A pat and a warning on global warming Business The Australian

THE head of the Paris-based International Energy Agency flies in to Australia today to deliver a blunt message to the Howard Government - give incentives to industry to reduce greenhouse gas emissions and invest in oil exploration or suffer serious environmental and economic consequences.
Speaking to The Australian in Paris, ahead of his keynote address at the Australian Petroleum Production & Exploration Association annual conference, IEA executive director Claude Mandil praised Australia for reaching emission reduction goals through bans on land-clearing.
The Government deserved some kudos despite Canberra's refusal, along with Washington's, to ratify the Kyoto protocol on global warming, he said.
But Mr Mandil was adamant existing emissions reduction programs were a risk because they were "not a long-term option for reducing CO2 emissions".
He said the Howard Government should re-examine its opposition to emissions-trading schemes and push for increased energy efficiency on the part of industry and consumers.
Land-clearing bans were "very good" in the short term, he agreed. "But it is a one-shot gun. It cannot make progress several times. You have changed the land to change what it consumes.
"We do not see how there can be a long-term, sound environment policy and a policy addressing global warming if there is not an incentive for industry to act in this direction.
"Australia is proud rightly that even if it has not ratified the Kyoto protocol that CO2 emissions in Australia are under the target.
"We just call for caution because that has been made possible thanks to the one main policy which is land-use change and forestry."
The IEA had no quarrel with industry's core mission to increase value for shareholders, Mr Mandil said.
"If we want industry to reduce CO2 emissions this should lead to increased value for shareholders," he said. "That means that the CO2 emissions should have a cost. The way to obtain that (is through a) tax or an emission trading scheme such as the one in Europe, or a mandatory target which means you will enjoy a penalty if you are above your target."
Australia received a big tick from the IEA for investing in long-term technologies to make energy production more efficient and environmentally sound.
"Australia is one of the major producers of fossil fuels - oil, gas, and coal." Mr Mandil said. "If we want and I think we need to ensure a lot of oil, gas and coal in the future, that can be done only if CO2 emittents can be trapped. That is carbon capture and sequestration, and Australia is very active in trying to demonstrate the visibility of this technology."
In Mr Mandil's view, coal will remain a key asset for Australia but the outlook remained uncertain. "There is really a black or white answer. Either carbon capture and sequestration can become worldwide a technology that is well-established and cost-effective and in that case there is a marvellous future for coal which is a cheap energy that is very well distributed on the earth and easy to transport," he said.
"Or CO2 capture and sequestration will not be a proven technology - in that case the future for coal can be very bleak."
Even if the future for coal remained unclear, Australia could look forward to LNG becoming a major fuel in coming decades, which could even outpace coal in terms of fuel consumption.
"For a long time the location of Australia was a handicap because transport costs were high," Mr Mandil said. "But costs of supply have hugely declined during the last decade. That means Australian gas will increasingly be able to reach all parts of the planet."