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Queensland and New South Wales may face shortfalls in electricity supply in as little as two years if the Federal Government pushes ahead with the planned Carbon Pollution Reduction Scheme (CPRS), a Senate committee has been told today.
Speaking at the Brisbane hearing of the Senate Select Committee on Climate Policy, ERM Power Executive Chairman Trevor St Baker said the proposed scheme would cause an “investment crisis” in electricity in Australia, and prevent the development of power stations required to maintain reliable supply.
ERM is Australia’s largest developer of new power generation, and builds only lower-emissions gas-fired stations. The company holds State Government approvals for new power stations in Wellington in New South Wales, and Braemar (near Oakey) in Queensland.
Mr St Baker said it was unlikely the stations would go ahead in the current economic climate, and with the looming threat of the CPRS.
“These projects are required to maintain reliable electricity supplies in these states, and to create hundreds of jobs,” Mr St Baker told the committee.
“As things stand, we will not be able to proceed until the sovereign risk threat of the proposed CPRS to the credit worthiness of the Australian electricity sector is removed.
“This effect is caused by the combination of introducing the draft CPRS before the rest of the world, and the fact that the global financial crisis will make it virtually impossible for the industry to source all of its required finance.”
Mr St Baker said the electricity industry in Australia needed to secure $97 billion over the next five years for essential infrastructure to cope with Australia’s expected 25 per cent energy consumption growth.
Mr St Baker called on the Government to change the “fundamentally flawed” CPRS and act in two ways to ensure Australia’s future electricity supply.
Firstly, he said Australia needed to co-operate with the carbon pollution reduction scheme developed by the world’s major polluters rather than proceeding alone in the current economic environment.
Secondly, he said the Federal Government needed to adopt in the short-term an incentive-based scheme, rather than a penalty-based scheme.
“(We need to) provide an incentive for investment in the solution (low emissions generation) rather than simply putting a price on emissions,” Mr St Baker said.
Mr St Baker told the committee that, while he supported the government’s 20 per cent renewables target, the maximum carbon reduction would be achieved by producing the remaining 80 per cent of the country’s power using lower-emissions fuel such as gas, until a long-term alternative was discovered.
He cited the Queensland Government’s successful Gas Electricity Certificate (GEC) Scheme as an example of a way to promote investment in cleaner generation at minimal cost to the economy and consumers.
“Any scheme intended to lower Australia’s carbon pollution before 2020 must encourage investment in new, gas-fired generation. At least 1,000 MW of new generation is required every year across Australia, at a cost of $1.5 billion to $2 billion every year,” he said.
“The proposed CPRS will not achieve this.”
ENDS
For more information call Margaret Lawson (Cole Lawson Communications) on 0419 643 243 or 07 3221 2220.