Oil and gas body offers carbon plan amendments

The peak body representing Australia’s oil and gas industry recommended a number of amendments to the Federal Government’s Clean Energy Legislative package in August.

The submission from Australian Petroleum Production & Exploration Association (APPEA) suggests improvements to the proposed carbon pricing plan’s ability to meet Australia’s greenhouse gas emissions reduction targets at least cost and provide investment certainty.

“The introduction of a carbon price mechanism should allow decisions about investments in low-emission technology and the mix of Australia’s energy sources to be made in an efficient way, avoiding an approach that picks winners or results in a ‘fashion parade’ of different energy sources,” APPEA chief executive, Belinda Robinson said.

APPEA said it supports a national climate change policy that delivers abatement at least cost and facilitates investment decisions consistent with there being an international price on carbon.

The association’s submission recommends the package be amended to allow the newly established Climate Change Authority to review the effectiveness and cost of the more than 230 other policies and programs regulating greenhouse gas emissions, as well as how these programs interact with the implementation of a carbon price.

“The growth of separate Australian Government and state and territory government policies and greenhouse initiatives and their lack of consistency are increasing costs and uncertainty for Australian industry, including the upstream oil and gas industry,” APPEA’s submission states.

“Such an outcome runs counter to the objects of the draft Bill, which include that Australia’s actions to reduce greenhouse gas emissions should be taken ‘… in a flexible and cost-effective way’.”

Ms Robinson said the introduction of a carbon price mechanism provides the perfect opportunity to examine whether flexible and cost-effective actions to reduce emissions are indeed occurring and whether the policies in place support least cost action.

With the competitive position and future development of the LNG industry in mind, APPEA’s submission recommends a range of improvements to the treatment of trade-exposed industries and that this treatment be included in the Act itself and not relegated to the regulations, as is currently proposed.

The APPEA submission acknowledges a number of improvements have been made to the proposed legislation as a result of consultation with the industry, particularly around the ability to manage liabilities for natural gas supplies and the ability to manage liabilities within joint ventures.

The submission recommends a number of further improvements to these arrangements, particularly the treatment of joint ventures, to increase their flexibility, ensure the policy intent of the government is fully met, and allow the obligations under the carbon price mechanism to co-exist with established commercial, regulatory and fiscal arrangements.