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Woodside ‘Remains Dismayed’ at Australia Carbon Plan

Bloomberg.com

By Angela Macdonald-Smith

March 10 (Bloomberg) — Woodside Petroleum Ltd., operator of Australia’s biggest liquefied natural gas project, said it remains “dismayed” that the country’s carbon trading plan fails to recognize the contribution of gas to cutting emissions.

The proposed system, for which draft legislation was released today, will add “significant” costs to the export of Australian gas and come at the expense of jobs, Perth-based Woodside said today in an e-mailed statement. Chevron Corp., another LNG producer in Australia, said it “looks forward to continual engagement” with the government on the plan.

Australia’s LNG producers, which include ConocoPhillips and BP Plc, in December won concessions reducing the cost of carbon trading when their industry was included among emissions- intensive businesses exposed to international trade qualifying for some free permits. The companies will still need to buy allowances to cover part of the emissions from gas-export plants once trading starts, set for July 2010.

The increased costs “are burdens that competitor countries show no signs of imposing any time soon,” Woodside, operator of the A$25 billion ($16 billion)North West Shelf venture and 34 percent owned by Royal Dutch Shell Plc, said in the statement.

San Ramon, California-based Chevron, a partner in the venture, is still reviewing the draft legislation, Nicole Hodgson, a spokeswoman for the company’s Australian unit, said in an e-mail.

The government in today’s draft legislation maintained its target of reducing carbon emissions by between five and 15 percent from the 2000 level by 2020 to help combat global warming. It also resisted calls to delay the start of trading.

Coal-Fired Power

The draft law allows for the issue of as many as 130.7 million permits to coal-fired power generators to help compensate for placing a cost on emissions.

While the more carbon-intensive brown coal-fired power generators in Victoria state are most affected by emissions trading, the carbon price in Australia probably “won’t be too significant,” and the plan allows for the purchase of overseas credits, reducing the impact, said Sajal Kishore, associate director at Fitch Ratings in Sydney.

The assistance for industry and the size of the emissions- reductions targets were criticized by environmental groups, which want the bill modified.

Introducing the existing targets would be the equivalent to “putting up the white flag on climate change,” Don Henry, executive director of the Australian Conservation Foundation, said in a statement. “Australia cannot afford to lock in a scheme for the next 10 years that is designed to fail.”

‘Deeply Flawed’

The Australian Greens described the planned trading system as “deeply flawed” and said it would need “significant changes to be made both environmentally and economically effective.”

The government needs the support of seven senators from the opposition or minor parties such as the Greens to pass the laws, which it is aiming to do in June.

“Over-compensating big polluters and the current weak target isn’t acceptable as it won’t cut emissions by much, if at all,” said Greg Bourne, chief executive ofWWF-Australia. Both sides of Australian politics need to work together to deliver “a bipartisan and effective” carbon emissions reduction policy before the United Nations-sponsored international climate treaty negotiations in Copenhagen in December, he said.

Australia’s greenhouse gas-reduction target is less ambitious than the European Union’s goal to cut greenhouse gases by a fifth by 2020 from 1990 levels.

Interested parties have until April 14 to make submissions on the draft legislation.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at[email protected]

 

Last Updated: March 10, 2009 03:11 EDT 

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