Big Coal Demands Billion-dollar 'ransom'

The Age

Tuesday March 18, 2008

Adam Morton, Environment Reporter

AUSTRALIA'S worst polluters, including the Hazelwood power station in the Latrobe Valley, have warned of soaring energy costs and escalating disruptions to power supplies unless they win a huge government payout as part of a new carbon trading system.

In an open challenge to the Government's climate adviser, economist Ross Garnaut, the $40 billion power generation sector has called for compensation topping $1 billion to help it cope with laws that will force it to pay to emit greenhouse gas.

The generators argued failure to compensate the biggest polluters - many of them dirty brown-coal fired power plants in Gippsland - could perversely hurt the environment by directing industry funding away from clean energy research to make sure the baseload energy supply did not break down.

Penny Wong, the Minister for Climate Change and Water, yesterday unveiled the timetable for drawing up carbon trading legislation, calling it the "most significant economic and structural reform" since trade barriers were removed in the 1980s.

The scheme, to start in 2010, will involve carbon emissions being capped and pollution permits sold at a market-set price.

The National Generators Forum push for a payout, spelt out in a submission to the Garnaut Climate Change Review, is at odds with an interim report released by Professor Garnaut last month, which argued against sweeping compensation.

Climate Institute policy director Erwin Jackson yesterday rejected the suggestion that forcing power generators to pay for carbon pollution without a payout would hurt the environment, arguing a strong emissions cap would force the market to invest in cleaner forms of energy.

"We shouldn't be giving (compensation) to industries that have failed to respond to what the market has been telling them was on the way for a long time," he said. The debate over compensation coincides with worsening predictions about the pace of climate change, including a weekend UN report that found glaciers melted nearly twice as fast in 2006 as they did in 2005.

Prompted by growing evidence that Asia-Pacific will be severely affected by climate change "in our lifetime", the Australian Climate Group - a collaboration between scientists, environmentalists and the insurance industry - will today release a report calling on the Government to stabilise greenhouse emissions by 2010.

The National Generators Forum, representing 22 power generators, estimates the country's electricity costs will rise from $78 billion to about $150 billion if it meets the Government's target of a 60% cut in greenhouse emissions by 2050.

Ms Wong said details of the Government's emissions trading legislation would be released in December, preceded by a public green paper in July. Vowing to take a "careful and methodical approach", Ms Wong said the July paper would spell out which industries would be covered, how pollution caps would be set and plans to help high-polluting industries.

Professor Garnaut will release a report on emissions trading on Thursday

© 2008 The Age

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