Carbon costs make gas cheaper than coal

Wholesale gas price-rise likely: This increased demand for gas is likely to result in increases in the wholesale gas price. [But] if the price of the permits rises to very high levels, the economics of renewable generation will improve more than gas-fired, reducing the demand for gas over the longer term."

Clean coal expensive & undeveloped: Clean coal technologies – such as so-called super-critical and ultra-supercritical coal with post-combustion capture (PSS), which can cut CO2 emissions by a fifth – are still at the pilot stage. They are also expensive, with PSS at $64-$108 per MWh.

Commercial ‘clean’ coal ten years away: They are not expected to be commercial for at least five to 10 years, but could eventually drop into the $40-$45 MWh price range, making them competitive at a carbon price of around $20-$30 per tonne.

Coal needs $25-$30/tonne carbon price: Other carbon capture and storage technologies for use with coal-fired generation will take 10 to 15 years to fully develop and will probably need a carbon price of at least $25-$30 per tonne – and more if they are to be retro-fitted to existing coal power stations. Venture capital opportunities to develop these new technologies will also spring up in Australia.

Nuclear needs $15-$40/tonne carbon price: Nuclear power, at $40-$65 per MWh, is likely to be between 20 and 50 per cent more costly to produce than power from a new coal-fired plant at current fossil fuel prices. It would need a carbon price of $15-$40 per tonne to be competitive and require 10 to 15 years before the first plants could be operating, even assuming coalition governments are in place to approve them.

The Sydney Morning Herald, 9/6/2007, p. 42



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