Origin drops forestry deal amid carbon worries

Origin Energy has quit $133 million worth of options for forestry projects in Australia amid fears that the price of carbon will plunge, according to The Australian Financial Review.

The federal government's move to abandon plans for a carbon price floor threatens to make it cheaper for carbon emitters to buy carbon units on the market instead of investing in carbon sinks like forests.

However, Origin denied that its decision to walk away from its 2013 contract with carbon sink developer Carbon Conscious was at all related to the government's announcement.

Carbon Conscious director of business development Dan Stevens said the decision by Origin, which is the company's largest client, was motivated by an expectation that carbon prices will fall after 2015, when the local market tethers itself to the European market.

“It has something to do with market sentiment and uncertainty around the carbon price,” he said, according to the AFR.