Free kick for worst polluters to cost $3b

Canberra Times
Monday 20/10/2008 Page: 3

Free carbon permits for big polluters will cost Australian taxpayers $3 billion in the first year of the Rudd Government's carbon trading scheme, a new report says. The coal industry will receive the lion's share, with $1.5 billion in free permits, based on a carbon price of $20 a tonne. Under its proposed carbon pollution reduction scheme, the Rudd Government has outlined two industry assistance packages offering free permits - to coal-fired power stations and high-emission industries - to soften the impact of a carbon price.

An analysis by global financial investment advisers Innovest estimates $825 million will go to aluminium smelting industries, $227 million to alumina refiners, $l46 million to cement manufacturers and $124 million to steel makers. The biggest recipients of Government assistance are expected to be Rio Tinto ($489 million), BHP Billiton ($340 million) Xstrata ($234 million), Mitsubishi ($200 trillion) and mining company Anglo American ($185 million).

The report, commissioned from Innovest by the Australian Conservation Foundation, estimates 47 per cent of federal assistance to emissions-intensive industries will go offshore, chiefly to Japan. Australian Greens climate change spokeswoman Christine Milne has called for the Government to abandon plans to allocate free permits to the country's biggest polluters. "Why is the Government determined to make ordinary Australians bear the burden of greater energy costs while giving polluters a windfall?" Senator Milne asked.

"The Rudd Government should immediately abandon their plans to reward the big polluters in favour of auctioning all permits, which would raise the cash the Government needs to invest in clean energy solutions and to drive equitable outcomes." The Innovest report estimates coal-fired electricity generators will receive $900 trillion in free permits under the Government's electricity sector adjustment scheme. The NSW, Queensland and West Australian governments will be the biggest beneficiaries. The biggest non-government recipients are expected to be power companies in Britain, Hong Kong and Japan.

Australian Conservation Foundation spokesman Tony Mohr said the report showed compensation arrangements proposed in the carbon pollution reduction scheme were " far too generous to big polluters and overseas interests". "Under the current plans for emissions trading, the amount being given away to the big polluters is more than the total federal budget spend on climate change and the environment," Mr Mohr said.

A spokeswoman for federal Climate Change and Water Minister Penny Wong said the Rudd Government welcomed all contributions to discussions regarding the best design for its carbon pollution reduction scheme. "This is a complex economic reform, and we are determined to get it right," she said.