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Rudd warms up for Bali climate talks -

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ALI MOORE: The Prime Minister Kevin Rudd travels to the Bali climate conference tomorrow to tell
the world he's serious about global warming. Australia and other developed nations will be under
pressure to accept deep cuts in greenhouse gas emissions by 2020.

Today, Mr Rudd again ruled out making any such commitment, saying he would wait for the findings of
his expert panel led by economist, Ross Garnaut. But any significant cuts to Australia's greenhouse
gas emissions will have a major impact on the nation's coal-based power industry.

While the industry wants to see achievable targets sooner rather than later to provide investment
certainty, householders are left to ponder what it means for household energy bills.

Kerry Brewster reports.

KERRY BREWSTER: Applause for Australia's dramatic entry to the global negotiating table.

KEVIN RUDD, AUSTRALIAN PRIME MINISTER: I would not have taken the decision to proceed with the
ratification of Kyoto unless, as Prime Minister of Australia, I was determined that Australia show
leadership in this area.

DON HENRY, AUSTRALIAN CONSERVATION FOUNDATION: The hard yards start now. We've got to be fair
dinkum, we've got to follow words with action.

KERRY BREWSTER: But what does the Government's election commitment to cut domestic emissions by 60
per cent in less than 50 years actually mean for everyone back home? Australia's energy sector is
bracing for a radical shake up.

JOHN BOSHIER, NATIONAL GENERATORS FORUM: It's 80 per cent below business as usual, that is an
extremely challenging target.

KERRY BREWSTER: Any action will cost. Already the Opposition is raising the spectre that all
Australian households will suffer if the Government goes for any deep short-term cuts.

BRENDAN NELSON, FEDERAL OPPOSITION LEADER: It would have a serious consequence for electricity
bills and many other burdens borne by working families in day to day life, and pensioners.

KERRY BREWSTER: Business, however, wants targets and timetables.

GRANT KING, CHIEF EXECUTIVE, ORIGIN ENERGY: And there's not too high a price to save the world, if
this is the challenge that it is, it has to be met successfully. But it will cost, and the cost is
not yet known.

KERRY BREWSTER: Australia's economy is built on coal. It generates the cheapest electricity in the
world. The boom states will need much more of it, and soon. Investors say multi-billion dollar
decisions need to be made now, if not, the lights will be going off in under 10 years.

GREG HOUSTON, ENERGY ECONOMIST, NERA: That simply is not enough electricity to meet the demands of
everyone in New South Wales or in Queensland at that time. So, we're running the risk of blackouts
or brownouts at peak days in six or seven years time from now.

KERRY BREWSTER: In the scramble for cleaner energy, coal is no longer king, according to Nera's
Greg Houston.

GREG HOUSTON: Gas is certainly the new king. That is going to be the main source of energy for
meeting the expanded needs in the electricity network or electricity generation over the next 10 to
15 years.

KERRY BREWSTER: The head of the National Generators Forum, agrees.

JOHN BOSHIER: This is a critical time gap between basically now and 2020, and that will be filled
by gas. Gas is the transition fuel. And natural gas-fired powered stations are the most likely
thing to be now built.

KERRY BREWSTER: Gas emits half the greenhouse gases of coal and companies like Origin Energy are in
a great place for a carbon constrained future.

In Queensland's Darling Downs, it's begun construction of a large gas-fired power station.

GRANT KING: That substitution of gas for coal is really about the only lever we've got to pull to
pull out really substantial reductions in a price range. The other lever is by setting renewable

KEVIN RUDD (October 30, 2007): Australia needs a real, robust renewable energy target. If Labor is
elected to form the next government of Australia, the renewable energy target for Australia will be
lifted to 20 per cent by the year 2020.

KERRY BREWSTER: Labor's commitment to a compulsory target of 20 per cent renewable energy means an
explosion of wind farms.

JOHN BOSHIER: The 20 per cent target by 2020 of renewable energy is going to mean 6,000 new, large,
wind turbines. The most windy states in Australia are Victoria, South Australia, southern NSW,
Tasmania. So that's where the states are going to have wind farms.

KERRY BREWSTER: This is where wind farms are likely to go. Even if the industry can overcome local
opposition, can it deliver?

ANDREW RICHARDS, PACIFIC HYDRO: Absolutely. We, as a company, we currently have about $3 billion of
investment ready to go in the wind industry alone, there's between $12 and $15 billion. That's half
of what's required under the target.

KERRY BREWSTER: For a country addicted to cheap energy, the challenge is to decarbonise the economy
as it grows.

GREG HOUSTON: You can't escape through a commitment to cutting greenhouse gases. You can't escape
higher priced energy and that's exactly what is needed to reduce people's appetite for energy. One
has to follow the other.

NICK ROWLEY, DIRECTOR, KINESIS: There are going to be greater costs imposed, and it's the extent to
which people and indeed the broader economy are able to, in fact, pay those costs and are willing
to pay those costs. That's very hard politics, that's very challenging policy.

KERRY BREWSTER: There'll be winners and losers, says Nick Rowley, climate change adviser to
Britain's former Prime Minister Tony Blair. But the notion that it's all pain and no gain, he says,
is wrong.

NICK ROWLEY: If you look at the evidence of the UK economy, there's a pretty robust economy indeed
the strongest economy in Europe, that has experienced a level of growth over a period of time that
has been unprecedented since the early days of the industrial revolution, and that is with, in my
view, a pretty robust principled approach to tackling the climate problem.

DON HENRY: In fact, Stern, who did the Stern review, the former World Bank economist, he said it's
actually better to act and act early for the economy. It's less expensive, rather than if you

KERRY BREWSTER: But uncertainty over a price on carbon continues. The rules of an emissions trading
scheme that will drive development of solar, clean coal and geothermal won't be known for at least
eight months.

NICK ROWLEY: Just saying, "We're going to have an emissions trading scheme," is a bit like saying,
"I'm going can to get married." Well, that's good news, but who is he or who is she? What do they
do? When are you going to get married? Except, there are a whole lot of questions you ask, and if
the answer is "I don't know", you start wondering whether or not it's really serious.

KERRY BREWSTER: For it to work, a carbon trade needs a 2020 reduction target. The UN wants
Australia to commit to deep cuts, between 25 per cent and 40 per cent. The Australian coal
industry, which is investing $1 billion to develop so called "clean coal technology" to bury CO2
emissions, doesn't wish to say publicly what target it wants.

GREG HOUSTON: It's a very serious matter, with implications for every Australian. Their well being,
economic well being but, of course, also their longer-term well being in a climate change context.
Serious matter, you don't pull numbers out of the air.

DON HENRY: As the Australian Conservation Foundation we say 30 per cent by 2020. That's the same
target the European Union's suggesting and the UK has adopted into law now, a target of a 20 per
cent cut by 2020.

KERRY BREWSTER: The uncertainty means more investment delay.

GREG HOUSTON: There's a lot of uncertainty. There's a lot of money needs to be committed and people
are just holding back.

KERRY BREWSTER: Watch this space. The design of our emissions trading scheme will determine the mix
of our energy future.

Once the price of carbon is reached, finance hard heads will decide whether old, less economic coal
fired power stations will

shut, or will serve out the terms of their natural lives.

ALI MOORE: That report from Kerry Brewster.