SYDNEY—Australia needs a price of at least A$25 ($21.22) a metric ton on carbon to drive a switch to natural gas-fired power generation from coal, which supplies 85 percent of the nation’s electricity, an industry consulting firm said.

At any price below that level, some coal-fired power plants will still be more competitive than gas-fired power, given the difference in cost between coal and gas, said Paul Taliangis, chief executive of Core Collaborative Pty., whose clients include AGL Energy Ltd. and Origin Energy Ltd., the nation’s two biggest energy retailers.

Australia will join the European Union in pricing carbon pollution when it implements a carbon trading system by 2012 to help cut emissions blamed for global warming. The nation, which hasn’t determined the detail of the system that will set the price, will next year set a greenhouse gas target, Prime Minister John Howard said June 3.

“The price signal we’re looking for, for a country to be serious about changing the fuel mix, and trying to encourage technology development is 25 bucks,” Taliangis said Monday at a carbon trading summit in Sydney. “Anything short of that, we think it’s a soft option.’’

Prices for European Union carbon pollution allowances for 2008, giving utilities and factories the right to pump a ton of carbon dioxide into the atmosphere, ended last week at €22 ($29.61) a ton.

Santos Ltd., Australia’s third-biggest oil and gas producer, and investors AMP Ltd. and Commonwealth Bank Ltd. are also customers of Adelaide-based Core Collaborative.

All Australia’s coal-fired power plants would need to be replaced by gas-fired plants, clean-coal plants and renewable energy plants to cut emissions by 15 percent or 20 percent, Taliangis said. A 50-percent reduction in emissions would require underground carbon disposal, nuclear and hydrogen-based energy supply, he said.

So-called carbon capture and storage, where carbon is extracted during the power generation process and injected into underground reservoirs, will take between 20 and 30 years to become economic, Taliangis said. The cost needs to fall to about A$30 a ton, down from about A$50 a ton at the cheapest existing pilot projects, to be commercial, he said.

Adelaide-based Santos earlier this month said it submitted a proposal to the federal government for a carbon storage project at the Moomba gas fields in central Australia that would be used by major emitters in the eastern states. The initial stage of the project will cost more than A$700 million, it said.

Australia’s electricity industry needs a long-term target for emissions reductions, probably as far ahead as 2050, as well as shorter-term targets to provide certainty for companies investing in lower-emissions generation, said Brad Page, executive director of the Energy Supply Association of Australia, an industry lobby group. Targets must be set “carefully’’ to avoid overextending the construction industry and threatening power supply reliability, he said.

The association’s members, which include Alinta Ltd. and the Australian unit of International Power Plc, have A$110 billion in assets. --Bloomberg

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SYDNEY—Australia needs a price of at least A$25 ($21.22) a metric ton on carbon to drive a switch to natural gas-fired power generation from coal, which supplies 85 percent of the nation’s electricity, an industry consulting firm said.