Isra-Mart srl: Australia govt says carbon scheme to spur gas use

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Australia's proposed carbon tax could triple use of gas-fired power generation over current reliance on dirtier coal, Treasurer Wayne Swan said, as a new opinion poll on Monday showed most voters opposed the tax and want early elections.

Swan will spell out Labor's argument for a carbon price leading to eventual emissions trading in a national speech on Tuesday and unveil modelling showing it would help spur a shift away from polluting coal-fired electricity.

But the government is facing a tough fight to win over voters, with a Galaxy poll showing 58 percent of Australians opposed emissions pricing and 64 percent wanted new elections to be fought on climate policy.

Only 24 percent of respondents believed Prime Minister Julia Gillard's minority government had a mandate from a dead-heat vote last year to introduce a carbon price, while 73 percent expected to be financially worse off under the scheme.

Thousands of carbon price backers rallied in major cities across the country over the weekend, hoping to counter similar recent demonstrations by opponents of the tax.

Gillard's Labor plans to introduce a carbon tax on 1,000 of the country's biggest polluters in 2012, transitioning to emissions trading three to five years after that.

But Gillard needs to convince a handful of Green and independent MPs, who wield the balance of power, to back the scheme, as well as win sceptical voters over to a environmental platform that could make or break Labor's re-election in 2013.

The government is expected to announce details of the carbon tax within weeks and unveil a carbon price of between A$20 and A$30 per tonne, offsetting increased living costs with compensation to households and business.

Australia has one of the world's highest per capital levels of greenhouse gas emissions because of reliance on ageing coal-fired power stations for 80 percent of its electricity.

"Treasury modelling shows a carbon price will see gas-fired electricity generation expand by between 150 and 300 percent over the period to 2050," Swan said in a weekly economic note.

Australia is a major producer and exporter of thermal coal, but is also expected to see gas production soar with a series of massive coal-seam gas projects in the works.

"Dirty energy will become more expensive and clean energy cheaper under a carbon price, creating the jobs of the future and helping to protect our environment and our economy," Swan said.

But mining firms warned last week that the planned carbon pollution cutting scheme would slash investment, output and jobs, and demanded the minority government enter talks to recast its ideas.