Industry to get $9bn carbon cushion

Sydney Morning Herald
Thursday 19/2/2009 Page: 7

THE Federal Government will spend $9 billion cushioning industry against the impact of carbon trading over the next three years. A wide range of heavy polluting industries, from aluminium refining to tissue paper production, may be eligible for compensation if they can complete audits by May 1. Guidelines showing how businesses will have to account for their greenhouse gas emissions were released yesterday by the Minister for Climate Change, Penny Wong.

"We are very mindful of the potential impact the scheme may have on industry, which is why we have already set aside over $9 billion to assist a range of businesses and industries under the scheme out to 2012," Senator Wong said. The burst of carbon assessments are likely to be a bonanza for the carbon audit sector, as hundreds of businesses seek to get their carbon footprint precisely measured over the next three months. Each company's carbon account must be checked by one of the several auditors vetted by the Government.

The guidelines point to 33 production processes the Government has already identified as being eligible for subsidy, including steel and iron making, lead and zinc smelting, and cardboard and newsprint production. Legal sanctions, including up to a year's imprisonment, can apply to anyone who knowingly submits false or misleading data. Mining giant Rio Tinto is likely to be the biggest recipient of free carbon permits under the scheme, based on figures in the Government's White Paper.

The steel and cement industries, along with aluminium smelters, are likely to be eligible to have 90% of their carbon emissions covered by free permits. The alumina refining, liquid natural gas and petrol refining industries are likely to get 60% free coverage. The money to provide compensation for eligible polluters will be raised by auctioning carbon permits, each valued as equivalent to a tonne of carbon dioxide gas.

The cash will then be redistributed to businesses which are disadvantaged because they are unable to reduce emissions, or because they are exposed to competition from countries without carbon restrictions. The Business Council of Australia was still examining the guidelines late yesterday, but a spokesman for the group said it was broadly in favour of the Government's approach, and was awaiting further detail on how the trade-exposed, emissions-intensive industries would be treated.

Companies will have three months to open their carbon efficiency books. Senator Wong still needs to produce a draft bill and the legislation must pass both houses of Parliament. The Government remains committed to bringing in a scheme by July next year but to do so it must persuade either the Opposition or the Greens to support it.

"If all permits were auctioned, as the Greens and the majority of economists advocate, the system would be more simple and more efficient," said the Greens Senator, Christine Milne. "Compensation should be limited to offsetting the loss of competitiveness that trade exposed polluters would face, and should be geared towards achieving emissions reductions instead of entrenching current pollution levels."