LNG may cost Australia in the long run, commentator says

THE LNG export boom may be responsible for the federal government having to change its carbon emissions reduction target, according to business commentator Alan Kohler.

Writing on the ABC's The Drum website, Mr Kohler said the high price of gas in Australia had made replacing coal-fired power stations with gas uneconomic.

That combined with "fugitive emissions" from the LNG plants meant that reducing overall emissions by five per cent by 2020 would require much bigger cuts in other industries.

Mr Kohler said Prime Minister Tony Abbott would either have to drop the promise to cut emissions by five per cent, or drop the promise to repeal the carbon tax.

He said the United States had banned LNG exports and was allowing them only on a case-by-case basis, resulting in a collapse in the domestic gas price there.

This had led to the replacement of coal-fired power stations with lower carbon emitting gas.

But in Australia, export pricing had led to a huge increase in the price of domestic gas, meaning gas was still uneconomic as a replacement fuel for coal.

Mr Kohler suggested Australia's LNG industry would end up being a big net cost to Australia, rather than a benefit.

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