News
Momentum is building for multilateral action on climate change and carbon pricing is likely to impact on LNG trade!
A paper has been commissioned for the APGAS Forum in San Diego (16 to 18 September) from a leading international energy economist, John Daley of Australia.
According to Daley:
- multilateral progress on climate change will occur in tandem with progress on energy security and sustained economic growth
- there is a need for agreement on a long-term global goal - for emissions, or concentrations or temperature - together with consistent nearer-term emissions ‘pathways’ and strategies for individual countries
- the private sector must be closely involved by accelerating R & D and deployment of clean energy technologies, and possibly collaborating on global sectoral approaches to emissions reduction.
Daley predicts that national emissions trading systems, informed by the lessons of the EU trials, are likely to proliferate. Those systems explicitly price carbon emissions and they can be expected to be progressively interlinked. Over time, this will lead to price convergence.
However, Daley cautions that high carbon prices will cause emissions-intensive industries, such as LNG, to relocate to jurisdictions without emissions restraints - unless dispensation is given to LNG within the trading systems to preserve its competitiveness.
For electricity generation, which accounts for about two thirds of energy sector emissions globally, a significant carbon price is required to induce the switches between key fuel sources and technologies (such as coal to gas, coal to nuclear or carbon sequestration). These switches are essential if big cuts in emissions are to be achieved. “Switch prices” vary from country to country and are likely to change as relative fuel prices vary and change.
John Daley’s paper will be provided to all APGAS delegates as soon as they register for San Diego.
Robert Pritchard
Technical Director
APGAS Forum 2007
tel: +61 2 9810 7322