Carbon plan a test for energy retailers

Age
Monday 15/12/2008 Page: 1

AUSTRALIA'S big three energy retailers say today's white paper must put an end to investment uncertainty surrounding the sector or risk companies chasing better opportunities offshore. AGL Energy, Origin Energy and TRUEnergy are three of the companies that will be most affected by the final detail of the carbon pollution reduction scheme. TRUEnergy's managing director, Richard McIndoe, said Australia would be a test case for an emissions trading scheme. If the Government aimed for deep cuts amid dire economic conditions, it could set back the worldwide challenge to reduce global warming.

"If we get it right and we preserve existing investments and incentivise new investments in new low-emission technology, then it's an opportunity for other governments to follow on. If we get it wrong and investment falls away, it will be a fantastic excuse for other sceptics to say, 'Well, look what happened in Australia'," he told BusinessDay.

Mr Mclndoe said if the costs of the scheme fell too heavily on his business, he would head overseas for investment opportunities. "If we have a massive financial impairment on our assets, then quite frankly we, like other international investors and lenders, will probably look elsewhere." He said the global financial crisis and the weakened Australian dollar made it more important for the Federal Government to quickly introduce its mandatory renewable energy target scheme, which requires that 20 per cent of the electricity supply comes from renewable energy sources by 2020.

AGL managing director Michael Fraser said the energy sector should not be exempt from the carbon pollution reduction scheme but should also not be forced out of business by overly ambitious targets. He said regulators needed to allow retailers to pass through the full cost of the scheme to send a price signal to consumers who could then cut their energy use.

Origin Energy's executive general manager of corporate development, Carl McCamish, said Origin Energy had been preparing for the trading scheme and supported measures to increase the development of renewable energy. Energy retailers and generators must be willing to be part of the scheme, but Government must get the detail right to avoid companies investing elsewhere, he said.