According to the APPEA, the recommendations of the Renewable Energy Target (RET) Review go some way to reduce the costs of the RET, however still leaves a number of Australia’s LNG exporters exposed to significant costs.
RET Review
The Review was set up to consider the ongoing costs of the RET, which is driving up the cost of meeting the Australian government’s 2020 greenhouse gas reduction target and hinders the natural gas industry’s ability to reduce greenhouse gas emissions.
The APPEA noted: “While it falls short of discontinuing the RET, the Review’s recommendations are an important recognition that the RET is not the most efficient way to achieve emissions reductions because it forces higher cost renewable energy into the electricity generation mix at the expense of lower cost emissions abatement opportunities from gas generation and elsewhere in the economy.”
LNG exporters exposed
If the Australian government accepts the Review’s recommendation and keeps a modified RET in place, the APPEA adds, it should improve the treatment of trade-exposed industries. While the Review has noted the changes it has recommended would lower costs to industry, the treatment of trade-exposed industries through the Partial Exemption Certificate (PEC) provisions still leaves some of Australia’s LNG exporters exposed to significant costs their competitors do not face.
These exporters cannot pass on increased costs to consumers and any loss of international competitiveness would benefit Australia’s international LNG competitors.
Conclusion
To ensure trade-exposed industries, such as LNG, remain competitive, APPEA has urged the government, in its response to the Review, to increase the PEC for trade-exposed industries to 100%. In addition, the current narrow definition of LNG production used for the PEC should be changed to cover the entire LNG production process.
Adapted from press release by Katie Woodward