LNG industry says 37pc of output threatened by carbon trade

West Australian
Thursday 20/11/2008 Page: 12

The LNG industry says up to 37 per cent of its potential output would be under threat if it does not qualify for exemptions under the emissions trading scheme. The Australian Petroleum Production and Exploration Association told a Senate inquiry yesterday that the Federal Government's ETS model would unfairly penalise a clean energy source which cuts emissions in customer nations.

Modelling commissioned by the association has shown that 28 to 37 per cent of LNG output in planned projects would not be produced under a 2020 greenhouse target of 10 to 20 per cent. There are three LNG projects operating or under construction off WA and another 13 in the planning stages nationwide.

"We're not saying they won't proceed (under an ETS)," chief executive Belinda Robinson told the inquiry. "We're not saying how it will play out on a project-by-project basis but it will play out in some way. " She said that for every tonne of carbon the industry produced in Australia, 5.5 to 9.5 tonnes of emissions were reduced in China and four tonnes in Japan by using LNG instead of coal.

The industry would not be allocated any free polluting permits like other exporters under the Government's proposed ETS. Ms Robinson doubted that LNG producing nations such as Nigeria, Algeria, Indonesia and Malaysia would face carbon pricing. The Government has been under fire from industry groups for assuming in its Treasury modelling that big emitters China and India would eventually commit to curbing emissions.

A Federal Treasury official told the inquiry the modelling reflected the Government's desire to engage the international community. "That multi-staged (action) was judged to be more realistic in the context of the international negotiations," Meghan Quinn, manager of Treasury's climate change modelling unit, said. "Assumptions need to be made to do modelling and there is a limit on how many you can do." Ms Robinson questioned the Government's modelling scenario of China taking action from 2015 and India from 2020.