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Predictions for rise in wholesale electricity prices between 7 per cent and 30 per cent: carbon trading scheme needs to make renewable energy competitive

Posted by gmarkets on 10 October, 2007

If Australia ratified the Kyoto Protocol, life would get tough for business after 2012, wrote John McCarthy, in The Courier Mail (29/9/2007, p.58).

Encouragement needed: According to broking house Citi Smith Barney, the foundations were already being built with the Government’s Clean Energy Target, which was intended to encourage renewables and other low emissions technologies in the early years of a national emissions trading scheme. They would need that encouragement, because the Australian carbon trading scheme would set a price too low to make renewable energy competitive. Wind power, for example, was twice the cost of coal-fired energy and would need either to be subsidised or coal would need to be penalised through a high carbon price.

Rise in energy prices predicted: ABN Amro suggested businesses, particularly mining and metals companies, were about to be stung with higher costs through a significant rise in energy prices, but this would be down the track. Its predictions were for a rise in wholesale electricity prices of between 7 per cent and 30 per cent. “The response may include greater energy conservation, the investigation of alternative fuel sources and the generation of credits through emission trading technologies,” ABN Amro said.

Mineral processing operations might relocate: ABN Amro believed that if commodity prices declined significantly and energy costs rose more than expected, some mineral processing operations might move to regions that did not impose greenhouse gas emission legislation, if some form of compensation was not provided by the Government. “Just as we have seen sustainable development funds grow in acceptance we may also start to see investment funds with a carbon neutral mandate.”

The Courier Mail, 29/9/2007, p. 58

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