Costs 'force reliance' on coal

Australia will rely on existing coal-fired power stations "indefinitely" as financial stresses, including a $4.6 billion carbon tax bill, throw plans for investment in the stricken electricity generation sector into turmoil, according to The Australian.

As Julia Gillard sought to play down the significance of a $652 million bailout of Victoria's Hazelwood power station by its offshore shareholders, figures to be released today by the Energy Supply Association of Australia warn coal generators will be hit with the $4.6 billion slug in 2012-13.

Carbon hedge plans on hold

Large emitters are holding off on plans to hedge against future carbon commitments due to political uncertainty and a three-year wait for a carbon floor price, according to the Australian Financial Review.

Investment banks developing financial products and trade instruments designed to help industry manage future carbon obligations said yesterday Australian emitters were reluctant to enter the potential $8 billion market.

Banks wound back their carbon teams in Australia during the financial crisis after the government’s carbon pollution reduction scheme was abandoned but started building up the business last year.

Morgan Stanley, Commonwealth Bank, Westpac, Macquarie and ANZ have been shopping around products for clients such as Australian-denominated certified emission reduction swaps or physically delivered international units in the Australian schemes.

Call to limit EFIC credit

The Productivity Commission has sought to ban the government’s main export credit provider, Export Finance and Insurance Corporation, from helping big mining or resource companies that could secure their own financing, according to the Australian Financial Review.

EFIC has pledged hundreds of millions of dollars in loans, guarantees and bonds to mining and resources companies in the past decade to help develop mines and buy infrastructure and equipment to secure export markets.

The Productivity Commission specifically questioned whether EFIC should have backed the Gindalbie Metals-Ansteel-Brookfield Rail train-line upgrade in Western Australia with a $US270â€â€°million insurance policy; provided a $US100 million guarantee for Queensland’s Wiggins Island coal export terminal or provided a $5 million bond to Greyhound Australia (not an exporter) for mining coach services at Wheatstone in Western Australia.