The energy giant AGL has said it will become the first big Australian company to join the Chicago Climate Exchange, a move that may embarrass the Federal Government as it wrangles over climate change.
The move will allow AGL to do something it cannot do at home: profit from cutting its greenhouse gas pollution in Australia.
It will help the complain expand its renewable energy operations, including plans to build the largest wind farm in the southern hemisphere at Macarthur in Victoria. This will power about 190,000 homes.
AGL’s managing director, Paul Anthony, told the Herald the company had invested almost $2 billion in renewable energy in the past 12 months. Mr Anthony said he hoped the board would soon agree to the big investment needed for the Macarthur wind farm. It has also just bought three “bio-mass” power stations in Queensland fired by, among other things, macadamia nuts.
By joining the Chicago Climate Exchange, AGL can market the cuts it makes to its emissions in Australia to less efficient companies around the world.
“We see the landscape changing massively,” Mr Anthony said. “This gives us some opportunity to reap the reward of our investments to date in the absence of a scheme in Australia.”
For the past 10 years, the Howard Government has stalled on setting up a carbon trading scheme in Australia or ratifying the Kyoto Protocol on curbing greenhouse gas emissions, which would allow companies to trade in the European carbon market.
Now Australian companies have no real way to measure the cost of greenhouse gas pollution caused by carbon-intensive energy sources such as coal, oil and gas, except for the Chicago Climate Exchange, which puts the price at $US5 a tonne.
So if Australian companies cut their emissions and invest in renewable energy they can find it difficult to reap an immediate reward for their efforts, while polluting competitors who stick to coal-fired power are not penalised.
Last year, the Prime Minister, John Howard, set up a taskforce to examine a carbon emissions trading scheme here. But while the taskforce is due to report in May, a fully operational scheme is likely to be years away.
AGL, the largest investor in renewable energy in Australasia, is putting big resources into cleaner gas generation. For the company, Canberra is moving too slowly.
When Mr Anthony joined AGL from Britain last year, he was surprised how far behind Australia was in putting a cost on greenhouse gas pollution. But he thinks the world will soon force Australia to recognise the cost.
While AGL’s signing up with the Chicago Climate Exchange will not have an impact on the cost of gas and electricity for its 4 million consumers, ultimately world markets such Chicago and the European carbon trading schemes are likely to push up the price of fossil fuel energy.
“In any exchange worldwide there will be a cost of carbon and if you are a user of fundamental energy that uses carbon you can expect that to flow through,” Mr Anthony said.
Last week, European leaders agreed to new targets by 2020. They include cutting carbon dioxide emissions to 20 per cent below 1990 levels and boosting renewable energy use by 20 per cent, which Mr Anthony endorsed.
“It’s a very positive step,” he said. Australia urgently needs a strong national target for renewable energy, he said. “That’s usually the first building block in trying to reduce emissions.”
Canberra’s renewable energy target is 2 per cent.
By Marian Wilkinson
20 March 2007
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