Speaking ahead of a well attended APIA dinner in Adelaide yesterday, chief executive Cheryl Cartwright warned that introducing a carbon trading system without policies to encourage use of natural gas could impair the country’s power generation capacity.

While Australia will move towards using renewable sources of power, natural gas costs less than nuclear, clean coal generation and renewable energy sources, and it will become an increasingly important part of the fuel mix, Cartwright said.

“In the short and even medium term, the costs associated with wind power, solar power and other non-greenhouse gas-emitters are prohibitive, other than for minor generation needs.

“The emissions from natural gas per kilowatt of power generated are about 40% lower than emissions from coal-fired power generation.

“Therefore, if a cost burden is introduced based on greenhouse gas emissions – that is a carbon trading system – this will lead to an increased demand for natural gas as fuel for power generation, as the cost of using renewables for major power generation will still be too high given that the technology is not yet fully developed.

“So, for power generation in a carbon-constrained future, natural gas is the answer.”

But with demand for natural gas set to grow further, federal and state governments must make sure the right environment exists for this demand to be met.

“Governments need to ensure that development of the necessary infrastructure – which is privately funded – is not hampered by restrictive regulatory policies,” she said.