Julia Gillard faces pressure to abandon her plan to ban dirty coal-fired power stations after some of Australia’s biggest companies warned that it could lead to more electricity price rises and put jobs at risk.
Rio Tinto Australia’s managing director, David Peever, has written to the government, warning that key planks of the proposal are unnecessary because the government has promised to put a price on carbon this year.
Mr Peever has also warned that the plan to mandate new standards for coal power stations, including that they be retrofitted for clean technologies, could weaken the signal to investors that nuclear power should be considered along with renewables and clean coal as a way of reducing emissions. He said the federal and state governments needed to work together to ease the red tape from duplicate greenhouse policies.
“These measures may also encourage an increase in electricity prices and impact electricity consumers,” Mr Peever wrote.
“These impacts need to be explicitly considered. Electricity cost increases will decrease the competitiveness of Australian industry, hamper economic growth and place jobs at risk.”
Rio’s submission will add to the pressure on the government over its handling of climate-change policy. The government has promised to introduce a carbon price this year and has ordered a climate-change committee to find a system to do this.
Compensation for the power sector and trade-exposed industries is shaping up as a key battleground, as the Greens want the Prime Minister to give ground on industry assistance levels.
The plan to mandate clean-coal power stations was promised during last year’s election campaign and is a key plank of Ms Gillard’s climate-change policy.
As well as introducing emissions standards for new coal power stations, the plan requires them to be capable of being retrofitted with technologies that capture and store the pollution caused by burning coal. Rio warns that there is still “significant uncertainty” about carbon capture and storage, and that there should be a focus on measures to accelerate the development of it.
The government has delayed $160 million of spending aimed at encouraging carbon capture and storage projects to help pay for repairing the flood damage in Queensland.
Rio has also warned that while power stations will need a sink in which to store their carbon emissions, there is only very limited geological data about reservoirs that could be used to do this.
Instead of drafting “prescriptive and inefficient” rules requiring new power stations to be ready, the focus should be on building investor confidence in such technologies, the submission states.
“In summary, the resultant increase in project costs from a CCS-ready requirement will have the unintended consequence of driving short-term investment away from the fuels and generation technologies covered by the requirement,” the submission says.
