The Bullroarer - Wednesday 16 July 2008

SMH - Emissions trading plan unveiled

The Rudd Government has opted for a softly, softly approach to emissions trading, which will most likely lead to an increase in the cost of living of less than 1 per cent. The Government's options paper on emissions paper, released in Canberra today, will ease Australia into a relatively gentle scheme on July 1, 2010. This approach is good news for industry and means there will be a limited impact on household budgets - but it's not likely to lead to deep cuts to greenhouse emissions in the short term.

SMH - Wong to ease squeeze at bowser

Labor's Climate Change Minister Penny Wong has started the campaign to sell the emissions trading scheme by rejecting claims the Government has ignored key advisers. The Green Paper on the Government's Carbon Pollution Reduction Scheme has included petrol in the trading scheme and recommends a "cent for cent" reduction in the current fuel excise. The move has been designed to ease the financial squeeze at the petrol bowser for consumers who are already facing fuel prices that are already 30 per cent higher this year.

The Government has admitted retail fuel and energy prices will increase as the result of producers facing higher costs from having to reduce emissions. The proposed cut in excise comes after Ross Garnaut, the eminent economist appointed by the Government before it was elected as its key climate change adviser, said the scheme should not alter market forces.

Professor Garnaut said petrol should be included in the trading scheme but believed cutting the excise to offset the carbon price on petrol would send a "funny signal" to world markets. Instead, he recommended in his first report that was delivered on July 4, that low income earners be given direct assistance to cope with the forecast in fuel.


SMH - Government to cut petrol excise

It is estimated the move will cost Treasury up to $1 billion a year in foregone tax revenue.

SMH - Electricity may rise by 16 per cent

SMH - Greens attack fuel excise cut

Crikey - Is Rudd truly serious on climate change?

Is the Prime Minister’s Office serious about addressing climate change? Is it even serious about getting an emissions trading scheme through the Senate? Its handling of the release of the Green Paper suggests its focus is on politics, first and last.

Business Spectator - Climate change caution

What we do know is that the fossil fuel industry has negotiated itself a massive windfall in the form of free carbon credits. Under the preferred options included in the green paper, the heaviest trade-exposed polluters, such as aluminium smelters, will have 90 per cent of their allocation given to them for free.

Other heavy trade-exposed polluters, such as the pulp and paper industry and various parts of the oil and gas and steel sectors, will get 60 per cent of their allocation for free. Coal-fired generators will also benefit from the government’s largess. They will get direct assistance in the form of cash or free permits. Right now we don’t know how much. That’s one for the lobbyists to fight over.

The coal industry, which has been criticised for investing little in new technology that could take the carbon out of its emissions, will get government assistance on carbon capture and storage options. The forestry industry will gain credits for planting trees, but no penalties for cutting others down. Petrol is included in the scheme, but the cost will be offset by reductions in fuel excise and other taxes.

There is little in this document on incentives on energy efficiency and renewable energy investment – considered by most to be the essential ingredients of a carbon reduced economy and the easiest to obtain. Those are subject to further reviews and more negotiations.

Business Spectator - Origin ups investment in geothermal JV

Origin Energy has raised its total investment in its South Australian geothermal energy joint venture with Geodynamics Limited to approximately $150 million, after the firms confirmed reaching a renewable energy milestone.

Origin managing director Grant King said: “This marks a further step on the road to better understanding our Australian geothermal assets. With this milestone achieved we can now move towards actually harnessing the energy contained in Australia’s hot-rock resources. We strongly believe in the growth opportunities of our low-carbon technologies in geothermal, solar and gas. Geothermal energy will play an ever more important role in securing the growing global need for clean energy technologies.

Cleantech.com - Origin Energy puts more cash into geothermal venture

Earlier this month, a draft report from Australia's climate change adviser called for an Emissions Trading Scheme in the country (see Australian report pushes for carbon trading). The government plans to issue an outline of the scheme later this month.

Geodynamics has currently drilled three wells, with the completion of the proof of concept phase including a 1 megawatt pilot plant to power the joint venture operations and the local township of Innamincka. The venture plans to build a 50 MW demonstration plant and drill a further nine wells, with the work expected to be completed in late 2011. Another nine plants will be built to produce an overall capacity of 500 MW, estimated to be complete in late 2015.

CNN - How technology can help aviation go green

Air New Zealand, for example, has begun testing Jatropha, a bush native to Central America that can grow in very arid environments, requires little water and has a much higher yield than crops like corn. Rob Fyfe, CEO of the New Zealand national carrier said they decided on the crop "because we wanted a fuel that had no connotations in terms of competing with the crops from indigenous forests." Air New Zealand has committed to running its fleet on 10 percent non-food biofuels by 2013.

CNN - Hot Solar Real Estate: The Southwest desert's real estate boom

Peak Energy - The cost of oil is totally bogus for surfers

Peak Energy - The Next Bubble And The Long Boom

Peak Energy - Floating vs Flying

Peak Energy - A Look At Some Second Generation Biofuel Companies

Peak Energy - Solar thermal power just got hotter with linear Fresnel technology

Peak Energy - Trawling For Tuna - But For How Much Longer ?

Peak Energy - 'The best thing that could happen to the country is if no oil is found'

So goodbye ETS and a big hello to CPRS (Carbon Pollution Reduction Scheme). An extra letter - we're making progress!

Please collect your genuine Titanic Deckchair from the attendant, pay him the price, and he will refund you in full! (That'll stop you from moving to any other ocean liner for your wild partying, and our future will be assured!)
;-)

One more - ABC - Ocean power surge

An Australian ocean power company expects to install wave and tidal power generators in the waters of King and Flinders Islands by winter next year. Sydney-based BioPower Systems met the Flinders Council recently to discuss the designs of the tidal power generator. The generator converts tidal force into hydraulic energy, and then into enough electricity to power up to 500 homes.

Despite early stumbles Rudd is keeping his word. He has also pre-empted some critics by keeping the carbon scheme separate from other economic factors.

However because of freebies and handouts I suspect the scheme could end up in the black. They could hand out a lot more than say $8bn in likely revenue. I suspect that oil refiners will be more than a little pissed they have to pay top dollar while brown coal generators get cash.

The scheme has compromised itself out of its original principles in several ways. An initial set carbon price eg $20/tonne CO2e may not gel with the yet to be announced target ie it is not a cap or physical limit. Annual carbon reductions of around 2% would seem to be required and that may not happen barring recession.

While soft targets get the full treatment the biggest carbon villains seem to get an indefinite holiday. Both the free permits and the cash could be on the stingey side but they could go on for years longer than intended. By 2015 or so those industries may still be on assistance. Whether or not the clean tech boom fills the gap is hard to predict but we have to go down this path regardless.

If we accept that we need at least a 2% carbon reduction per year and most most of these cut will have to come from a reduction in coal fired electricity generation, this will mean an annual cut of about 4% in coal fired electricity. A $20/tonne cost for CO2e, will be equivalent to $80 /tonne thermal coal. This is double the long term contract price, so even if the industry gets 60% permits free, every additional kwh is going to be considerably more expensive to generate, so the industry will be keen to cut back on supplying off-peak power at 1.2-2 cents/kwh. With the rise in prices for export thermal coal, I can't see any new coal fired plants built until a workable and economic sequestration demonstration is up and running(if thats possible). It seems likely that in time CSM powered plants will displace all coal fired plants above the free permits. This will result in CSM prices rising to world LNG prices.
One outcome will be much higher off-peak or base-load prices for electricity which will benefit wind generated power.
The 16% rise in retail electricity prices seems low unless the carbon tax is much less than $20/tonne CO2e.

Bernard Keane in Crikey asks,rhetorically I presume,if the Rudd government is serious about climate change.It has been obvious for some time,even to Blind Freddie, that the Labor Party across Australia has only a political interest in sustainability, which encompasses climate change,energy and population.Ditto for the Liberal Party.
They are only interested in sustaining themselves in power so everything is poll driven and directed at the next election even if it is more than 2 years away in the case of Rudd.
I am becoming more and more convinced that the only way there will be much real change for the better in Australia is if there are massive shocks to the system as in economic meltdown with geo-political strife as a wild card.
At the moment most of the population ,including the "leadership",seem to be living in an unreal world of their own.
At least it is pleasing to see that Geodynamics is getting some support out at Innamincka.

If Innamincka population 12 can shake off the bogey of fossil fuels then Australia population 20.6 million can't be too far behind.

Aussie oil, gas industry 'could suffer'

Investment in Australia's oil and gas industry could decline as companies that provide drilling, engineering and construction services reallocate their skills to work with national oil companies overseas, a survey says.

Full article @ http://tradingroom.com.au/apps/view_article.ac?articleId=152138

They'll go. Then the stuff overseas will run short, and they'll come crawling back.

I can't see it having any meaningful impact on gas developments at all - if they can find customers and they can find skilled labour, then projects will be built. Its as simple as that.

As for oil exploration, I think the combination of high prices and declining domestic output shows that there either isn't much oil left or they couldn't be bothered hunting for it before. Regardless of which is true, lets kick the oil habit and not care if they go or stay.

NT Government Media Release, 17 July 2008
Paul Henderson, Chief Minister
Fight for $50 Billion Inpex Project

The Inpex gas plant would be worth $50 billion to the Territory economy according to one of Australia’s leading economic analysts, Chief Minister Paul Henderson announced today.

Speaking at the opening of the South East Asia Australia Offshore Conference (SEAAOC) in Darwin this morning, Mr Henderson said ACIL Tasman’s assessment highlighted the importance of the Government’s campaign to secure the project.

“50 billion dollars for our economy means more jobs, more opportunities for business and more police, nurses and teachers,” Mr Henderson said.

“We have a strong case – but there is a long way to go if we are to win this project from Western Australia.

“One of our strongest competitive advantages is our clear message the Territory is open for business.

“Terry Mills and the CLP Opposition called for the Inpex gas project at Middle Arm to be scrapped– they continue to risk our competitive advantage and risk the project.

“Securing this project will take 100% commitment from Government – and I am fighting hard to give Inpex certainty it needs to invest in this project in the Territory.”

ACIL Tasman forecasts the project Inpex would inject $50 billion into the Territory economy over 20 years, from the start of site work in 2010.

ACIL Tasman identifies benefits flowing through to small business in a range of industries including manufacturing, maintenance, transport, training, office equipment, and accommodation.

“Inpex would be required to meet rigorous Northern Territory and Commonwealth environmental legislation and requirements,” said Mr Henderson. “Under my project you can have both – protection for the environment and our harbour and this world-class gas project.

“This project will create 4000 jobs and underpin our economy for decades – there is no room for doubt.

“I am 100% committed to securing this project because it means decades of benefits for Territory families.”