Wednesday 1 October 2008

LNG firms seek ETS break until rivals pay

West Australian
Tuesday 16/9/2008 Page: 11

The LNG industry wants free carbon permits under the Rudd Government's emissions trading scheme that would cover its entire greenhouse pollution without any obligation to cut emissions until competitors in developing nations also acted.

In a submission to the Government's Green Paper on the ETS, the Australian Petroleum Production and Exploration Association said the LNG industry was unique and should be given its own special treatment as part of a national effort to curb greenhouse emissions.

Main LNG producers including Woodside Petroleum have warned that, under the ETS, up to $100 billion in projects could be dumped because of the extra costs imposed to curb their greenhouse pollution. Under the ETS, firms that produce more than 1500 tonnes of carbon per $1 million of revenue would get free permits. The biggest emitters would get up to 90 per cent of their permits free. However, the cut-off is too high for LNG to qualify.

The association proposes a new category of export industries called "clean global contributors" which would get all of their emissions covered by free permits. It appears that LNG, which produces a lot less emissions than coal, would be the only industry recognised immediately as a "clean global contributor". A special threshold of emissions would be set - most likely in line with average LNG emissions.

Companies given the permits could sell them on the secondary carbon permit market, potentially another income stream. The Australian Food and Grocery Council wants either a tax on food imports from countries that do not put a price on carbon emissions or a low price - $5 to $10 a tonne - on carbon under the proposed ETS. Council chief executive Kate Carnell said that Australians should prepare for a big rise in food prices when the ETS began.

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