Energy giants back development of carbon trading systems

Global carbon trading is needed to set a price on carbon and allow for investments in new energy-supply projects while reducing emissions, said Russell Caplan, the chairman of Royal Dutch Shell in Australia.
While the European Union's carbon trading system is "a good start," a worldwide plan is required, Caplan said at the Asia-Pacific Economic Cooperation energy business forum in Darwin, which is part of a meeting of energy ministers from the 21-nation group.

Global energy demand is set to increase 50 % by 2030, resulting in between 35 % and 55 % more carbon dioxide emissions, the International Energy Agency has said. APEC nations, which include the United States and China, are responsible for 60 % of global energy demand.
"Market mechanisms are likely to be the most effective means of implementing change," Caplan said at the forum. "Trading needs to become global to become truly effective and establish a clear market price for CO2 that will be factored into the investment evaluations of the new technologies and energy conservation measures that we need for a low-carbon future."

The talks among the APEC energy ministers are expected to focus on initiatives to improve energy security while reducing the harmful environmental effect of energy use. The member economies account for around 2.6 bn people, or more than 40 % of the world's population; more than $ 19 tn in gross domestic product, representing more than 56 % of the global total; and more than 48 % of world trade.
The talks will cover emissions, without discussing a specific trading plan, the Australian resources minister, Ian Macfarlane, said on May 24.

Australia and the United States have refused to sign the Kyoto Protocol, which is aimed at reducing greenhouse gas emissions blamed for global warming. A task force including Peter Coates of Xtrata, Treasury Secretary Ken Henry and Chris Lynch of BHP Billiton is due to report to Prime Minister John Howard of Australia on whether to introduce carbon trading in Australia.
Any national system needs to be compatible with any broader regional or cross-regional mechanism that emerges, Caplan said later.
"I think we'll see a progressively assembling patchwork" of trading systems, Caplan said.

The uncertainty about carbon pricing in Australia needs to be removed to ensure that investments are made in time to meet the need for new base-load and peaking power generation capacity, said Paul Simshauser, the chief executive of Babcock & Brown Power, Australia's largest publicly traded power generator. Australia's power generation capacity needs to double by 2030 and all the existing thermal power plants will need to be replaced by 2050 in order to change to a lower-carbon power system, he said.
"In order for Australia to actually ensure that it gets the right economic environmentally adjusted outcome from the supply-side perspective it is important that CO2 carries a price sooner rather than later," Simshauser said in an address at the business forum.

Still, any emissions trading system needs to be carefully designed to avoid "catastrophic" effects on power supply because of the potential effects on coal-fired generators, he said.
Scientists say that global warming caused by emissions of carbon dioxide and other greenhouse gases is causing glaciers to melt, sea levels to rise and coral reefs to die out.