Carbon tax olive branch for LNG

Federal Resources Minister Martin Ferguson has indicated the LNG industry will receive greater protection from the proposed carbon tax if it can prove the compensation envisaged under the abandoned emissions trading scheme is inadequate.

Rejecting industry calls led by Woodside boss Don Voelte for LNG to be excluded from the carbon tax, Mr Ferguson said the Government remained intent on implementing comprehensive coverage for the carbon tax from July 1 next year.

But Mr Ferguson extended an olive branch, agreeing with industry chiefs that the LNG industry had changed significantly since the Carbon Pollution Reduction Scheme was finalised in November 2009, when the only operational LNG projects were the North West Shelf and one in Darwin.

It was on this two-project industry "baseline", that LNG companies were to get 66 per cent of their pollution permits free under the CPRS, including a six-point recession buffer.

The Government has agreed to maintain the buffer, but the LNG industry is arguing that coal seam methane gas development in Queensland, and the many projects about to come on stream have significantly changed the booming sector's profile.

Mr Ferguson said at the Australian Petroleum Production and Exploration Association conference in Perth yesterday that compensation for the sector depended on where the baseline was set.

"The companies have been asked to supply my department, in association with the Department of Climate Change, appropriate material to their case," he said.

Premier Colin Barnett said while he vehemently opposed the carbon tax, it would not greatly limit LNG's growth, such was the international demand.

But the LNG industry will nonetheless demand at least being afforded the protection extended to steel and aluminium producers which are in line to get 94.5 per cent of their permits free.

Greens deputy leader Christine Milne said Australia should be planning to transition to a "100 per cent renewable energy" instead of promoting fossil fuel industries.

Mr Voelte said Ms Milne's comments were "past ridiculous", adding that California, which has invested most in renewable energy, had managed only a 12 per cent penetration of alternative energy sources. Conservationists insist the new tax is merely a cash grab.