Australia must take carbon lead, says HK utility

Australian
Thursday 12/4/2007 Page: 23
Andrew Trounson

ONE of Asia's biggest power utilities has urged Australia to take a regional lead in putting a price on carbon emissions, ahead of major emitters China and India.

Hong Kong-based China Light and Power head of environmental affairs Gail Kendall said Australia, as a key developed country, had a responsibility to drive efforts to cut emissions in Asia. But she said that in the longer term moving early would give the country a competitive edge, as the world inevitably moved to a low-carbon economy.

In Australia to promote CLP's expanding portfolio of renewable energies, such as wind power, Dr Kendall said coal would remain a major energy source into the future and that the commercialisation of so-called clean coal technologies was "critical" to cutting global emissions.

CLP has also identified natural gas, which emits half the greenhouse emissions of coal, as a key transition fuel, and the utility is now planning to build a liquefied natural gas receiving terminal in Hong Kong which could be in production soon after 2010. That could provide yet another opportunity for Australian gas producers. "Australia is in a position to move ahead of developing countries like China and India, and it is the responsible thing to do," Dr Kendall said.

For CLP, which supplies energy to 1.1 million Australians through its TRUEnergy business as well as owning power plants and wind farms, Australia also presents an early opportunity for it to adapt its own business to a low-carbon economy.

Under the Kyoto Protocol, most of Asia was excluded from targets to cut emissions, and the region's problems in having to tackle poverty and drive economic development mean much of the burden to cut emissions and develop new technologies will fall on developed countries. "Australia's economy needs to be competitive on a low-carbon basis and that also will be true of our business in the long run, so we can definitely learn from our experience here," Dr Kendall said.

In its submission to the Prime Minister's task force on emissions trading, CLP's TRUEnergy said inaction on cutting emissions was now "simply untenable" for governments and urged the creation of a domestic trading scheme irrespective of efforts to create a centralised system.

Dr Kendall said the Government needed to start putting a price on carbon to provide certainty for power companies to go ahead with new investment in generation capacity. She said industries that might be seriously disadvantaged could be compensated to maintain their competitiveness with Australia's Asian neighbours. "In Australia an emissions trading scheme could be very effective in promoting the dramatic reduction in emissions that are needed over the long term," she said.

CLP currently sources about 2.6 per cent of its power from renewable energy, excluding its major hydro projects in China, and is aiming to raise that to 5 per cent by 2010. More than half its renewable portfolio is weighted to wind power, and in Australia it has an equal stake with Hydro Tasmania in the Roaring 40s wind power business.

But Dr Kendall said government subsidies were key to the development of otherwise high-cost renewable energies, and that the failure of the federal Government to expand its so-called Mandatory Renewable Energy Target had forced Roaring 40s to shelve two projects. Dr Kendall said strong growth in renewables would be needed to combat emissions, but she said significant coal and natural gas would also still be needed to supply the world's rising power demand, with nuclear also set to play a role.

According to a scenario study by the World Business Council for Sustainable Development, if the world is to cut emissions back to 2000 levels by 2050, as advocated by the consensus of scientific opinion, the uptake of renewable energies will have to grow by 11 per cent a year. But that scenario also assumes coal use rising 50 per cent during the period to 2050, with half that coal capacity using technologies to capture and store carbon emissions.

Over the same period, the use of gas is assumed to triple to overtake coal as the largest fossil fuel powering electricity generation, while the size of the world's nuclear industry is assumed to also triple.