Edition No. 1, August 15, 2008
Protect petroleum industry rights,
GHG storage inquiry urges
Petroleum industries’ “pre-existing” rights should be
preserved to minimise investors “sovereign risk” under Fed Govt laws
regulating the undersea storage of CO2 storage, a parliamentary committee
recommended today. But the minister should be able to force the industry to
negotiate with other players, said the report on the inquiry into the
govt’s Draft Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill
2008 released this morning. Ctee chair Dick Adams said “one of the most
contentious elements of the legislation” was the protection it gave to
pre-existing petroleum title holders and managing their interactions with
proponents of GHG storage. That “could frustrate the establishment of GHG
storage activities”, Adams said in his foreword to the report. Empowering
the relevant minister to direct parties to negotiate in good faith and
“direct an outcome” was the solution recommended. Still, the ctee
assumed petroleum title holders would most likely carry out most GHG
storage because they had the technical expertise. As such, they could hold
combined petroleum exploration and GHG storage permits, the ctee said. The
Fed Govt should also offer financial incentives to encourage investment in
GHG storage given the significant cost involved, the ctee said.
 Return to Top
Aust corporates ‘drag the
chain’
Aust’s biggest listed companies are not taking their
climate change impact as seriously as their overseas counterparts, new
research has found. A study
conducted by London-based Ethical Research Investment Services (ERIS)
analysed the climate change impact of 3,000 global companies listed in the
FTSE 300 index. Parallel research by the Canberra-based Centre for Aust
Ethical Research (CAER) focused
on ASX 200 companies. ERIS found the activities of 35.6% of the FTSE firms
had a high or very high impact on climate change. CAER found the figure was
much higher for Aust’s ASX 200 at 48%. Eighty-four percent of FTSE 300
companies had a corporate-wide commitment to tackling climate change (39%).
But board remuneration was linked to climate change strategies in only 14%
of global corporates (4% in Aust). ERIS found just 25% of published
long-term GHG reduction targets (9% in Aust) was “an important indicator
of a company’s true commitment to reducing their impacts”. The research
found 39% of the Aust companies disclosed GHG emissions data, but only 11%
had the information verified externally.”
Return to Top
Target GHG industry support
Productivity Commission chair Gary Banks has questioned
emissions intensive industries’ claims they should be compensated for the
impact of the proposed carbon pollution reduction scheme (CPRS). In an
August 6 speech at
the Uni of Qld, Banks led a wide-ranging discussion of policy rationales
for industry support. He said there may be genuine reasons to consider
compensation for unexpected govt policy measures that “lead to a loss of
pre-existing ‘property rights’”. But for the CPRS that justification
was “being pushed to the limits”. “[T]he prospect that govt action
might one day be taken to address GHG emissions is hardly news,” he said,
citing the commission’s own inquiry in 1991 before the Rio Summit nearly
20 years ago. “Moreover, depending on how such compensation is paid, it
could delay the adjustments in economic activity that the [CPRS] is
designed to drive.” Banks urged the Fed Govt to ensure its industry
policy was “targeted at areas where market failures are likely to loom
large” rather than trying to “pick green technology ‘winners’”.
Some govt measures may be needed to support strategic research, he said.
Eg, if the carbon price failed to drive the technological innovation needed
to tackle climate change. But he strongly opposed govt support for
commercialising existing “green” technologies like the govt’s $500m
green car fund and clean energy technologies through a mandatory renewable
energy target. A market-based carbon price would make schemes like the MRET
redundant and “simply very costly industry support vehicles”. Banks
said “the growing intersection of environmental policy and industry
policy “has great political appeal, but can lead to confusion” about
its objectives. “It is important to separate genuine rationales for govt
intervention from convenient environmental pretexts for supporting
particular industries or activities,” Banks warned.
Return to Top
No GHG permit sales above the cap
Fed climate change dept head Martin Parkinson has roundly
rejected calls for new investors in emissions intensive industries to be
allowed to buy carbon emission permits above the cap set by the govt’s
carbon pollution reduction scheme (CPRS). Cement Aust CEO Stuart Ritchie
has told CE the biggest concern of emissions-intensive trade-exposed
industries (EITEs) was “how the [emissions] cap will address new growth
from investments in the economy …we want new investors to be able to draw
down permits from above the cap”. In a speech
last week, Parkinson repeated the govt’s position that the more support
provided to EITEs the more other non-assisted industries would bear the
cost of a carbon price. The govt was aware of the risk of “carbon
leakage” associated with restraining GHG emissions in the absence of a
global agreement, but it had to strike a balance, he said. “[I]t is
unrealistic to believe these tensions can be resolved by increasing the
national cap for new investments in the EITE sector.” Parkinson also
warned the govt to resist “the siren call of attempting to pick sectoral
or technological winners”, echoing Banks. Instead, the govt
needed to “focus on fostering a flexible, dynamic economy”. That would
allow resources including capital and labour to move between industries
according to where the market could use them most productively, he said.
Return to Top
E-tags could collect carbon tax
New motor vehicle technologies such as “etags” and
global positioning systems could be an efficient way to apply a carbon
price to fuel, says a discussion paper
on the review of Aust’s tax system released on August 6. The Fed Govt’s
current fuel excise was not an effective means to meet social or enviro
objectives, it said. “[F]uel excise rates do not substantially change the
decision to drive in particular vehicles (to reduce road damage), in
particular areas (to reduce noise pollution) or at particular times (to
reduce congestion),” the paper said. “New technologies (such as
‘etag’ and global positioning systems) are increasing the viability of
more efficient direct charging mechanisms,” the paper said.
Return to Top
Tax review will consider CPRS
The national review of Aust’s tax system (see E-tags
could collect carbon tax) would
advise the Fed Govt on how the tax system could be used to deliver promised
assistance to help low-income households cope with rising energy prices
expected to flow from its carbon pollution reduction scheme (CPRS). A
review discussion paper released last week (see E-tags
could collect carbon tax) said if the tax system
was used to compensate for a carbon price “it is likely to involve a
reduction in existing inefficiencies to the extent that there is a
reduction in (effective) marginal tax rates”. A spokesperson for fed
Treasurer Wayne Swan told Carbon Extra the review would “report in
stages” although there was no date yet for the CPRS tax paper. To
contribute to the final design of the CPRS the tax paper would have to be
released well before Dec when CPRS draft legislation was due to be
released. The tax review final report was due in late 2009, he said.
Return to Top
The market alone can’t cut GHGs
California’s
electricity use has “stopped dead” in its tracks since 1975 while
across the US it has grown by 50%. That was partly because electricity
generators had been subjected to state energy efficiency regulations under
two powerful govt authorities, Prof Michael Hanemann from Berkeley Uni told
an audience at the ANU’s Climate Change Law and Policy Centre
this week. Hanemann was in Aust to argue emissions trading alone would not
induce the behavioural change and technological innovation needed to cut
GHG emissions. Traditional economic theory claimed a carbon price set by
the market through emissions trading was a superior method to bring about
the behaviour change, but it did not explain whether it was the cap or the
price that changed behaviour, he said. That was the logic behind
California’s decision to adopt a mix of measures including a cap and
trade emissions trading scheme and energy efficiency, vehicle emissions and
other regulatory measures. California’s experience in tackling air
pollution also demonstrated the value of a “command and control”
approach, but Hanemann warned against directly translating this to cutting
GHG emissions. "CO2 is very different to SO2 and NOx. There is no low
CO2 coal … There is no end of pipe treatment available right now,” he
said.
Return to Top
COAG feed-in tariff paper missing?
Fed climate change minister Penny’s Wong’s promised
options paper for a national feed-in tariff for renewable energy is either
well overdue or being kept under wraps. Wong said on March 7 the COAG
climate change working group she chaired would prepare “an options paper
on a nationally consistent approach to feed-in tariffs for COAG by the end
of June”. This week neither the minister’s office, fed climate change
dept nor the COAG secretariat would tell Carbon Extra what had happened to
the paper. All said COAG would “look at” the issue at its next meeting
in Oct in Perth.
Return to Top
|
|
