CarbonSignal

Woodside announced a half-year profit of $1.02 billion, which is 67% higher than last year’s $608 million, and exceeds analyst’s expectations.  While announcing the good news Don Voelte made sure to have a dig at the Government’s Carbon Pollution Reduction Scheme by threatening to reduce funding for the Browse LNG project.

Of all our LNG portfolio, it is also the project that will be the most adversely affected by an unfavourable ETS.  If the current discussion paper is not corrected, we’ll need to consider dramatically reducing the spending that we have going in 2009 and beyond.

Woodside’s game plan is clear - build more LNG trains to extract and export more gas than ever before, at a rate faster than ever before.  An ETS will have a dampening effect on this process.

However, if the economists are correct and the free market adjusts a company’s valuation due to changes such as the ETS with the greatest possible efficiency, then it can’t be that bad for profits considering that Woodside’s share price found support and has been rising nicely after the Government’s “unfavourable” Green Paper was released in mid-July.

chart generated by www.marketwatch.com

For more info visit wasea.fasthit.net

The Western Australian Sustainable Energy Association (WASEA) reports that the Labor party will introduce a Feed-in Tariff (FiT) of 60 cents per kilowatt-hour for domestic solar systems of under 10 kilowatts.  This is the most generous FiT in Australia, and will significantly boost domestic solar installations in the State.  To be eligible customers must use 100% green power.  Households with an income of less than $100,000 can also access the Federal Government rebate scheme.

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The media has latched on to a report released by the Business Council of Australia which claims that the Carbon Pollution Reduction Scheme, as described in the Government’s Green Paper, will be “a company killer”.  Port Jackson Partners were commissioned by the BCA to conduct a business analysis using the financial records of 14 companies from key sectors of the economy including aluminium refining, cement production, petroleum refining, steel refining, sugar milling and zinc and nickel refining.  The study finds that at a carbon price of $40/tonne (the current price in Europe), three companies would “have to shut immediately” and four others would lose “between 32 and 63 per cent of their pre-tax earnings”.  The press release and full report are available here.

The BCA proposes to set the threshold for compensation based on financial impacts, with a limit on carbon costs of 3 to 5% of industry value-add.  This is different from the Government’s current proposition for a compensation threshold based on trade exposure and emissions intensity.

The data and findings of this study are important, but the true value of the work is lost in the alarmist and populist press release of the BCA.

Any scheme that allocates compensation based on financial impact rather than emissions-intensity would compromise the key mechanism of the carbon market.  A low-carbon economy will only emerge if emissions-intensive industries can achieve a competitive advantage through every incremental improvement in greenhouse efficiency.

The net effect of the BCA proposal would be a delay in the reduction of Australia’s emissions trajectory, a wet-blanket effect on green investments, a reduced opportunity for low-carbon innovation, and a disservice to Australian ingenuity in the face of the climate change challenge.

Mitsubishi has announced that it hopes to deliver Australia’s first production EV in Australia.  The i-MiEV will go on sale in Japan in 2009, and Mitsubishi’s battery supplier - Lithium Energy Japan - is constructing a new plant to meet an anticipated rapid increase in global demand for EV’s, as reported by GoAuto.

The car will have a range of approximately 160 km, and will include both a home charger which can charge the battery over a 7-hour period, and a secondary connection for a high-current fast charger.  The timeframe in which Australia will receive the MiEV depends to a large extent on a pending decision to include a right-hard drive for the UK in the early production runs.

Since the release of the Government’s Green Paper on the Carbon Pollution Reduction Scheme in July, the gas industry has been claiming that the Government’s preferred policy position may prevent future investment in Australian LNG.  Despite this lobbying effort, it has just been announced that Chevron, Royal Dutch Shell and ExxonMobile will pump an additional $1 billion into the speculative Gorgon gas project over the next 12 months.

The Sydney Morning Herald quotes Credit Suisse analyst Andrew Williams’ assessment that “…the scheme would compress margins for producers, but was unlikely to affect the commerciality of most LNG projects.”

As part of Chevron’s willyoujoinus.com website, an online game has been released called Energyville.  The game was developed in partnership with The Economist Group, and is based on their internal research.  Players must power a city using a range of conventional and alternative technologies.  Scores are based on the minimisation of economic, environmental, and security impacts.

Is this a well-intentioned tool to communicate the tradeoffs of different energy sources and stimulate insightful debate?  Or is it a carefully designed campaign to communicate the necessity of fossil fuels while undermining alternative energy sources?  Play the game and decide for yourself.