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More pressure on Australian LNG projects - admin - 07-05-2012
Aussie LNG producers to cop it: APPEA
Wednesday, 4 July 2012
THE sky has not fallen but it may as well have for LNG exporters, says the Australian Petroleum Production and Exploration Association.
Rob Oakeshott, Kevin Rudd and Australian PM Julia Gillard. Image courtesy of Kevin Rudd's facebook page.
With a price on carbon coming into effect on Sunday morning, the industry association labelled the scheme as an extra impost on an industry already facing heavy cost pressures.
“It is important to recognise there is no international carbon price in operation,” APPEA chief executive David Byers said.
“So while natural gas as a lower emissions fuel source will be more competitive as an energy source for domestic power generation, Australia is imposing a cost on its gas export industry that will not be borne by any of its LNG competitors.
“This will diminish its international competitive standing.”
APPEA said for every tonne of carbon dioxide created by the production and export of LNG, 9.5 times as much carbon dioxide was avoided in customer countries where LNG is used instead of coal.
The Australian LNG industry is already facing pressures as the cost of labour starts to bite and regulatory hurdles become higher and higher.
Back in May, BG Group’s QCLNG project on Curtis Island suffered a $US5 billion ($A4.9 billion) cost blowout on the back of the two factors, leading to widespread scepticism that other projects wouldn’t suffer a similar fate.
There was also concern that the prospect of LNG exports from gas-rich North America and east Africa could cause a rupture in the Asian LNG market, with prices becoming unsustainable in the longer term for Australian producers.
While APPEA is willing to work with the Australian government to make sure the carbon pricing mechanism operates as smoothly as possible, it wants a swathe of other programs regulating greenhouse gas emissions in Australia scrapped.
“The plethora of regulatory and pseudo carbon pricing mechanisms – such as the energy efficiency opportunities scheme, the imposition of greenhouse conditions under environmental approval processes and the renewable energy target – are no longer consistent with the government’s stated policy intention,” Byers said.
“All should now be removed.”
However, not all in the energy sector were against the price on carbon, with wave energy company Carnegie Energy unsurprisingly pleased with the scheme.
The price on carbon also comes with associated funding for the Australian Renewable Energy Agency and the Clean Energy Finance Corporation, a $10 billion fund set up to complement private sector investment in green energy projects.
Carnegie will be hoping to be one of the companies to tap the pool of funding and said its demonstration project in Perth would never have gotten off the ground if not for public investment.
It received support from both the emerging renewables program and the Western Australian government’s low emissions energy development program.
“For Carnegie, these programs will provide crucial support in the deployment of wave energy projects beyond the Perth wave energy project,” Carnegie managing director Michael Ottaviano said.
First published in sister publication EnergyNewsPremium.net.