Monday, March 26, 2007

Polluters to government: Emissions trading now, please.

Australia’s most important resource companies, among them BHP Billion, Rio Tinto, Woodside, AGL and Alcoa have come out in support of a national system of carbon emissions trading as a way of fighting global warming.

Their submissions to the Prime Minister’s emissions trading taskforce are among 200 posted on the web on the weekend. Almost all call for the introduction of some form of emissions trading.

The Electricity Supply Association of Australia, representing more than 40 energy suppliers, says investments potentially worth $100 billion will remain in limbo until such a scheme is introduced.

“Coal-fired power stations have physical lives well in excess of 50 years and, if there is an expectation that there may be a future price on greenhouse gas emissions, investors may be unwilling to risk investment in a coal-fired plant,” its submission says. “On the other hand, a gas-fired plant may not receive adequate reward in the absence of a greenhouse gas emissions price signal to warrant investment. Without a clear greenhouse gas emission policy framework there is a risk that investment in baseload capacity may be deterred.”

BHP Billiton says it already assesses how each of its new investments would withstand a high, medium, and low price for carbon emissions..

It wants a national system of emissions trading that “removes the plethora of state and Commonwealth emissions reduction schemes”...

The coal and iron ore miner Rio Tinto says it wants the government to set a long term carbon price in order to “provide some certainty for long term investors” as well as “an initially low price, increasing over time” in order to ensure “an orderly transition to a carbon constrained future”.

AGL says it already factors carbon considerations into all of its major investment decisions. “However, the lack of certainty around future carbon pricing policies is creating significant investment uncertainty throughout the energy sector. It is critical that Australian governments establish long term emission reduction targets and implement market-based policies to support them. Because of the long-lived nature of many assets in the energy sector, targets should be set until at least 2050,” its submission says.

Woodside, the operator of Australia’s largest resource development on the North West Shelf says it wants a scheme that is consistent across all sectors of the economy and streamlines the currently separate state-based targets and reporting systems. It says it wants Australia’s system of trading to connect with those overseas.

The Prime Minister set up the emissions trading taskforce late last year to advise him on whether it was possible to introduce a system of trading in pollution permits as a way of cutting greenhouse gas emissions without harming Australian businesses.

Its members include Mr Peter Coates of Xstrata Mining, Mr Chris Lynch of BHP Billiton, Mr John Stewart of National Australia Bank, and Dr Ken Henry, the head of the Australian Treasury. It submitted an issues paper supporting of the concept last month and is due to report to the Prime Minister on April 31.