Natural Gas Big Winner From Carbon Tax

Natural Gas Big Winner From Carbon Tax – Reputex Research Report

MELBOURNE, 27th September, 2011 – RepuTex, a leading carbon analytics firm, today released research into the impact of the proposed carbon tax on the Australian power industry from 2011 to 2020. The research found that natural gas generators will be the big winners with generation projected to increase by 40% by 2020.

Over the same period, RepuTex predict that Australian power industry emissions will drop by 9% (equal to a 5% reduction from 2000 levels) and generation from brown and black coal is expected to reduce by 40% and 20% respectively by 2020.

A comprehensive research report of RepuTex’s findings will be made available in a forthcoming research report with Standard & Poor’s. Initial findings were made available today at the Powering Australia conference in Melbourne.

According to RepuTex Global Director of Research, John Metzler, the carbon price mechanism will make natural gas pricing more competitive and will increase power generation from cleaner fuels.

“Domestic coal prices will gradually fall into line with international pricing, pushing up the long run marginal cost (LRMC) of brown and black coal, and making gas more attractive. RepuTex projects that gas output will grow from 14% at current levels, to 43% of total NEM generation by 2020.

“A $23/t carbon price from day one is not enough to completely switch coal to gas or less carbon intense technologies, but it will drive more investment in cleaner technologies, away from brown coal” said Mr Metzler.

RepuTex tracks and forecasts the output of more than 200 power plants in Queensland, New South Wales, Victoria, South Australia and Tasmania via its proprietary model which aggregates plant generation and emissions information. RepuTex modelling assumes a $23/tonne CO2-e starting price, increasing annually at 2.5% plus inflation over the fixed price period, then growing 10% year on year to $45 by 2020.

Other key RepuTex research findings include:

• The commencement of the ‘fixed price period’ in July 2012 would result in a drop in emissions of approximately 5.5% between 2011 and 2015.
• Industry emissions will drop by 9.1% from current levels by 2020, equivalent to a 5% emissions reduction against 2000 levels.
• Natural gas generation is projected to increase 40% over the same period, with output from brown coal and black coal dropping by 40% and 20% respectively.
• Brown coal generators are the most at risk under the proposed carbon tax, with Hazelwood, Energy Brix and Playford potentially in the firing line.

To register to receive RepuTex’s full research findings, please visit www.reputex.com

RepuTex’s Global Director of Research, John Metzler (London) is available for interview in Melbourne.

ENDS

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