17/09/2008 - 22:00

Industry warns on ETS by 2010

17/09/2008 - 22:00


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PEAK industry groups in Western Australia have voiced concern over the federal government's proposed Carbon Pollution Reduction Scheme, saying it would adversely affect exporters.

PEAK industry groups in Western Australia have voiced concern over the federal government's proposed Carbon Pollution Reduction Scheme, saying it would adversely affect exporters.

The industry groups were responding to a government green paper, which canvassed issues such as which industry sectors will be covered, how emission caps are to be set, and ways to address the impacts on strongly affected sectors.

Oil and gas producer Woodside and the Australian Petroleum Production and Exploration Association (APPEA) expressed concern that the green paper did not provide adequate concessions for growth of the liquefied natural gas (LNG) industry.

This was especially of concern because LNG is more emissions-efficient than other fossil fuels and it reduces net carbon dioxide emissions when replacing coal-fired power generation.

In their submissions to the green paper, both Woodside and APPEA stated that the scheme's suppression of the LNG industry could lead to carbon leakage, where one country imposes a carbon cost ahead of its major competitors, prompting production to relocate offshore in response.

"Without expansion of Australian LNG exports, the increasing demand for energy will be met either by other LNG suppliers who do not face carbon constraints or worse, by higher emission fuels," Woodside said in its submission.

It warned that the introduction of the scheme could more than double the operating costs of a typical LNG project.

Recommendations put forward to address these issues include ensuring no net cost to the LNG industry unless customers and competitors are subject to similar cost, and for concessions in purchasing permits to be made available.

The Chamber of Minerals and Energy WA has also responded to the green paper, claiming that an emissions trading scheme implemented before any global response would significantly affect competitive exporters, particularly those in the resources sector.

"Our industry supports the decision to introduce an emissions trading scheme in Australia, however a trading scheme developed ahead of a global framework and in the absence of alternative low emissions technologies may harm, not benefit our most competitive exporters," CME chief executive Reg Howard-Smith said in a statement

In its submission, the CME highlighted some of the distinctive features of WA, including the resources sector making up nearly 30 per cent of industry income compared to less than eight per cent at the national level.

The CME warns that the green paper will need to better consider such factors if WA industry is to remain successful.

"The competitiveness of many of WA's most important export industries could be damaged and future investment reconsidered if the emissions trading scheme is implemented in its current form," Mr Howard-Smith said.

The CME supports a phased approach to full auctioning under an emissions trading scheme as proposed by the Minerals Council of Australia, preferring a measured transition to best allow for the necessary structural changes to the Australian economy.

The Chamber of Commerce and Industry WA has also come out in support of a slower introduction, stating that the 2010 introduction of regulations is too soon for business and industry to properly consider how it will be affected by the scheme and how to address it.

The Carbon Pollution Reduction Scheme requires businesses and industry to purchase a 'pollution permit' for every tonne of carbon they release into the atmosphere.


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