Emissions trading handouts cost earth

Sydney Morning Herald
Thursday 18/9/2008 Page: 5

INDUSTRY handouts to help cope with the introduction of an emissions trading scheme would cost half the Federal Government budget for infrastructure and transport, modelling submitted to Canberra shows. In a submission to be published today the Climate Institute Australia criticises work done by the Business Council of Australia warning that companies would move overseas because of a trading system.

"We need a laser-like focus on driving clean investment and opportunities in the low-carbon economy, not 'loser-lite' strategies that shield polluters with unjustified claims and inaction," the chief executive of the Climate Institute Australia, John Connor, said. A report by McLennan Magasanik Associates on behalf of the institute found the number of free permits the Government was proposing to give away would deprive it of between $3 billion and $6 billion in revenue.

That is roughly half the amount the Government spends on big ticket areas such as transport and about a third of what it spends on education. The Government has said it wants to use the money it earns from the sale of carbon permits to help householders cope with higher power prices. The institute wants the Government to commit to a 2020 target for reducing greenhouse gas pollution and argues it must be at least 25 per cent if Australia is to play a leading role in international negotiations.

Its modelling, done with the help of a former climate change adviser to the Government, shows Australia would be better off including petrol in the trading scheme and investing money raised in public transport or subsidies for more efficient cars. Last month the business council published modelling that predicted heavy polluting companies in such industries as minerals processing, manufacturing, oil refining, coalmining and sugar milling would shut down or move overseas as a result of emissions trading.

Moving overseas to escape the trading system is referred to as "carbon leakage" because it effectively moves the emissions created by those companies from Australia to another country. Lobbying on the emissions trading system has been hard and fast since the Government launched its green paper in July. Environmentalists argue the scheme as it has been foreshadowed does not go far enough but business is largely claiming it will be badly affected.

The institute's modelling is the latest in a string of submissions to the Federal Government. It follows a public campaign waged by the liquified natural gas industry over the past two months. Woodside Petroleum is arguing for more Government assistance and says every tonne of gas it exports to China and elsewhere results in less coal being burnt. It wants recognition for the work it does to lower greenhouse pollution overseas. The Government is more concerned about lowering Australia's high rate of greenhouse pollution.

The Australian Conservation Foundation criticised Woodside's argument, saying the company was ignoring the dangers of unchecked climate change. "Woodside is trying to make a molehill into a mountain," a foundation campaigner, Tony Mohr, said. "The stronger Aussie dollar last financial year had three times the impact that a carbon price would. This grab for cash from the Carbon Pollution Reduction Scheme makes Woodside look like an irresponsible climate cowboy."