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.
Click
here for the full audio.