Getting certainty on carbon policy and pricing is as much about ensuring electricity supply now as it is about providing certainty for long-term investment, Energy Supply Association of Australia chief executive Brad Page says.
Already, existing power stations that were refinancing debt had run into higher interest rates and radically shorter loan periods that put generators on a capital drip-feed that could be shut off by bad policy, he said.
“If that happens, then we’re into a world of pain because that means those facilities can’t operate, and they are large-scale contributors to our electricity supply today, and in the short run aren’t easily replaced,” Mr Page said.
“You do question energy security from the existing assets if the financiers lose their confidence.”
Australia’s mostly coal-fired electricity generators will be directly affected by a plan outlined in late February by Prime Minister Julia Gillard to start pricing carbon from July next year, subject to the federal parliament passing legislation.
Describing it as an essential economic reform, Ms Gillard said the price of carbon would be fixed for three to five years before moving to a cap-and-trade emissions trading scheme. Details will be announced in due course.
The price of carbon is critical for generators, which Climate Change Minister Greg Combet estimates cause up to 40 per cent of national carbon emissions.
Up to 1000 of Australia’s biggest emitters will pay a price on each tonne they emit, and the government will consult major players in the energy sector in coming weeks to discuss the way this will be treated.
The association, whose members hold more than $120 billion in assets and include companies that generate, transmit and distribute power, supports development of a sound, efficient, enduring and equitable policy that prices carbon through a cap-and-trade scheme.
But Mr Page admits getting there won’t be easy and there is an “awful lot of work to do”.
“So we have taken the first step on a 100-step journey. We’re not unhappy with the processes the government has laid out provided they are utilised fully and genuinely,” he said.
