Origin Says Australia Carbon Policy Changes May Delay Investment

Origin Energy Ltd., Australia’s largest electricity and gas retailer, said shifting government policies to reduce carbon emissions will discourage investment in power plants.

“With continual change in carbon policy, it’s very unclear as to what other forms of generation you ought to invest in,” Managing Director Grant King said in an interview today on the Australian Broadcasting Corp.’s “Inside Business” program, according to a transcript.

Australia’s Prime Minister Kevin Rudd plans to move to emissions trading a year ahead of schedule and scrap predecessor Julia Gillard’s policy should his Labor government win this year’s election. The carbon price began at A$23 ($21.10) a metric ton last year, rose this month to A$24.15 and was scheduled to climb to A$25.40 in 2014. It will transition next year to a floating price of about A$6, Rudd said July 16.

Opposition leader Tony Abbott has pledged to ditch the carbon price system if he wins the election.

“A change in the carbon price from A$24 to say A$6 or A$8 is a very material change in the relative cost of generation from coal and gas,” King said. “So it does mean to the extent that investments were required, they will be delayed.”

The fixed price on emissions for about 300 of Australia’s largest polluters was planned by Gillard to reduce the country’s reliance on coal and help meet the target for a 5 percent cut in greenhouse gas emissions from 2000 levels by 2020.

Abbott’s Liberal-National coalition also supports Australia’s 5 percent reduction target by 2020.

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