Aussie LNG producers win on emissions trading

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Dec. 16 -- Australia's LNG producers and refiners have emerged from the government of Prime Minister Kevin Rudd's emission trading scheme proposals unexpectedly better off than first expected. They will receive 60% of their carbon permits free under the so-called carbon pollution reduction scheme (CPRS).

This differs from Rudd's November comments when he said he was unconvinced that LNG producers needed special treatment under the CPRS.

Details of the scheme, announced this week, mean that Australia will commit to an emissions cut of 5% by 2020 if the world does not sign an effective climate change pact. However this percentage will increase to 15% if a global agreement is reached. The scheme will take effect in 2010.

Australian Petroleum Production & Exploration Association Chief Executive Officer Belinda Robinson said the scheme design had taken a major positive step forward. However, she added, Australia needs to make more progress in accepting that its gas reserves represent a major strategic asset for supplying Australia and the Asia-Pacific region with a cleaner source of energy.

The industry's most vocal critic, Woodside Petroleum Ltd. Chief Executive Don Voelte, acknowledged the government's recognition of the LNG industry as a section likely to qualify for assistance under the scheme. He said Woodside would take some time to study and understand the white paper, but said he remains concerned that in implementing an emission trading scheme, the government might make Australia's industry less competitive with other global producers.

"We do not want a scheme which will cost Australian jobs or lead to an increase in greenhouse gases though the burning of higher emission fuels."

The government will make final decisions in 2009 on the eligibility of industries for free permits.

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