A CHEMICALS firm which announced last year it was shelving a $1 billion expansion because of the carbon price, bolstering Coalition claims the scheme would kill investment, now says it is pushing ahead with the plans.
Coogee Chemicals, which has a methanol plant in the Lalor electorate of the Prime Minister, Julia Gillard, maintains the carbon price is still a drag on its business but that changes to the scheme, such as scrapping the $15 ''floor'' price, makes an expansion viable after all.
The revelation comes 100 days after the carbon price began on July 1, forcing about 300 large companies and councils to pay $23 for each tonne of carbon they emit. The Opposition Leader, Tony Abbott, has vowed to scrap the scheme.
Grant Lukey, the manager at Coogee's existing Laverton methanol plant, told the Herald: "We are continuing to progress a project related to a world-scale methanol project. The project is ongoing, but the carbon tax hasn't made it any easier in getting it up."
In November last year, with the Senate poised to pass the controversial carbon price legislation, the Coogee Chemicals chairman, Gordon Martin, said a planned $1 billion expansion to its methanol operation had become "uncompetitive and unviable" because of the Gillard government's scheme.
Mr Martin is also a member of the Coalition's business advisory council on climate change.
Dr Lukey said the company stood by the previous remarks. The scrapping of the floor price and greater certainty around industry compensation had lifted the prospects for going ahead with the expansion, which could create 150 jobs and $14 billion in exports.
''The project that was envisaged back then was killed off … but that doesn't mean you can't revisit the project under the new economic scenario … and that's what's happened," he said.
''The legislation has changed. That's a big part. There have been some fundamental shifts in the legislation.''
The carbon floor price would have set a minimum price of $15 a tonne from 2015, when the scheme shifts from an effective tax to an emissions trading scheme with a price set by the market. Removing it is likely to make the scheme cheaper for the 300 businesses and councils paying the carbon price, at least in the early years of the scheme.
Dr Lukey said that the previous investors had walked away from the methanol expansion and invested instead in Chinese projects, though he declined on commercial confidentiality grounds to say which ones. These coal-based plants in China were more greenhouse-intensive than the natural gas method used by Coogee, he said.
The company was now looking at "a similar project … but it will be different individuals involved".
There were several potential sites being considered for the expansion, he said, while stressing the carbon price still made the project more difficult than it would have otherwise been.
Methanol, a clear liquid, is used in the manufacture of particle board for building, paint, plastic bottles, rubber and a range of other basic products.