July 25, 2008 / 11:31 AM / 10 years ago

Australia study sees power risk from emissions cuts

PERTH (Reuters) - Australia’s proposed carbon trading scheme could put as much as 23 percent of current generating capacity out of commission in the country’s densely-populated east coast by 2020, an industry group representing energy providers said on Friday.

The government plans to set medium-term emissions reduction targets later this year, but the scheme has already provoked protest by some industries that have talked up the threat of higher costs.

The Energy Supply Association of Australia (ESAA) said plans to replace the coal-fired generation capacity that would be lost as a result of emissions caps with new gas-fired and renewable generation plants looked ambitious.

“The extent of generation plant retirement and construction of new facilities is vastly bigger than Australia has ever attempted previously in the space of a decade,” ESAA Chief Executive Brad Page said in a statement.

The government’s proposal to cut greenhouse gas emissions from the electricity industry by 10 percent, or 20 percent below 2000 levels by 2020, would result in the closure of between 6,700 and 10,400 megawatts of mostly coal-fired generation capacity, ESAA said in a statement.

The closures would represent between 15 and 23 percent of current generating capacity on the eastern seaboard, it said, citing findings from a study conducted by economic consultancy firm ACIL Tasman.

“At a time when the world is experiencing unprecedented demand for all items of electricity supply equipment and Australia has labor constraints, this build task will at the very least be challenging.”

About 85 percent of Australia’s electricity supply is generated from coal, which emits 30 to 50 percent more greenhouse gases than gas-fired plants. ACIL Tasman’s study also said that an estimated A$33 billion ($31.7 billion) of investments, including the construction of gas-fired and renewable generating plants, would be needed over the next 12 years.

Australia, the world’s biggest per-head polluter, plans to launch an emissions trading system in 2010.

Reporting by Fayen Wong; Editing by Michael Urquhart

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