Australian
Monday 9/2/2009 Page: 25
DOMESTIC gas consumers in Western Australia have cried foul over the federal Government's decision to offer assistance to liquefied natural gas exporters under the emissions trading scheme, claiming the move penalises local users. The DomGas Alliance, whose membership includes companies such as Fortescue Metals, Alcoa, Alinta and Newmont, has warned that the failure of government to extend ETS assistance to domestic gas producers discourages local supply.
"This could lead to domestic gas shortages and higher gas and electricity prices, and could undermine Australia's energy security and efforts to cut greenhouse emissions," alliance chairman Stuart Hohnen said. LNG exporters were excluded in the ETS green paper from receiving ETS assistance but, over the past year, had successfully lobbied the Government and in the subsequent white paper were classified as an emissions intensive, trade exposed (EITE) industry eligible for 60% free permits.
LNG exporters argue they should receive assistance because gas is a low-emission fuel for energy-hungry nations and because they are price takers on the international market. Unlike domestic gas, gas for export must be supercooled until it forms a liquid in a process that is emissions intensive. Mr Hohnen said the lack of assistance for local production of gas would result in the full cost of the carbon tax affecting the price paid by local consumers. "Where gas producers are able to pass on carbon costs to the domestic market, this will further increase the cost of natural gas for downstream industry and households," he said.
From a greenhouse perspective, it is illogical to discourage natural gas supply by providing a financial incentive for gas producers to export LNG rather than supply the Australian market with clean energy. "This could increase Australia's greenhouse emissions and shift investment and energy use from gas to coal." Mr Hohnen said the exclusion of domestic gas from assistance pushed the power-hungry industries of the West back towards coal.
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