Australian chemicals major revives plan for methanol plant

An Australian chemicals company, which had last year announced it would scrap a $1 billion expansion of its methanol plant because of the government imposing a carbon price, has decided to revise the plan.

Coogee Chemicals, a diversified manufacturer of chemicals and a major tank terminal operator, had last November declared that its planned expansion of its methanol plant near Melbourne would become uncompetitive and unviable because of the imposition of a carbon price by the Labour party government headed by Julia Gillard, the prime minister.

However, on Sunday, the company said it would go ahead with the project despite the carbon tax, as the government had announced some changes to the scheme. This includes scrapping of the $15 a tonne 'floor' price.

''The project that was envisaged back then was killed off,'' remarked a company spokesperson. ''But that doesn't mean you can't revisit the project under the new economic scenario. And that's what's happened. The legislation has changed. There have been some fundamental shifts in the legislation.''

The carbon price scheme became effective in Australia on July 1 and about 300 large companies had to initially pay a tax of $23 for each tonne of carbon emitted by them. The Labour party government introduced the scheme, which is vehemently being opposed by the centre-right Liberal party. Tony Abbott, the Liberals' leader, has vowed to scrap the scheme if the party comes to power.

Australia is amongst the top-20 greenhouse gas emitters in the world and is the highest per capita emitter among developed nations. It has been warned by other nations of trade retaliation if it did not act on its greenhouse gas emissions.

The original plan was to impose a floor price on the 300 large businesses and councils from 2015. However, the government is now introducing bills to establish a link between its emissions trading schemes and those of the European Union from July 2015, when the fixed carbon price scheme ends.

Australia will establish the world's first inter-continental linkage of emissions trading schemes, tying up with the European Union. According to Greg Combet, climate change and energy efficiency minister, the linkage will remove the carbon floor price to enable Australia to move to a fully flexible emissions trading scheme.