Carbon price could end coal's reign, Origin says

Canberra Times
Wednesday 19/5/2010 Page: 15

Origin Energy says coal will remain the most economical fuel for power generation in Australia unless a price is put on carbon. The energy producer and retailer said a carbon price in the range of $20 to $40 per tonne would drive a substantial change in base load power generation. Origin Energy managing director Grant King made the comments in a speech about the role of natural gas in the nation's future energy needs, at the Australian Petroleum Production & Exploration Association conference in Brisbane yesterday. "Without a carbon price, coal remains the most economical fuel for power generation," Mr King said.

Origin Energy controls substantial natural gas reserves, is involved in oil and gas exploration, and also has a stake in wind and geothermal power projects. "A golden age for domestic gas consumption was being predicted in the late 1990s, but by 2002 it was clear these projections would not be met," Mr King said. He said the opportunity for gas to dominate Australia's power generation was lost to coal, mostly due to new coal-fired power generation in Queensland. At above $40 per tonne for carbon emissions, gas power generation was the cheapest way to produce electricity. With no carbon policy, Australia's emissions were projected to grow to 45% above 2000 levels by 2020, but the Federal Government's renewable energy target should lead to that growth being cut to 28%, Mr King said.

State One Stockbroking energy analyst Peter Kopetz agreed coal would remain the dominant fuel for generating energy unless a price was put on carbon. "There is lots of coal, both here and in the rest of the world, for at least another 100 years or so," Mr Kopetz said. He said coal was easy to extract and was often close to the surface. It was easy to ship, snaking it cheap and the likely dominant fuel unless caps were set or a carbon price was set. "Alternative energies have been pushed back a long way," he said. Shares in Origin Energy closed down 15c, or 1%, at $14.62.