percentage cuts are similar to those being planned by the
Under legislation in the Senate, the
Higher costs of emissions abatement would also mean a reduction in
“Relatively high abatement costs are due to the dominance of low-cost coal fired power generation, which means that a relatively large penalty will need to be placed on carbon to encourage fuel switching in
Perhaps the biggest problem of all is “the per capita comparable effort” resource-rich countries will have to make to cut pollution.
“Domestic permit prices will be fixed at A$10/tonne of CO2-e over 2011-12 with a transition to a full market from 1 July 2012,” added Access.
“Economic modelling indicates
Planned LNG investments include the huge A$34bn Gorgon project in
Numerous others include the A$12bn Pluto project, which is being pursued by Woodside Petroleum.
Time is running out for the informed debate the AIGN wants on the carbon-reduction bill as the
So far the government has issued “little quantified information” to get the discussion going, Hitchens added in the September press release.
Pressure from industry comes as the Labor Party faces calls from environmentalists to make the proposed bill tougher.
Striking the right balance on an emissions bill could well be important in making sure this reputation is kept.
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