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Emissions hurdle for Penola pulp mill

Posted on July 22, 2008, 5:05pm and updated on July 23, 2008 at 6:42 pm

Developers of the Penola Pulp Mill have hit a potential new hurdle as they investigate the implications of the Federal Government’s proposed carbon emissions trading scheme.

Protavia communications officer Jason Chappel said he was looking at the implications of emissions trading on the $1.5b development, which was approved last year by state and federal governments.

“We’re asking ourselves the same questions you are asking us and don’t know the answer yet,” he said.

However, State Greens MLC Mark Parnell said the emissions scheme could be the final blow to stop the mill project.

He said the mill developers were already unlikely to secure the project after plantation companies decided to export woodchips to China that were previously thought to be destined for the mill.

“Like any major new project with significant greenhouse pollution implications, the Penola Pulp Mill will be caught up by emissions trading,” Mr Parnell said.

He said extra costs and responsibilities would now need to be factored in.

“With the price of electricity and gas set to rise, the big energy demand of the Penola Pulp Mill project will require a complete re-write of the project’s business case,” Mr Parnell said.

“Emissions trading makes an extremely marginal project even more marginal.”

However, Mr Chappel said confidence remained strong surrounding the pulp mill and construction was expected to begin early in 2009.

Mr Chappel said a number of companies were involved in negotiations to deliver a woodchip supply to the mill and discussions were continuing, but appeared positive.

“We are aiming to satisfy the banks the project will be viable,” he said.

“The banks look into fine detail and we have to have a good case to convince them, but aim to do exactly that.”

Mr Chappel said, in the meantime, fine details were being negotiated on various contracts.

“These things take awhile — when you get approval to build a house, you don’t start the next day and need all the details right,” he said.

“It takes awhile on a house, so when something costs over $1b it takes a little bit longer.”

JASON WALLACE

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