There has been a lot of debate about whether or not the Australian Government should introduce its proposed carbon pollution reduction scheme.
Recently, BHP Billiton Chairman Don Argus joined the industry chorus against the planned emissions trading scheme suggesting it would crimp the investment needed to meet the nation’s growing power demand.
AGL Energy’s head of carbon origination and Government affairs Tim Nelson spoke to Australian Mining to help clear up some of the confusion surrounding the hotly debated issue.
According to Nelson, the carbon pollution reduction scheme, which will come into effect 1 July 2010, will employ a cap and trade concept.
“The Government will cap overall emissions in a bid to get companies to invest in minimising their carbon footprint,” he said.
“The Government will create a number of permits, each of which will represent one tonne of greenhouse gases.
“The permits will be freely distributed to emissions intensive industries and strongly affected industries such as coal-fired generators. The rest will be sold at auction. Once sold, these permits can then be traded on a secondary market.”
The Government is likely to use a permit price cap to avoid price hikes.
According to Nelson, the carbon pollution reduction scheme will impact businesses in two main ways.
“Large emitters will be required to hold a permit for every tonne of carbon dioxide they emit and all businesses will experience high wholesale energy prices,” he said.
“Therefore, the principal options available to businesses will be to foot the bill and pay higher prices and purchase permits or work with their utility provider to reduce energy use and emissions.
“It is fair to say that businesses are already studying their emissions closely in order to determine their risks and opportunities before 2010.”
While many business are pursuing energy efficiency and renewable solutions, others are considering alternatives such as nuclear power.
The war on nuclear
BHP Billiton Chairman Don Argus is one of many championing nuclear power as an alternative.
In an address to the Australian Industry Group, Argus called for serious debate about using nuclear reactors for domestic power as a way to cut carbon emissions.
According to Argus, carbon prices cannot be accurately predicted under the Government’s proposed cap and trade scheme.
“Regulatory uncertainty and market distortions are to blame for new investments not occurring at the speed and magnitude required,” he said.
“It will be hard for generators to predict carbon prices under Australia’s proposed carbon pollution reduction scheme. Therefore, they will be reluctant to invest.
“Australia should at least consider and debate alternatives to a cap and trade system that are more certain.”
Honeywell’s Paul King said that while nuclear power will play a role in carbon reduction, it will never be able to take centre stage.
“As an industry, nuclear power will have a role to play but it is not the only answer,” King told Australian Mining.
“In our society building a nuclear reactor is a 15 year process. Even China, which is quickly outstripping the west in terms of technological development, would take approximately eight years to build a nuclear power station. Perhaps it is something we could look to in the future but, for right now, nuclear as the sole alternative to building a fossil fuel fired plant is simply not feasible.”
An alternative coal
According to King, clean coal technology is a more feasible option.
Clean coal technology has been the subject of much debate in recent years.
The concept of clean coal is said to be a solution to climate change and global warming by coal industry groups, while environmental groups maintain that it is greenwash, a public relations tactic that misrepresents coal as having the potential to be an environmentally acceptable option.
Greenpeace has always been opposed to the concept as they are of the belief that emissions and wastes are not avoided, but are transferred from one waste stream to another.
However, Kevin Rudd has long been a proponent of the idea.
In 2007, Rudd promised to set up a $1.5 billion research fund to develop clean coal technology, which in turn would secure the jobs of over 20,000 coal miners.
Rudd has also said that he wanted clean coal to generate electricity by 2020.
According to King, clean brown coal technology coupled with effective sequestration could become an efficient tool against the fight on climate change.
“There are companies in Asia and Australia that are looking to focus their clean coal technology on brown coal and, as we are sitting on a huge brown coal resource, I could see this becoming a very fertile area,” King said.
“Brown coal doesn’t have a high value on the market because it is extremely difficult to transport.
It is a low grade resource, however, when you look at the rising market value of black coal and oil, a brown coal plant might cost more to construct but, in the long term, it could be a very cheap, very good alternative.”
Head of Carbon Origination and Government Affairs
1300 55 47 57