Global and long term policy focus needed

Climate and Energy Policy

More focus on Australia's part in reducing global emissions and the impact of short term carbon pricing policy on investment were key issues on the agenda as part of CEDA's State of the Nation climate and energy policy discussions.

APPEA Chief Executive Belinda Robinson said it seemed the reason for special treatment of some industries was being lost in the current debate.

With regard to LNG, she said that without a global agreement it was important that Australian exports were able to compete, highlighting that competitors such as Qatar, Nigeria and Trinidad and Tobago were not likely to be putting a price on carbon at any time soon.

"We are starting to lose sight of why we are looking at special treatment for some industries - it is nothing to do with increasing input costs in the domestic market," she said.

Ms Robinson also raised concerns that the debate was fixated on the reduction of emissions country by country.

"This is a global issue and whether or not one country's emissions are higher, but in being higher enable the rest of the world's emissions to be lower, is being lost."

Ms Robinson gave the examples of Australia's aluminium being used to lightweight cars in Europe so they can be more energy efficient and our LNG being used to displace high emission intensive fuels in other countries.

She also raised concern about the lack of discussion about what would happen to the 237 emission reduction "complementary" measures already in place.

She said they were "cannibalising" the very objective of securing least cost abatement and while some may be constructive where a market failure can be demonstrated - possibly in areas such as research and development - there needed to be more discussion about what would happen to them once the carbon tax was put in place.

Energy Supply Association of Australia Chief Executive Officer Brad Page highlighted that a longer term policy perspective was needed for climate policy to ensure continued investment in the energy sector.

He highlighted that a three year fixed price period was pointless, with the industry needing much longer if it is to secure the investment that is required to transform the stationary energy sector in Australia.

"Industry needs a much longer term perspective because our investments last from anywhere between 30 and 50 years," he said.

"Currently industry has invested capital of about $120 billion and that stock of capital has been built up over the past 55 years.

"When we look forward at any of the sorts of reasonable emission targets that government has put forward… we see a new capital investment requirement of anywhere between $70 and $110 billion.

"We've taken 55 years to get to where we are and we're talking about that level of investment turnover in the next 15, or at most, 20 years, so this is a very large capital ask in our economy and our sector.

"We need sustained, predictable and confident carbon policy."

Mr Page said the three year fixed price period currently proposed "just defers still further the point at which can make confident investments".

"We need a clear set of targets for the middle of the century and nearer term targets as well…so we can do all the transformation at lowest cost possible."

Mr Page said the refinancing of Hazelwood during the time the CPRS was proposed was a key example of what could happen, with refinancing only negotiated for two and half years compared to the normal five to 10 years usually secured in the energy sector.

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