Business joins forces to kill clean energy fund.

BIG business has warned that energy prices will soar further as Labor’s $10 billion clean energy fund pushes up the cost of cutting greenhouse gas emissions.

In an escalation of the backlash against a key plank of Julia Gillard’s clean energy plans, a coalition of Australia’s top 100 companies is urging the government to dump its plans for a Clean Energy Finance Corporation.

Rather than it being technology neutral, a CEFC would pump taxpayer funds into green projects, they argue.

The move by the Business Council of Australia is significant, as it represents a widening of the rearguard action by business against the CEFC, which until now has been largely opposed by heavy industry, coal firms and coal electricity generators.

In a new submission to the government’s draft energy white paper, the BCA warns that the fund will be directed at projects that are likely to be “less economic than available alternatives”.

“This will distort market outcomes and increase the overall cost of reducing greenhouse emissions,” the submission states.

“The CEFC also fills a role already adequately covered by banks and other financial institutions and places the government in the undesirable position of being a last resort.”

Other groups, including the Australian Industry Greenhouse Network, which represents heavy industry, have also warned the body could distort markets.

The BCA says if the CEFC is retained it should include carbon capture and storage, which the multi-party climate change committee had excluded from funding because of pressure from the Greens.

Business has also hit out at complex rules that are hindering coal-seam gas projects, which have “the potential to make an important contribution to Australia’s energy mix”.

“However, to date exploration for CSG has been slowed and hampered by lengthy approvals and consultation processes,” the BCA says.

“Unclear and inconsistent regulatory frameworks are currently preventing CSG from being brought to market at least cost with a subsequent cost impact on energy end users.”

Also on the costs front, the group has warned that the renewable energy target continues to impose costs on energy users, and that if the scheme is not wound up then the Climate Change Authority being established as an advisory group to the government should be looking to find ways to reduce the costs from the RET.