Free permits to big polluters

Age
Saturday 20/12/2008 Page: 4

SIX of Victoria's coal-fired power stations - including the notoriously dirty Hazelwood - will receive $2.8 billion in free carbon pollution permits over five years tinder the Federal Government's emissions trading scheme, a report estimates. Under the scheme to cut Australia's greenhouse gas emissions by 5 per cent by 2020, some of Australia's wealthiest companies will get $5.3 billion in free permits by 2015, predicts the analysis, which was produced by financial advisory company Innovest for the Australian Conservation Foundation.

The aluminum industry would receive the largest assistance to trade-exposed sectors of $1.2 billion in 2014-15. Top recipients include Rio Tinto at $620 million, BlueScope Steel ($233 million), US company Alcoa ($228 million), the UK-Netherlands company Royal Dutch Shell ($186 million), and Chinese trading company CITIC ($48 million in 2015). Four of Victoria's coal-fired power stations will get the lion's share of assistance to coal-fired generators over five years, with Hazelwood receiving $990 million, Yallourn ($738 million), Loy Yang A ($677 million) and Loy Yang B ($344 million).

Under the scheme, detailed in the Government's white paper this week, most businesses will have to pay for permits to pollute. By limiting the number of permits, the Government aims to force companies to reduce their greenhouse gas emissions. To offset industry's costs, the Federal Government will return some of this money in free permits. The Australian Conservation Foundation attacked the Government for giving "handouts to big polluters". "Australia's carbon pollution reduction scheme should not be a pay-the-polluter scheme," ACF executive director Don Henry said.

But the deputy chief executive of the Minerals Council of Australia, Brendan Pearson, said Australian business world pay the world's "highest carbon costs" under the white paper design. "Nearly 90 per cent, or $120 billion, of Australia's minerals exports will face full carbon costs under the emissions trading scheme," he said. "An average Australian firm with a 1 million tonnes carbon liability will pay $111 million in carbon costs over the first four years of the ETS." Industry has argued that trade-exposed companies should receive relief because of their economic importance in terms of exports and jobs.

While the Government has given big concessions to trade exposed sectors, it has also protected domestic coal-fired plants. Climate Change Minister Penny Wong said the Government had taken on the concerns of industries while building a "low-pollution economy". In a separate analysis, the Climate Institute Australia think tank found the increased compensation offered under the Government's final carbon trading scheme model meant it was unlikely Australia could meet its target of cutting emissions by 15 per cent by 2020. "The more we look, the worse this package appears, and we will have to seriously look at recommending the whole package goes back to the drawing board," said John Connor, the institute's chief executive.