Australia's second largest energy retailer Origin Energy this week supported moves by Woodside Petroleum urging the federal government to give free carbon trading permits to the liquified natural gas (LNG) sector. Origin chairman Kevin McCann also called on the government to create an independent body similar to the Reserve Bank of Australia (RBA) to regulate carbon trading.
The company is currently defending a hostile $13.7 billion takeover attempt by Britain's BG Group.
BG is partly interested in Origin's coal seem gas reserves, which Origin wants to convert into LNG for export with a joint venture partner.
"We're generally supportive of the need for government to recognise that trade-exposed (sectors) should include LNG because it's a good fuel," McCann said.
"It's a fuel that we export to the Chinese and other users of energy and it's a better fuel in terms of carbon intensity than coal."
Woodside chief executive Don Volte recently warned the proposed emissions trading scheme (ETS) could threaten Australia's LNG industry, which competes internationally.
Origin is a supporter of the government's plan to introduce an ETS by 2010 which is set to lift household electricity bills by 16 per cent on a carbon price of $20 a tonne.
"We've done lots of modelling on the impact on the company, and the fact of the matter is, it's recognised in the Green Paper; Origin's on the right side," he said.
"We're going to be winners out of this because we have gas-fired generators and people with gas are going to do better than people with coal."
According to McCann, coal-fired power generators, particularly those using dirtier brown coal, would reduce in number.
"They'll continue to operate and they'll enjoy the higher energy prices, but they won't run at the volumes that they've done historically."
McCann said Origin would need to make direct investments in wind farms to fulfil its renewable energy obligations after the government recently set a renewable energy target of 20 per cent by 2020.
"We will certainly have to get access, either as equity holders or as counterparties, to wind to see we meet our renewable obligations," he said.
"But we also have a significant investment in geothermal and we will continue to pursue that investment which we think has got really great potential as an alternative to wind."
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