Chevron director lashes out at emissions trading

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Oct. 21 -- Chevron Australia managing director Roy Krzywosinski has echoed the recent comments of Woodside Petroleum's Don Voelte in condemning the Australian government's proposed emissions trading scheme.

Speaking at the 2008 Asia Pacific Oil & Gas Conference and Exhibition in Perth, Krzywosinski says the planned scheme would leave the LNG industry in the country bearing the full economic costs and would subsidize more carbon-intensive industries.

He said a number of elements in the proposed scheme could be obstacles to the further development of Australian LNG industry.

"Taking one scenario proposed and using the hypothesized emission price of $20/tonne over the life of a project would be likely to increase the operational costs of Chevron's Gorgon and Wheatstone developments by $100-$200 million each per year," said Krzywosinski.

"This additional cost could put the viability of projects in jeopardy."

He said a well-designed emissions trading scheme should consider a cleaner global contributor mechanism and the LNG industry should be recognized on this basis and encouraged over more-polluting energy industries.

Krzywosinski added that for every tonne of carbon dioxide emitted in Australian LNG production, as much as nine tonnes of CO2 emissions are reduced from more carbon-intensive alternatives in places such as China.

He said Gorgon would result in a reduction of 45 million tonnes/year of greenhouse gases from supplying energy to Asian markets, compared with the use of more carbon-intensive fossil fuels.

Putting this in context, he said the net reduction in greenhouse gas emissions is equivalent to taking about two thirds of all vehicles off Australian roads, or a reduction of over 8% of Australia's total greenhouse gas emissions.

Australia, he says, must take time to get the design of an emissions trading scheme right or the economic hurdle may jeopardize final investment decisions for major projects.

He added that it is clear LNG is Australia's best lever to reduce global CO2 emissions, and subsequently, LNG needs to be recognized as part of the solution.

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