West Australian powerstation operator Verve Energy says a carbon tax would have to be set at up to $70 a tonne to force a shift to cleaner energy.
The estimate was made by Verve managing director Shirley In’t Veld, who in Perth on Friday fronted a Senate committee hearing into a carbon tax.
Ms In’t Veld told the inquiry that, based on Verve’s current coal contract and taking into account a gas price of $8 per gigajoule, a carbon price would need to be in the range of $60 to $70 a tonne before there would be a shift away from coal.
Only at that rate would combined cycle gas generation, which utilises exhaust heat from gas turbines, be as competitive as conventional coal-fired power, she said.
“So at $20 a tonne there is no incentive to shift to gas in WA,” Ms In’t Veld said.
“This is in contrast to the situation in the eastern states. This means there will be no abatement in WA, so no environmental gain, but considerable financial pain.”
Ms In’t Veld said that, based on Verve’s 2009-10 carbon emissions, a carbon price set at $20 a tonne would cost the company $160 million, while at $25 a tonne it would cost more than $200 million a year…
So whoever says that a carbon tax to reduce temperatures at little cost to consumers, is full of ..it.
…If Verve was unable to pass on the cost, Ms In’t Veld said the company would have less money to cover maintenance and upgrade costs which may impact on the reliability of the company’s power generation.
Mr Winner said if Verve was unable to pass on the costs it would “wipe out last year’s net profit” which was about $97 million.
“It would mean we would have to be bailed out by the government or find some way of covering those other costs,” he told AAP.