Friday 3 October 2008

Waste fuels no threat to food

Adelaide Advertiser
Thursday 18/9/2008 Page: 19

Second-generation biofuels can ease climate change without reducing food production, writes Dr Glenn Tong.

SOUTH Australia's longest serving Premier, Sir Thomas Playford, recounted a meeting he had as a young man with famed Sherlock Holmes author Sir Arthur Conan Doyle in London after World War I. Without having met him before, Conan Doyle correctly told Playford a number of things about him, including the fact that he was the oldest child in his family. Doyle said he could divine his sibling ranking from the way Playford spoke; he was used to being listened to, which, the author said, was the mark of the first born.

What would Doyle's creation, Holmes, say was the explanation for the opposition to biofuels globally? Because, sadly, it would seem that biofuels now are opposed in many quarters, despite their potential benefits. biofuels are produced from plants which pull carbon dioxide out of the atmosphere, whereas fossil fuels bring no such benefits. So, biofuels have far less impact on global warming.

Opponents of biofuels say that, just like fossil fuels, arable land is a finite resource and competition between growing crops for food and for fuel presents obvious ethical questions. Developing countries assert that rich countries, in their hurry to respond to global warming, are driving up food prices by encouraging the use of crops to produce biofuels rather than feed people.

The World Bank's 2008 World Development Report states that about a quarter of a tonne of corn - enough to feed one person for a year - is needed to produce 100 litres of ethanol, enough to fill the tank of a sports utility vehicle. Last month, the head of BHP Billiton, Marius Kloppers, was reported as saying, "we are making hundreds of millions of people worse off with biofuels because it's pushing up food prices". Other international figures see biofuels in no better a light. The United Nations special rapporteur on the right to food, Jean Ziegler, says biofuel production could amount to a "crime against humanity" because it will bring more hunger.

Mr Kloppers and Mr Ziegler's remarks may be relevant to first generation biofuels where there is a conversion of starch sourced from crops such as maize and sugar cane into ethanol. This ignores the benefits of second-generation biofuels. This is where cellulosic biomass, like wheat straw and sugar cane bagasse, is converted into ethanol, offering a means to convert low value agricultural residues - in effect waste products - into high value fuel, without any competition between food and fuel. Therefore, the best of both worlds can be achieved.

There are, of course, myriad advantages in using biofuels. Transport fuels account for about 40 per cent of Australia's energy use. All of this is hydrocarbon-based and most is imported and subject to the uncertainty of international developments. Critics who still perpetuate the food-versus-fuel argument do not appreciate the fundamental difference between first and second-generation biofuels. In Australia, more than 38 million tonnes of wheat straw, essentially a waste product, is produced each year. This represents a tremendous potential feedstock with which to produce second-generation biofuels and, in turn, help combat climate change.

What was once waste can be turned into a valuable resource of renewable fuel without competition against food supplies or increasing the demand for arable land. The potential exists for us to make a real impact on climate change through using biofuels as renewable energy sources. Second-generation biofuels offer a win for both food and renewable energy. Holmes, on the basis of these facts, could only agree.

Or Glen Tong is CEO of Molecular Plant Breeding Co-operative Research Centres formed in 2003 under a program funded by the Commonwealth Government. The MPBCRC has a large research unit within the Waite campus of the University of Adelaide.

Australian bioenergy sector talks investment potential

Clean Energy Council
25 September 2008

CANBERRA: The Australian bioenergy industry is meeting today to discuss opportunities for converting the nation's rich renewable biomass resource into electricity - set to unlock billions of dollars worth of renewable investments and significantly reduce Australia's carbon footprint.

Delegates from around the country attending the bioenergy Australia quarterly will also officially launch the Australian bioenergy Roadmap. The Roadmap was developed with input from the entire, diverse bioenergy industry and has a vital role in ensuring bioenergy plays its part in Australia's low-carbon energy transition.

The Australian bioenergy Roadmap outlines a clear strategy to achieve:
  • A growing, sustainable Australian bioenergy industry;

  • Increased community awareness of bioenergy;
  • A consistent national policy to support the industry's development; and 

  • Long-term investor certainty.

Known as man's oldest energy source, bioenergy has been quietly providing renewable energy in Australia and around the world for decades. It is a form of zero-net-emission electricity or thermal energy that can be generated from biomass or organic matter, such as landfill, sugarcane or sewage. 
"Bioenergy represents one of the few untapped energy sources left in Australia. We have a range of proven conversion technologies and an abundance of biomass resource so the industry is well placed to push bioenergy to the forefront" said Rob Jackson, GM Policy Clean Energy Council.

Currently less than 1% of Australia's electricity generation comes from bioenergy, well below the 14% benchmark already achieved in leading OECD countries. bioenergy has the potential to provide 73 terawatt hours of electricity generation per year to 2050 – that's enough to power 10 million homes.

50% of our greenhouse gas emissions come from the stationary energy sector, so any solution to climate change must first target the energy sector specifically. With the global shift to a carbon costed economy upon us, the commercial incentive to invest in proven alternatives such as bioenergy is now obvious. 
"Armed with viable renewable energy technologies, like bioenergy, we have the tools to reduce emissions, displace fossil fuels and combat climate change," Mr Jackson said.

For a full copy of the Australian bioenergy Roadmap visit

Insurers may face $18 billion bill for Hurricane Ike
London, 18 September:

Insured losses from Hurricane Ike could reach $18 billion in the US alone, according to some estimates. The hurricane made landfall in Galveston, Texas in the early hours of 13 September, as a strong Category 2 storm, after devastating Haiti and Cuba. At least 145 fatalities were caused by the hurricane. Haiti, which has been hit by four storms in as many weeks, leaving at least 550 people dead and up to 1 million homeless, according to the BBC, accounted for the largest number of fatalities.

Catastrophe modelling companies are still in the process of calculating the likely financial losses from the hurricane, but estimates for onshore, insured losses in the US range from $6-18 billion. An early estimate by Risk Management Solutions (RMS) put losses in the Caribbean at between $50-200 million.

But RMS, the risk modelling firm which has published the most up-to-date figures, has reduced its initial estimate for insured losses in the US, from $6-16 billion to $7-12 billion. This figure includes onshore and offshore insured losses, but excludes some bill items – including work stoppages at oil and gas platforms in the Gulf of Mexico. Christine Ziehmann, director of model management at RMS, said: "Our reconnaissance teams have focused on evaluating wind and storm surge damage in the landfall region, and they have found that despite some severely affected coastal areas, Ike wasn't as damaging as initially feared."

This was largely because of the financial impact on the city of Houston was not as bad as originally feared. She added: "While the 75-storey JPMorgan Chase tower was extensively damaged, the majority of downtown Houston had minimal damage. They also found that most of the large industrial facilities, including the oil refineries, escaped significant flooding or other damage, though they are dependent on power being restored to regain operations." Peter Dailey, director of atmospheric science at AIR Worldwide, said on the day the hurricane struck land in the US that mobile homes and warehouses were particularly likely to suffer damage. Its initial estimate put insured, onshore losses at $8-12 billion.

Oakland-based Eqecat gave the highest estimate for onshore insured losses, at $8-18 billion, excluding insured losses relating to flooding and vehicles. The risk modelling firms are yet to produce estimates for damage to oil and gas infrastructure in the Gulf of Mexico. According to Platts, 28 oil and natural gas platforms were destroyed during the hurricane, accounting for around 11,000 barrels a day of oil output.

New report confirms energy efficiency and clean energy targets will save carbon reduction scheme $40 billion

Clean Energy Council
22 September 2008

NATIONAL: The Clean Energy Council, Australia's peak body for clean energy and energy efficiency, confirmed that energy efficiency and renewable energy targets are the key to keeping costs down in Australia's transition to a low carbon economy; inline with findings released by the Climate Institute Australia today.

An independent study commissioned by the Climate Institute Australia found that $40 billion in savings will become available when these essential complementary measures are included in the policy framework alongside emissions trading. Rob Jackson, GM Policy said: "Increasing our energy efficiency and renewable energy generation will not only save the economy $40 billion, but they will also ensure at least $20 billion worth of new investment and over 50,000 jobs by 2020, primarily in regional Australia."

"The Council has long advocated that emissions trading alone will not be enough to stimulate investment and activity in these crucial areas," he said. "Only a broad approach including emissions trading, targets for renewable energy and efficiency operating alongside significant R&D funding, will deliver large-scale growth and stability for Australia's low carbon economy," he concluded.

Complementary policies that embed energy efficiency and increase renewable energy generation have been shown internationally to lower retail energy prices; the Climate Institute Australia study found a comparable reduction would occur in Australia. The Council will be releasing independent modelling on the impact of emissions trading on the retail electricity price shortly. Climate change policies are due for discussion at the upcoming Council of Australian Governments meeting in Perth on 2nd October 2008. The expanded Renewable Energy Target and nationally consistent feed-in tariff for small scale renewable energy are both on the agenda.

Carbon credits cashed in for tourism

Northern Territory News
Wednesday 17/9/2008 Page: 8

THE Territory Government has purchased 5000 tonnes of carbon credits to help make NT tourism carbon neutral. Tourism Minister Kon Vatskalis said the $150,000 "Outback Offsets" program would attract environmentally conscious travellers from the UK and Europe. The carbon credits were bought from the Shoal Bay Landfill - which generates electricity from methane harvested from waste. The pilot program would apply to Adventure Tours Australia, Connections and Wayoutback Desert Safaris - who collectively snake up 40 per cent of tours in Central Australia.

Mr Vatskalis said the tours have a greater carbon footprint than the flight to the Territory. "What is significant is when people get off the plane, get in a taxi, get in a four-wheel-drive, go out bush, go camping or go to a hotel." he said. The program was endorsed by the World Wildlife Fund. WWF Territory campaigner Stuart Blanch said the entire tourism industry should aim to be carbon neutral. "Our tourism sector is based on travel to remote areas. We can greatly reduce the energy we use to get there and offset the rest." Mr Blanch said.

Solar power use doubles in a year

Adelaide Advertiser
Wednesday 17/9/2008 Page: 29

THE number of South Australians who have solar panel systems in their homes has more than doubled in the past year, figures show. ETSA Utilities figures provided to The Advertiser show 3700 homes have a solar system and are generating power for the electricity grid. This is 2000 more systems than at the same time last year. ETSA is receiving an average of 300 applications a month for systems to be connected to the grid, compared with 30 applications a month last year.

Connecting to the electricity grid enables solar panel owners to supply excess electricity, which is not used by the household, to the grid and be paid for the energy. The increased federal government rebate for households, which was doubled from $4000 to $8000 in May last year, has made it more attractive for householders to install panels and generate emission-free electricity.

Solar SA general manager Rob Jung said business had boomed in the past year because of the rebate. But he said the Federal Government move to means-test the rebate - which prevented households with incomes above $100,000 from receiving the rebate - had led to a decrease in the number of large systems being sold. "The average size (of the system) has gone down now, so there are more jobs - but the volume (of electricity) hasn't changed a great deal," Mr Jung said.

"The majority of the larger sized systems don't exist any more because the households that could afford them are the ones which earn over the $100,000 mark. More and more people are looking at ways they can reduce their ongoing costs - and with solar, they will definitely do that." Greens MLC Mark Parnell said it was great news that the number of solar panel systems had increased substantially.

"It shows that given appropriate incentives and support from government, people are really keen to do their bit for climate change," he said. "But there's still work to do to bring the two big retailers (AGL and Origin Energy) into line to make sure they pay for the electricity that's being produced and don't just pass on the Government's feed-in tariff."

We must rise to the challenge

Hobart Mercury
Tuesday 16/9/2008 Page: 25

IT'S reasonable to attack Professor Ross Garnaut's proposal for a greenhouse gas emissions reduction target of 10 per cent by 2020. But it's unreasonable to attack the man himself, because years of political deception and complacency have put him in an impossible position. We have cause to be disappointed.

The reduction target is based on stabilising greenhouse gas levels at 550 parts per million, which scientists estimate would condemn the planet to a temperature rise above pre-industrial levels of well over 2C and possibly as high as 5C. That level of warming makes for a very depressing outcome: dwindling food and water resources, more extreme weather conditions and massive geo-political upheaval in many parts of the world.

Prof Garnaut's low target allows politicians to put off facing the issues head-on. But deeper analysis reveals he is up against a chronic failure of government in this country to deal honestly with greenhouse gas emission data, and for that he has my sympathy. The 1997 Kyoto Protocol, the result of diplomatic maneuvering to reach political consensus, is an inevitably flawed agreement that's been exploited by past and present Australian governments to mask their complete failure to achieve physical results.

The Howard government assured us we were on track to meet Kyoto Protocol targets, as if this was in itself a desirable outcome. It disingenuously presented our Kyoto data as objective truth, a sort of climate-change bible. But what's really disturbing is that the present government has continued this sleight of hand.

Some nifty diplomatic footwork at Kyoto which gave Australia a 108 per cent "reduction" target, led to official government data that skews reality. Australian politicians, bureaucrats and special interests have cited this data to "prove" that all's well, when that is patently untrue. In fact, if you remove some questionable data on agriculture. forestry and land use, Australia's emissions have increased since 1990 by about 25 per cent. It's against that backdrop that Prof Garnaut's interim targets should be assessed.

Stuck with a public misconception about our emissions fed by faulty government data. Prof Garnaut's task is to turn a disturbing upward emissions trajectory into a cut. His belief that a global agreement is an essential element is beyond dispute, but his counsel against Australia taking on an ambitious unilateral target in the absence of an adequate global agreement is more contentious. If the whole world took such a view, we'd get nowhere.

To his credit, Pr of Garnaut said he'd prefer that Australia commit to a 2020 greenhouse gas reduction target of 25 per cent while urgently seeking a global deal to stabilise levels at 450 parts per million. That is still higher than the 350 parts per million that scientists say we need, but it's much better than where we're now headed.

Prof Garnaut knows that the nine federal, state and territory governments that he serves will fear electoral retribution if the bar is set higher than their realpolitik allows - or if dodgy data on emissions is revealed for what it is. They must put such fears aside. Australians are tired of politicians and economists dictating what can and can't be achieved. In tines past, when the chips have been down, Australians have risen to the challenge. There's every reason to believe that with strong, honest leadership we can do it again.

Peter Boyer is a Hobart-based science writer and a presenter for Al Gore's Climate Project.

Thursday 2 October 2008

A big part for smallest technologies

Summaries - Australian Financial Review
Monday 15/9/2008 Page: 63

World energy demand is rising and presents three key concerns: the security and sustainability of energy supply; the link between the use of fossil fuels and climate change; and the availability of technological innovation in energy conversion, transmission and use. A recent study by the Australian Academy of Technological Sciences and Engineering has identified four key opportunities for nanotechnologies to be applied to energy systems in Australia.

The areas of opportunity include applying nanotechnologies to existing processes, improvement of photovoltaic systems based on nanomaterials and converting natural gas or coal to liquids for transport fuels. Professor Greg Tegart, lead author of Energy and Nanotechnologies: Strategy for Australia's Future has called for a strong effort in nanotechnologies applied to energy systems which he believes will make a significant contribution to Australia's energy security and sustainability.

Guide names best offset providers

Tuesday 16/9/2008 Page: 2

AUSTRALIA'S first independent guide ranking carbon offset providers will be launched today to protect consumers and businesses from "carbon cowboys". The guide is a partnership between the Total Environment Centre, Choice and the Institute of Sustainable Futures.

It comes after a BusinessDay investigation in February exposed several offset providers that had been misleading consumers through vague promises and questionable offsets. One was forced to take down its website after the investigation found its forestry offsets did not exist.

TEC director Jeff Angel said the voluntary carbon market was riddled with confusing claims, products and carbon calculators. "The Australian carbon offset industry is worth over $44 million a year and its credibility has been in question," he said. "But Carbon Offset Watch will force the industry to grow up by naming the best and most reliable.

"Consumers who are actively trying to reduce their carbon footprint are making an important contribution but need to be assured, not duped into buying offsets that provide little environmental benefit." There are about 50 offset providers in Australia and the guide ranks 20 of the largest from "outstanding" to "adequate". It has named Climate Friendly, Cleaner Climate, Climate Positive, SMRC (Southern Metropolitan Regional Council) and the Carbon Reduction Institute as those that scored top marks.

None of the 20 offset providers scored less than 60%, which would have put them in the "not recommended" category. CO2 Australia, CO2 zero and Global Carbon Exchange scored the lowest, or an "adequate", result. Other providers were invited to take part but chose not to.

Offset providers are marked on how they encourage customers to reduce carbon emissions before offsetting (19.5% of the total score), the quality and reliability of the offset (73% of score) and the desirability of the underlying projects used to generate the offset (7.5% of score). Mr Angel called on the Federal Government to release its national standard for carbon offsets, which it committed to in last year's election and promised to deliver by the end of the year.

State acts to reduce emissions

Hobart Mercury
Saturday 13/9/2008 Page: 8

TASMANIA has 40 per cent lower carbon dioxide emissions, per capita, compared to the rest of Australia, but that's nowhere near low enough, says Premier David Bartlett. Mr Bartlett said for Tasmania to become a successful low carbon economy, emissions from all parts of the economy had to be identified and slashed. To that end, he said, the Government was calling for tenders to conduct a "wedge analysis", the first state to do so. with carbon pollution reduction and renewable energy targets in mind.

Mr Bartlett said the analysis was a major component of the Government's Tasmanian Framework for Action on Climate Change launched in July. It commits the Government to setting interim and sector-based emissions reduction targets by the end of next year. "Tasmania is also the first state to clearly spell out in legislation the path for reducing our emissions over tine." Mr Bartlett said.

The Climate Change (State Action) Bill 2008 before Parliament, sets a 2050 target of 60 per cent below 1990 levels, and provides for the establishment of interim and sector-based targets through regulation. "The new high level, independent Tasmanian Climate Action Council will play an important role in advising on the establishment and review of the targets," he said.
  • Other framework components already announced include:
  • Subsidies for low income earners to audit their energy use and insulation.
  • Partnership agreements with local government to tackle climate change.
  • New climate change considerations in the Regional Planning Initiative.
  • Commissioning research into how the agricultural sector can work cleaner.
  • A major study on how to "sex up" public transport.

Sun shines on energy project

Sunday Mail Brisbane
Sunday 14/9/2008 Page: 25

FEDERAL Environment Minister Peter Garrett has launched what he hopes will be the catalyst for the country's first fully integrated solar city at Magnetic Island off Townsville. The Smart Lifestyle Centre is part of the $32 million Townsville Solar City program and is a major education tool for the community. Mr Garrett said north Queensland was an obvious place to promote solar energy to feed back into the main power grid, particularly Townsville where there's an average of 300 days of sunshine each year.

The Magnetic Island project is the only one of its type in Queensland and one of seven nationally which it's estimated will reduce carbon pollution by 76,000 tonnes annually. It's the first of several projects to be rolled out across Townsville's suburbs during the next three years. Ian Cruickshank, manager of the Solar Cities project, said Magnetic Island residents had embraced the project and already there had been 100 energy audits of homes on the island and 31 photovoltaic systems installed on the roofs of homes.

"We're starting to get some traction," Mr Cruickshank said. "It's early days yet, but we are getting feedback that people are saving money on their electricity and on days like this we are generating a lot of solar energy. "We've already taken the equivalent of 22 houses off the grid with the solar energy and efficient light globes."

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.

Bank breaks ranks on emissions

Sydney Morning Herald
Monday 15/9/2008 Page: 3

AUSTRALIA'S second biggest bank, Westpac, has spoken out against the business community to urge the Federal Government to pursue a strict emissions trading scheme with tougher reporting standards for business. In a submission to the Government, obtained by the Herald, Westpac warns against handouts for companies seeking to shelter themselves from the full force of the scheme.

"Utmost care must be exercised that compensation measures do not undermine the integrity of the scheme or alleviate the impact of the introduction of a carbon market," says the submission, one of hundreds received by the Government in response to its green paper on the design of the scheme.

The Australian Food and Grocery Council will today release its submission calling for bigger concessions for energy intense, trade-exposed industries, including tariffs on imports from countries with less stringent environmental regimes. Amid the clamour for relief, Westpac has urged the Government to stick to its guns.

"The market must be allowed to function effectively, without overt interference from buffering policy mechanisms or overly generous compensation allocations which distort the market ... [or] provide market participants with the means of avoiding the medium to long-term behavioural change intended by the introduction of a price on carbon." The position is in stark contrast to the Business Council of Australia, which represents the country's top 100 companies. It has issued dire warnings of multiple bankruptcies under the scheme because proposed levels of compensation are "not sufficient".

Westpac is a member of the council but has fallen out in the past over the council's reluctance under the former mining boss Hugh Morgan to state an early position on climate change. Westpac's former chief executive David Morgan, who is married to the former Labor environment minister Ros Kelly, was a driving force in establishing the Australian Business Roundtable on Climate Change in 2004 after frustration with the council over policy.

Westpac's submission offers strong support for an emissions trading scheme. "Doing nothing is not an option. Failure to implement an effective response to the challenges posed by climate change will endanger Australia's future economic prosperity," it says. In an attempt to limit special case pleading by industry, Westpac proposes the process by which a company is deemed "energy-intense and trade exposed" - and therefore forced to participate in the scheme - be subject to regular review and determined five years in advance.

To avoid political interference, Westpac also supports an independent body such as the Reserve Bank to administer the scheme to ensure it is run "as independently as possible, free from political sensitivities or representations from impacted industry sectors".

Other measures advocated include: no cap on the price of permits; quarterly rather than annual reporting on emissions; more regular auctioning of permits; broad industry sector coverage; encouragement of businesses not covered by the scheme to participate by qualifying for and selling "offset credits"; permits not to be labelled "financial products" because of the regulatory hassle involved; and transactions to be GST-free.

"Westpac has sought to propose measures aimed at ensuring an efficient, liquid and transparent carbon market with a smooth process of price discovery and avoiding the sudden market shocks which beset the early stages of the European Union emissions trading scheme," the submission says.

Westpac, like all other banks, stands to benefit from the establishment of a new market for emissions permits, by advising clients on how to cope with the scheme, performing trades for them, and more directly, by trading the permits to make money, as with trading in other commodities.

Eco-friendly car rebates

Herald Sun
Monday 15/9/2008 Page: 9

BUYERS of environmentally friendly cars would get cash rebates while those buying gas guzzlers would have to pay more, under a proposal to be considered by state and federal governments. A government-commissioned discussion paper also suggests cutting registration and stamp duty charges for new light vehicles, based on their emission levels.

The discussion paper, prepared by the Australian Transport Council and the Environment Protection and Heritage Working Group, also suggests the inclusion of fuel consumption and CO2 data in new-vehicle advertisements and new environmental standards for vehicle manufacturing.

The transport sector is the nation's third-largest source of carbon pollution. There were claims yesterday that thousands of food manufacturing and processing jobs could be lost when carbon emissions trading begins. In a submission to the Department of Climate Change, the Australian Food and Grocery Council said sections of the industry might be unable to compete with imports.

In the absence of a global approach, any domestic emissions trading scheme that imposes costs will make domestic companies less globally competitive, and may well contribute to the relocation of the manufacturing base offshore, taking the emissions with it," it said.

Food processing is the nation's largest manufacturing industry, employing almost 200,000 people. An industry source said some companies had already begun considering moving overseas. The council wants a carbon price cap of $5 or $10 a tonne and consideration of a "border tax" on imports from countries without adequate greenhouse gas reduction policies.

Power switch: it's time to put our uranium to work

Canberra Times
Monday 15/9/2008 Page: 15

The Australian Government should heed the call to informed realism made recently at a conference of the Australian Industry Group in Canberra. Here, Don Argus, chairman of BHP Billiton, exhorted delegates to "start talking seriously about using the country's vast uranium resources for domestic use" and " to engage in a debate about nuclear energy". Without nuclear energy Australia would face a century of environmental, economic and geopolitical disadvantage and would miss out on the optimal technology for electricity, water and hydrogen production.

Argus is not the first head of a major Australian coal mining company to signal an interest in the promotion of nuclear fission as apposed to chemical combustion for Australia's baseload energy supply. Last month, the head of Macarthur Coal, Nicole Hollows, strongly endorsed the establishment of a domestic nuclear energy industry. She hoped Australia's first nuclear stations would be built and commissioned over the next decade.

At the present time on planet Earth about 27 billion tonnes of carbon dioxide is pumped into the atmosphere per annum. Were it not for nuclear energy this figure would be closer to 30 billion tonnes. The ever increasing contribution of this greenhouse gas from the developing economies - especially the giants China and India - is driven by their enormous coal-based demand for energy and their population increase, This will ensure energy resources consumed over the next two decades will be greater than those consumed over the past 100 years.

If Prime Minister Kevin Rudd and his climate change adviser Professor Ross Garnaut really want to demonstrate to the United Nations that Australia is a world leader in greenhouse gas abatement, they have one clear responsibility. They need to commend and endorse nuclear energy technology as the pivotal component of an Australian energy policy. Without such a commitment even the modest Garnaut target of a 10 per cent reduction by 2020 will be difficult to achieve.

Today the new paradigm in clean energy technology is nuclear energy. Already Australian uranium supplied to 11 nuclear-powered trading partners provides them with low-cost energy security and is destined to avert some 15 billion tonnes of greenhouse gas emissions over the next 20 years. All but one of the countries that attended the recent G8 summit in Japan - some of theta as observers - already have, or are in the course of planning, a major domestic nuclear energy industry. Remarkably, and sadly, the sole exception is Australia.

The real climate change challenge for Australia is to embrace an energy policy that has the full endorsement of expert scientists and engineers and provides clean baseload energy security for the nation at the lowest possible cost. When such criteria are satisfied, the secondary task of implementing an emissions trading scheme or a carbon tax is simplified both in terms of econometrics and the introductory timeline. The task then becomes focused not on political spin, as at present, but on national interest.

In February 2008, despite growing global and Australian approval for nuclear energy, Climate Minister Penny Wong reasserted the Australian Labor Party's opposition to it and promised to press for the greater use of "alternative energy resources". She stated, "We don't need to go down the path of nuclear energy. What we do need to ensure is that we look at renewables, and the Government has a 20 per cent renewable energy target by 2020 to drive investment in the renewable energy sector.

We will also be investing in carbon capture and storage so there is a clean coal future for Australia." The Australian Government could well learn from Australia's uranium trading partners as it shapes its energy and climate change policies. Wong should endorse the energy technologies that provide real energy security and offer the largest emission reductions at the lowest cost and not the other way around.

Her aspiration for "renewables" and "clean coal" clearly does not fit the template. Indeed they are highly questionable propositions on both technical and economic criteria. The introduction of nuclear energy and a nuclear industry into Australia is a matter of great urgency. From the point of view of global warming, it would be desirable to have our first five nuclear energy stations operating by 2020 and to have at least 25 GWe nuclear plants by 2050.

Without such a provision there will be little hope of meeting our stated emission reduction targets. Adopting such an energy policy would transform the token political gesture of ratifying the Kyoto Protocol to the practical and ethical high ground of a real contribution to the global climate change problem. It would undoubtedly be highly commended by the UN at next year's Copenhagen climate conference.

Leslie Kemeny is the Australian foundation member of the International nuclear energy Academy. He is a visiting Professorial Research Fellow and an internationally acknowledged consulting nuclear scientist and engineer.

Green LNG exporters call for special treatment

Monday 15/9/2008 Page: 27

AUSTRALIA'S $20 billion liquefied natural gas (LNG) industry has called on the federal Government to create a category of "Clean Global Contributors" in its proposed emissions trading scheme. The Australian Petroleum Production and Exploration Association argues in its response to the Government's green paper that LNG plays such a crucial role in the global move towards carbon constraint that exporters of the low-emission fuel should not be penalised for the emissions associated with preparing gas for export.

Under the proposal, the Clean Global Contributors category in the ETS would sit alongside other groups, which will be compensated by the government during the initial stages of the scheme including Emissions Intensive Trade Exposed Industries (EITE) and Strongly Affected Industries.

"Australia's liquefied natural gas industry is today urging the Government to recognise a new category of export industries that fights climate change the clean global contributors," APPEA chief executive chief executive Belinda Robinson told The Australian yesterday.

"APPEA's submission to the Carbon Pollution Reduction Scheme Green Paper process calls on the government to ensure that Australian industries, that materially assist the world move to a lower emissions future, are not hampered by a domestic emissions reduction scheme operating in the absence of a broad global scheme." Australia's LNG exporters were surprised in July when the Government's green paper did not include them in the EITE category of groups, which would receive free permits as the scheme was phased in.

APPEA's CGC's proposal aimed to continue to encourage developing countries to use lowcost, low-emissions liquefied natural gas while protecting Australian exporters who become liable for the emissions created when they cool the gas to minus 163 degrees Celsius so that it turns into liquid-form and can be exported.

"The category of Clean Global Contributors would be subject to materiality tests and sit alongside Emissions-Intensive Trade-Exposed Industries and Strongly Affected Industries," Ms Robinson said. "Every extra tonne of cooled gas that the LNG industry can export to China will help avoid global greenhouse emissions of up to 6.8 tonnes in net terms.

"That's why the growth of the LNG industry is so important because clean-burning natural gas provides a vital stepping-stone on the path to lowemissions economies." While gas produces between 50 and 70 per cent fewer emission than coal when used in electricity generation, most of the emissions the industry is liable for are created when gas is refrigerated in Australia so that it liquefies and can be exported to other nations.

Any export industry that can demonstrate the ability to deliver net greenhouse reductions for the world and meet a materiality threshold should be included in the Clean Global Contributors category," Ms Robinson said.

"It's important to understand that such a mechanism would be an interim measure only to partly address the disadvantage created by a domestic emissions trading scheme in the absence of a global agreement." The LNG industry warned that more than $100 billion in investments could be jeopardised if it is not compensated in the same way as other companies that were heavier polluters and similarly unable to pass on cost increases in international markets.

Solar the most economical

Adelaide Advertiser
Monday 15/9/2008 Page: 44

ELECTRIC hot-water systems may be the cheapest to buy and install but the cheapest by far to operate is a solar system, costing as little as $120 a year. "The old electric hot-water heaters are really expensive beasts to run," said the spokesman for national consumer group Choice, Christopher Zinn. "They came from another era," he said.

When replacing or installing a hotwater system, people need to consider the fuels available - electricity, gas or even the sun, and the type of unit they require - a storage heater that keeps water hot within a tank for use at any time, or an instantaneous heater that heats water as it is required. According to a recent report by Choice, with the average person using about 50 litres of hot water a day, the hot-water system can account for a large part of the household energy bill.

Origin Energy Institute manager Anne Armansin said hot-water systems were often not a purchase that involved a lot of planning, unless a new home was being built. But she said it was important for people to consider their alternatives before an emergency demanded prompt action.

"Those of us who think ahead would be looking at our solar options ... and matching that with a gas booster," she said. "That way, you have hot water at the lowest running cost and the least impact on the environment." Ms Armansin said the outlay costs were high for a solar system - up to $10,000, according to Choice - but rebates could be favourable depending on the type of unit being replaced.

The Federal Government offers a rebate of $1000 to householders with an income of less than $100,000 for replacing an electric storage hotwater system. The purchase of a solar hot-water system may also attract Renewable Energy Certificates under a Commonwealth scheme to promote renewable energy, which can be sold to further reduce the cost of the unit.

The South Australian Government also offers a rebate, in some circumstances, of $500, depending on the unit being replaced. Ms Armansin said the cheapest hotwater system to buy for a medium household was a 250-litre electric storage unit available for about $1078, but if it was connected to a continuous heating system it could cost nearly $1000 a year to run. A solar unit with a gas booster - to heat water on cloudy days - cost about $3000 after the Commonwealth's $1000 rebate but only $120 a year to run.

Tuesday 30 September 2008

Life in the eye of the storm

Saturday 13/9/2008 Page: 10

As Australia's chief weatherman heads to Geneva to work for the UN, he leaves as his legacy an urgent message on climate change - your time starts now.

IF AUSTRALIA'S response to climate change could be likened to a marathon, here's how Geoff Love would call the race. John Howard's government had a dose of the pre-race jitters as it considered whether to get off the starting blocks. But the Rudd Government - with its efforts on emissions and water trading - has taken the nation over the starting line.

Love, who recently completed his term as Australia's chief weatherman, likes the marathon analogy because he sees the problem of climate change as long-term one. He says the outlook for the next two decades shows relatively similar outcomes regardless of the amount of greenhouse emissions. It's when the models reach 50 or 100-year time scales that the differences between a low and a high-emissions world blow out.

However, Love says, the only way to affect the long-term impact is to begin changing the way we live now. "You've got to run a marathon but you've got to get out of the blocks now, you can't stand around and discuss how far 42 kilometres is much longer. There is a bunch of urgency in starting to do things, in getting balls rolling." Love's time at the Australian Bureau of Meteorology could be dubbed a marathon in itself.

Like many of its employees, he was there a long time - more than three decades give or take a few absences - and speaking just after he finished at the bureau, he was still waiting for the reality of his departure to sink in. "I joined in '75, I've come and gone a few times, but it's been the main piece of my life for 33 years," he said. It still doesn't quite feel real (that I've left)." In a carefully worded manner typical of scientists and public servants the world over, Love says of his time at the bureau that he's "tried not to play on the policy edge". "I suspect I could do the policy work as well as anybody, but that's not my role and that's not what I'm paid for, so I do try and stay out of that, unless invited."

But the 57-year-old is not afraid to express some views that could be interpreted as political. He believes Australia is over governed for its population, that no one has shown the appropriate "statesman-like" leadership required to tackle climate change, and that despite the best intentions of those involved, an emissions trading scheme will bring unintended economic consequences.

And asked about his involvement in the Intergovernmental Panel on Climate Change's fourth assessment report that gained so much global attention, he laments what it could have been. While describing it as "a good product" with "solid science", he says there was also plenty of good science that was left out due to the sensitivities of various governments.

"Sometimes there's a great euphoric feeling when you finish a big task like that, but there wasn't, there was just sort of disappointment and a bit of anger at all the compromises being struck with the really critical text at the end ... taking out things that some governments are sensitive to." Because it is governments that control the final shape of the documents, he says, and not the scientists, the result is "very conservative".

"The world is divided into political blocs, and there are a number of governments that are sensitive to all sorts of things in the greenhouse issue, and at the end of the day the IPCC reports are really compromised documents, the lowest common denominator." Already, it is apparent that warming, Arctic ice melts and emissions levels are ahead of the worst-case scenarios outlined in the previous report. And Love, a former secretary of the Geneva-based IPCC, predicts this trend will continue. Over the next 10 to 15 years, he believes people will come to realise how constrained the IPCC reports were.

"Just the measurements of what's happening will show that governments have forced a pretty conservative outcome." Love has just returned to Geneva, where he started a new role this week as a director of the World Meteorological Organisation, the United Nations agency that established the IPCC. A two-year appointment, his job will be to help countries improve responses to floods, cyclones and other natural disasters.

It's yet another foreign base to add to a list that already includes Tokyo and Colorado, and a long way front the leafy suburb of Ivanhoe where he was born and bred. He likes to joke that he was educated at Ivanhoe Primary and the former Heidelberg High - both on Waterdale Road and then La Trobe University, at the end of Waterdale Road. "I didn't go far." His family didn't have a background in academia or science - his father was a fitter and turner before finishing up in hospital administration, and his mother worked at a pharmacy before managing a doctor's surgery. But being a "Sputnik-era kid", he felt drawn to physics and the way it provided ways to understand the world.

"Physics just brought a whole lot of things together, and it was about explaining why things are like they are." After graduating from La Trobe, he taught at the physics department of the Ballarat Institute of Advanced Education, while trying to complete his master's thesis on upper-atmosphere disturbances. A couple of years later, he applied for the meteorology training course at the bureau, having decided research, not teaching, was his calling. His unfinished master's almost cost him the job - not because he had yet to complete it, but because he was doing it at all. Unofficial bureau policy then was not to recruit anyone with higher degrees, because they were looking for forecasters, not academics.

"They said if you'd actually finished and had your degree we probably wouldn't offer you a job." Meteorology training completed, he moved into the bureau's research branch with the task of investigating floods and tropical cyclones, in the aftermath of the 1974 Brisbane flood and cyclone Tracy. When the call came nine months later for forecasters to head to Darwin, he saw it as an opportunity to research tropical meteorology where it was. He was the only person to put his hand up for the job.

After two years living in the Northern Territory capital as it was slowly rebuilt after Tracy, Love and his first wife packed their bags for the US, where he completed his PhD at Colorado State University with tropical cyclone expert Bill Gray. Both his children were born in the US - son David the day after he submitted his thesis - and it was for them that the young family returned to Australia, where Love and his wife wanted to raise their children.

But they were only back at the Darwin's bureau office for about a year before they were on the move again. There was a speaking tour of China, followed by research at the Meteorological Satellite Centre in Tokyo. Then back to Darwin in 1985 in a new role as regional director.

Aged in his 30s, Love knew it was a job that could set him up for a comfortable life. "I thought, 'Gee, now I'm a regional director, now I can have a nice house overlooking Fannie Bay; I could sail and drink beer and play tennis for the rest of my life . . . but I'm probably more interested in trying to do more.' SO THE family returned to Melbourne, where Love ran the national meteorology centre for 10 years. He was made a deputy director in 1997, a role he filled for five years before becoming secretary of the IPCC in Geneva for 18 months. In 2003 he returned to Melbourne to take the top job at the bureau.

"I probably halved my pay, but I always wanted to run the bureau, and I don't regret a minute of it." Among his professional highlights at the bureau, lie lists developing strategies for supercomputing and helping to get radar images on the web. From his Collins Street office - which commanded views of the Docklands and the giant "Eagle" sculpture he also oversaw the establishment of a new collaboration between the bureau and CSIRO on weather and climate research, and began a review of the bureau's operations.

That review, published in October last year, found the bureau to be "an Australian icon" but said it faced challenges in the year ahead, and needed to modernise and broaden the experience of its staff. Love says many of the report's recommendations have been adopted, and he believes he has left the bureau in a good shape - despite the pressure to run a tighter financial ship.

"Because it's not a political organisation, it will never get a lot of largesse through the political system unless it's really in trouble,' he says. "Canberra keeps turning the screws so that you don't waste resources, and the question is at what point does that become counterproductive? It's hard for them to judge, and the community I hope will express an opinion." His decision to leave the bureau, he says, was not due to any dissatisfaction he applied for another terns as director before withdrawing his application. "I'm not leaving unhappy, disgruntled, cross with anybody," he says. "I've just got another opportunity."

The Geneva position will be a chance to have a greater global impact, and bring him and second wife Kathleen - an American - closer to her family. Love has left Australia as the nation grapples with some tough questions about how to deal with the changing climate. In the past week, Federal Government greenhouse adviser Professor Ross Garnaut has cone under fire from environmental leaders and some key UN scientific advisers over his recommendation to cut emissions by 10% below 2000 levels by 2020 as part of an achievable global deal - a reduction critics describe as not enough.

But Love says Garnaut is recognising that Australia is too small to be a global leader. We do play a significant role, but when the elephants such as the USA, China, Russia and India dance, the mice such as Australia have to position themselves carefully." Disagreement on the right path of action will continue as long as uncertainties remain about precisely how climate change will affect the environment and the economy.

As a nation, he says, the best thing to do is get behind whatever the Government's adopted strategy is "and give it a good go". "Because in the end any decision to reduce emissions is infinitely better than no decision." Looking ahead, he sees a need to integrate good science with good economics, something he says has yet to occur. "I think science rums its race out here. I think the economists run a different race; it's not quite blending together." Love also questions whether politicians, without the scientific background and with their focus on short-term electoral cycles, are the right leaders when it comes to climate change.

"Nobody has really stood up as being sufficiently statesman-like and above the problem," he says. "Until we can do that, I suspect a lot of our responses are a bit uncoordinated or fragmented ... the politicians have to take a step back and let somebody who has those skills stand up." With Australia's clearly drying landscape, particularly inland, Love - who is due to become a grandfather for the first time in October - says he is concerned about what the future may hold for his family. "I'm just not sure whether it's my grandchildren or my great-grandchildren who are really going to have to work pretty hard."

Nevertheless, he describes himself as an optimist. "The human species is pretty resilient, the world's pretty inventive, so I think we'll come through." Australia, with its small population and stable political system, has as good a chance as any to get things right. "We've got just 20 million people, we are a bright country and we're well resourced. If we can't solve it, nobody can. If we can't come up with a decent national response, nobody else has got a bloody hope in Bell."

Geoff Love
Born: Ivanhoe, Melbourne, December 1950.
Education: 1972 Bachelor of science (honours), La Trobe University.
1975 Meteorology-in-training course, Australian Bureau of Meteorology.
1976 Master of science, La Trobe University.
1982 PhD, Colorado State University.
1988 MBA, Deakin University.
Career: Includes positions in Melbourne and Darwin with the Australian Bureau of Meteorology, most recently director in Melbourne (2003-08); secretary, United Nations Intergovernmental Panel on Climate Change, Geneva (2002-03); now director of World Meteorological Organisation, Geneva.
Achievements: One of the many IPCC contributors who shared in the 2007 Nobel peace prize.
Family: Married to Kathleen; two children, Sonya and David, from first marriage.
Interests: Tennis, sailing, music.

Power of current affairs sparks waves of interest at Newhaven

Saturday 13/9/2008 Page: 4

WHEN experts started looking for somewhere to try tide power, the advice was clear: you won't do better than the channel that separates San Remo from Phillip Island. The Singapore-based renewable energy company Atlantis Resources Corporation is hard at work there testing the power of the ocean. So strong is the current that Matthew Harry, a local cray fisherman and chairman of the San Remo Fisherman's cooperative board, says that when the tide's running at its fastest, it can be "almost impossible" to dock a large fishing boat.

"You've really got to know exactly what you're doing," he says. Although the trial began three years ago, the company was initially coy about publicity. Not only was ARC wary that others might steal the idea, it did not want to raise expectations too high. Since 2006, the modest apparatus off the pier at Newhaven has bemused locals and intrigued visitors to Phillip Island. Not only was all the activity happening under water, it was all under wraps.

Initially, two turbines were used, and based on data collected over tinge, a more sophisticated turbine, the Nererus, was created in Melbourne by ARC, and installed in April 2008. The new turbine works on a horizontal axis, creating kinetic energy as it is rotated by tidal flows. It works on the same principles as a wind turbine and is already feeding electricity into the grid. Testing will continue there until at least 2011, at which time the company's permit expires.

Although similar trials are going on around the world, none feed electricity into the grid. This week, ARC announced that the US-based investment bank Morgan Stanley had increased its stake to become the company's biggest shareholder. As part of the deal, ARC acquired Morgan Stanley's tidal power project development business, Current Resources.

The result, says, Tim Cornelius, ARC's chief executive, is "very exciting". Most importantly, he said: "We can now marry the cutting-edge research and development of ARC with that of Morgan Stanley, resulting in a much stronger product." While wind and solar energy have been among the best forms of renewable technology, ARC believes tidal currents have the advantage of offering "unparalleled predictability".

Mr Cornelius describes the Newhaven trial as a continuing success story, through research collected and environmentally. "We are collecting groundbreaking data at Newhaven, and plan to continue doing so until at least 2011," he said. "Protection of the natural environment is paramount. We have people complete regular water and seabed monitoring, and have found that through all trialling, the environment has suffered no adverse affect." While wind turbines can be a danger to birds, there is no evidence that marine life has been affected.

So successful has the trial been that the company is thinking about a second Victorian trial, in the Queenscliff area, where Mr Cornelius says there is huge potential. Bass Strait and the Pilbara region of Western Australia are other areas ARC are looking at with interest. "King Sound, located in the Pilbara, has some of the most powerful and fastest-flowing tides in the world," Mr Cornelius said.

There was also scope to apply the technology to fast flowing rivers. All of these new trials would be pending permits, which is why we really need a sustained effort from the Government to support renewable energy," he said. "They play an important role in that they really need to support companies like us through the permit stage, as it is all very new technology."

Monday 29 September 2008

Snowtown wind farm to double

Adelaide Advertiser
Friday 12/9/2008 Page: 30

NEW ZEALAND energy company Trust Power is on track to more than double the size of its $220 million wind farm at Snowtown, while it plans to go ahead with its controversial Myponga project next year, pending government approvals. In the Mid North, the 47th and final Stage 1 turbine was installed last week. When operational, it will result in the farm powering about 55,000 homes.

But the company is assessing the commercial logistics for Stage 2, which is about 120 turbines to feed 250-plus megawatts into the power grid. "We've got the planning approval, so we're finalising commercial arrangements to ensure the economics work so that we can build it," said business development manager Rodney Ahern. One element of the process already sorted is dealing with farmers and landowners along the Barunga Ranges.

"We lease the land from farmers and they get royalty payments for the turbines and, in many cases, they make about as much money out of the turbines as they do out of farming, especially in drought conditions," Mr Ahern said. One of those property owners, Neville Michael, has 14 turbines on his land and is earmarked to have more of the 80m giants. "Initially I thought it would be a bit like Gulliver with those enormous fans, but at a distance they're really not too bad," he said.

In Parliament on Wednesday, the firm's Myponga wind-farm project was raised, having been the subject of a bitter battle with locals since approval in 2003. While Mr Ahern told The Advertiser Trust Power was "getting ready for construction hopefully for next year", Planning Minister Paul Holloway said he was concerned about ongoing delays in building the 16-turbine wind farm. "It certainly is unusual that, when approval is given, it takes such a long time for construction to be undertaken," Mr Holloway told Parliament.

Carbonated commerce

Summaries - Australian Financial Review
Friday 12/9/2008 Page: 34

The local head of General Electric recently told an American Chamber of Commerce lunch that climate change is 'the biggest business opportunity of the century'. Meanwhile the Business Council of Australia has focused solely on old dirty industries that will suffer from the institution of an emissions trading scheme. Austrade reports that the renewable energy sector has grown at 15 to 30 percent a year since 2002 and US$100 billion was invested in the sector last year.

The Australian government is committing $500 million to a renewable energy fund. Forest Reinhardt of Harvard Business School says the emerging carbon economy is an opportunity for innovation and leadership over short-term balance sheet focus. Peter Meurs of WorleyParsons says those who invest early in this new economy are 'going to do very well'. Baker & Mackenzie is offering investment banking services for the low-carbon economy. UBS has launched a 'greenhouse index' and Macquarie Bank has recruited former Australian of the Year Tim Flannery to design rainforest projects for carbon offset.

The Carbon Disclosure Project has signed up over 3,000 companies including: AMP, Foster's, Wesfarmers, Merrill Lynch, Goldman Sachs, Morgan Stanley, AIG, Barclays, Colonial First State, HSBC and Rupert Murdoch has endorsed the project. PricewaterhouseCoopers reports a massive change in Europe since carbon trading began in 2005 and as more Kyoto Protocol signatories get on board, this alternative economy has immeasurable potential.

Line in Chinese deal to tap gas

Friday 12/9/2008 Page: 19

EMERGING clean fuel producer Linc Energy has launched into the Chinese market, where it plans to use its gas and coal technologies to set up commercial projects. The gas-to-liquids hopeful has joined forces with its new Chinese partner, Xinwen Mining Group, to develop underground coal gasification (UCG) and gas to liquids (GTL) projects in the Yining mining area. The move follows an announcement last week that Xinwen had bought Linc's Teresa coal exploration permits in Queensland's Bowen Basin for $1.5 billion.

Linc government and environment affairs general manager Justyn Peters said the company was also in talks with other Chinese miners interested in its UCG and GTL technologies. "It is good news that Australia is exporting clean coat technology to China. Xinwen came to our demonstration plant in Chinchilla and were gobsmacked," Mr Peters said. Under the deal, the companies have agreed to negotiate a formal agreement to form a joint stock company to develop UCG fields to produce gas for transport directly to Shanghai.

It will also provide the feedstock for a GTL facility to produce liquids that will be transported by pipeline to the Dushanzi oil refinery. Xinwen already has government approval for UCG, which means that once commercial terms are finalised, the joint venture partners can move directly into commercialisation and start tapping stranded coal in China. Mr Peters said dealing in energy-hungry China had been a straightforward process and the country was supportive of the technology.

"There has already been known UCG fields in China and they know what the technology can do and know it works, but wanted to combine that with the GTL technology," he said. "In China and India, the governments' energy policies have UCG as a leg." Xinwen's purchase of the Queensland coat permits still needs approval from the Foreign Investment Review Board, which has been under the spotlight this year with China's focus on Australia's booming resources sector.

In July, Treasurer Wayne Swan said he had received $30 billion worth of Chinese foreign investment proposals since the previous November, and that applications would be screened to see if they were consistent with Australia's national interests. But Mr Peters said there had been no resistance from China for the Australian company's interest because it was a joint venture. "The Government in China is completely open to it and foreign companies in joint ventures in China just need to take a minority interest because natural resources are owned by the state," he said. The push into China could see Line's first commercial GTL plant operated out of the Asian region, upstaging its flagship project in Australia.

The Queensland-based company is close to finalising the pilot plant at Chinchilla to prove that gas produced through UCG can be converted into products such as diesel and aviation fuel. It then plans to build a commercial plant at the site, but the move into China could progress faster, with final approvals stilt needed in Australia. Linc's stock has jumped substantially following a week of big announcements, closing yesterday at $4.15, valuing managing director Peter Bond's 51 per cent holding which he is free to trade at $841 million.

Backers wary of generators going bust

Friday 12/9/2008 Page: 4

BANKS and other financial backers of electricity generators believe there is a significant likelihood one or more power companies will go broke if no compensation is provided under an emissions trading scheme. A PricewaterhouseCoopers survey of 15 banks, investors and analysts of the electricity sector found most financiers were still willing to lend to the sector, but were now charging a risk premium because of the current uncertainty over the industry's treatment under an emissions trading scheme from 2010.

The survey is included in a supplementary submission to the Rudd Government's green paper by the National Generators Forum. It indicates investors are already looking to reduce their exposure to coal-fired generators, and that most had not started factoring in the risk of a carbon price until 2005. The main threat of liquidation would be triggered by a major devaluation of generators' assets if an emissions trading scheme rules out compensation when the final terms are announced by the Government in December.

This would trigger accelerated debt repayments under the existing financing and hedging arrangements negotiated by the power companies, with some generators understood to be highly geared and at significant risk of loan defaults. Most financiers thought breaches of the financing arrangements were likely if no compensation was provided, with insolvencies rated as a possibility. The NGF has warned the financial stress would impact on investment in new technology.

"Shifting between technologies is not costless and simultaneous significant funds and lead times are required to decommission existing generation and replace it with new generation," the submission said.

One of those surveyed was Sajal Kishore, associate director of Fitch Ratings, who said while the questions were biased in favour of a negative response, the sector faced worsening financial stress and uncertainty. "The real thing is whether the generator is able to pass on those costs or not," he said. A coalition of energy providers has supported the introduction of a trading scheme but said the scale of the transition required structural assistance for the power sector.

The electricity supply association, electricity retailers, NGF and the gas pipelines association said a modest target for 2020 was required to "allow the wider economy greater opportunity to adjust to one of the most fundamental structural adjustments ever applied by fiat". Generators are already unable to negotiate hedge contracts beyond the end of the year because of uncertainty about the carbon price.

"To enable generators to write future hedge/bilateral contracts, the emissions cap and trajectory needs to be announced as soon as possible, and permits made available," their joint submission said. "Currently, there are very few hedge contracts being offered beyond June 2010 because the cost of greenhouse gas emissions is unknown."