(EnergyAsia, June 25 2012, Monday) — Australian’s coal production and greenhouse gas emissions will rise to record levels as it continues to attract investments despite increased cost from the imposition of a new carbon tax from July 1 as part of the government’s long-term clean energy plan, said carbon analytics firm RepuTex.
According to the company’s modelling analysis, investments in several major new mines are viable even though they will be built after July 1 2012 and will not be eligible for industry assistance through the government’s Coal Sector Jobs Package (CSJP).
The nation’s two largest coal mines yet built – Xstrata’s Wandoan coal mine and Hancock’s Alpha project, both in Queensland, are set to start up from 2015. The scale of these operations will contribute to a steady rise in both coal sector production and greenhouse emissions.
“Australia is facing a significantly lower carbon price beyond 2015 when companies will be able to start purchasing offsets from the international market, and the price will be partially permitted to float”, said RepuTex’s Executive Director Hugh Grossman.
“When you couple this lower medium term carbon cost with the government’s industry compensation, RepuTex is not forecasting long-term net liabilities for most coal producers high enough to seriously impact production.
“Demand from Asia is going to be a far more significant factor in impacting production levels, and we perceive that outlook as positive.”
The sector’s greenhouse gas emissions will decline from 2018 as a result of the scheduled closure of aging Rio Tinto’s Blair Athol mine, New Hope’s Jeebropilly and the Isaac Plains joint venture followed by another five significant closures at Foxleigh, Mount Owen, Moorvale, Gregory Crinum and Mount Thorley by 2020.
“Technological advancements at new operations ensure such projects generally present lower carbon emissions profiles, and therefore lower liabilities relative to older assets. This is despite those newer mines not receiving Government carbon compensation”, said Mr Grossman.
RepuTex’s analysis shows that older mines exhibit very high average emissions intensity, while new projects are setting the standard for emissions levels, with the new Wandoan and Alpha projects projected to operate at significantly lower emissions intensity.
“This high operating emissions intensity for aging coal assets will equate to a high gross carbon cost from commencement of the Carbon Price Mechanism in July 2012”, said Mr Grossman.
“However, the high level of government compensation via the CSJP ensures their total liability will be relatively low, allowing them to continue producing.”
With offices in Hong Kong and Melbourne, RepuTex is a leading source of carbon market intelligence and pricing of firm-level carbon liabilities. It supplies corporate, trading and capital markets firms with carbon market benchmarks and price information to assist customers make sound trading, reporting and business decisions.