Climate Change

The Federal Government’s proposed carbon tax will impact on the gas transmission industry and increase the cost of doing business.  Firstly, as with all businesses, the cost of fuel and other necessities will increase.  Secondly, officials are in the process of developing systems to calculate the CO2 emissions of the transportation infrastructure and the methods being proposed are incorrect and unfair.  The emissions caused by compression of the natural gas being transported will be calculated and, unless the carbon tax is defined as a tax (which some bureaucrats argue it’s not), not all transportation companies will be able to pass through those extra costs.  Also, the current proposed system of calculating “fugitive” emissions reflects distribution pipelines’ emissions, not transmission pipelines’ emissions. Clearly, this is inappropriate and demonstrates a distinct lack of understanding by government officials of the transmission businesses.

On the other hand, even though the proposed carbon tax is unlikely to directly cause a move from coal to natural gas for energy generation, the fact that such a policy is being introduced will influence future decisions by generator companies.  This should see, in time, an increase in demand for natural gas and this, in turn, should see an increased demand for gas transmission services.