Clean fuels 'lift refinery emissions'
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Nigel Wilson, Energy writer July 14, 2007
CALTEX has warned that producing cleaner and more efficient transport fuels will require more energy -- and therefore increased greenhouse gas emissions from its refineries.
Australia's leading oil refiner and marketer will also tell the federal Government it must recognise the financial risk that a cap-and-trade emissions scheme would place on the upstream oil business.
Caltex managing director Des King told The Australian the Government should not disadvantage "early movers" in Australian industry, and should recognise previous efforts to reduce greenhouse gas emissions.
This included the development of clean fuels in reducing emissions from the use of petroleum products.
Caltex emits about two million tonnes of carbon dioxide a year, most of it from its two refineries in Sydney and Brisbane.
Mr King said Australians should be encouraged to buy more efficient motor vehicles, probably through higher fuel taxes.
Any emissions scheme had to be part of a set of measures to tackle climate change that was consistent and co-ordinated throughout Australia, and avoided economic distortions resulting from overlapping state and federal schemes, he said.
He said the government should take a holistic view of emissions from oil refining, recognising that refining emissions might have to increase in order to produce fuels that allowed lower emissions from vehicles -- so that greenhouse gas emissions were decreased overall.
Caltex argues that deep cuts in greenhouse gas emissions will require vehicles that emit much less carbon dioxide for each kilometre travelled.
While diesel vehicles emit about 15 per cent less carbon dioxide for each kilometre travelled, their pollution control equipment requires diesel fuel with very low sulphur levels, implying higher refinery costs.
In a letter being sent to all federal and state parliamentarians, Mr King says Caltex accepts that carbon pricing should be in the form of emissions trading for industrial emissions, and that its business costs will increase.
"We are concerned about loss of international competitiveness against Asian refineries, which are the source of most imported petroleum products," he says.
"These refineries are unlikely to bear any carbon costs in their emissions for many years. Until then, government policy will need to protect the competitiveness of Australia's energy-intensive, trade-exposed industries."
He says more than a quarter of Australia's petroleum products are imported, mainly from Singapore, which will not face carbon pricing until long after Australia does.
Mr King came to Caltex in Australia last year after running Chevron's Penbroke refinery in Wales and being exposed to the European Union's controversial emissions trading scheme. He said the volatility of such schemes made them inappropriate for the retail end of the oil business, though they were suitable for refinery operations.
Caltex has spent $250 million on its refineries to produce low-sulphur diesel, as required by the federal Government to meet new standards in 2009, and it is the biggest supplier of fuels blended with ethanol.
Mr King said the government had to