Coal jobs still tipped to go from revised ETS

THE Rudd government has delayed its proposed emissions trading scheme by one year to July 2011, a move welcomed by industry groups concerned with how it will affect the competitiveness of Australia’s key exports, such as coal.

Blair Price

As a transitional measure to give industries more time to recover from the global financial crisis, an unlimited number of permits will be made available in the first year of the scheme at the price of $10 per tonne.

The Department of Climate Change said these permits could not be banked for use in future years, with full trading scheduled to start in the 2012-13 financial year and auctions for permits to start in 2010-11.

The reduction target range has also been revised to up to 25% of 2000 levels by 2020 should similar global action take place.

Another measure will be the introduction of a global recession buffer to allow discounts to what the government considers emissions-intensive trade-exposed activities, to operate for the first five years of the scheme.

However, the black coal industry does not qualify as an EITE, as noted by the Australian Coal Association.

“Coal's exclusion is unfair and hard to understand in terms of evidence-based policymaking,” ACA executive director Ralph Hillman said.

The ACA also made the point that the changes announced today will not address the loss of competitiveness the scheme will have on Australia’s leading export commodity, which contributes over $20 billion into the economy every year.

“That loss of competitiveness will see jobs in the Illawarra, the Hunter and regional Queensland move to competitor countries, such as South Africa, Indonesia and Colombia – countries that will not face the costs imposed by an emissions trading scheme,” Hillman said.

"The emissions associated with those lost Australian jobs will go overseas with them; there will be no reduction in global emissions and no benefit to the global climate. This is just carbon leakage."

The Australian Chamber of Commerce and Industry said the new changes of a one-year fixed price created some short-term certainty for business as it struggled with the recession.

“Given, however, that investment decisions are made for the medium and long term, it remains the case that Australia should still exercise a high degree of caution before locking in scheme design or start dates,” ACCI said.

The chamber added it was quite possible the 25% by 2020 target, while sensibly conditional on global agreements, could still remain too ambitious for Australia’s industry profile.

The Minerals Council of Australia said the changes did not address the central flaw of the scheme, being the decision to embark on full permit auctioning from its outset.

“These are changes at the margin,” MCA said.

“They will not materially improve the environmental outcomes or reduce the economic impact of the scheme. Under today’s changes, instead of being hit with $10 billion in carbon costs over the first five years of the scheme, the minerals sector faces an impost of $9 billion.”

MCA also reiterated its previous calls for a phased approach to the introduction of full auctioning of emissions permits in line with other nations.

“The proposed one-year delay amounts to little more than a temporary stay of execution for thousands of mining jobs and billions of dollars in investment, including in breakthrough low emissions technologies,” the council said.

“These losses won’t be mitigated by the changes to the so-called ‘compensation’ measures for EITE firms.

“Ninety per cent of Australian mineral exports will still receive no shielding from the full carbon price ahead of their international competitors.”

As to the coal industry’s exclusion from EITE status and compensation, the MCA sees wider repercussions.

“The result will be a severe impact on the coal mining regions in Queensland and New South Wales and the inevitable increase in coal exports from Indonesia, Russia, Colombia and South Africa.

“The government’s own Treasury modelling forecasts that coal mining output will be slashed by 35 per cent by 2020.

“Our own work suggests that the impact on other minerals sectors will be comparable.”

Commercial law firm Allens Arthur Robinson welcomed the $75.8 million Australian Carbon Trust measure included in the day’s announcements, but also said fixing the price of carbon permits for the first year of the scheme suggested concern about possible price volatility during its initial stages.

Interestingly, the Construction Forestry Mining Energy Union argues the scheme will protect jobs that will be at risk if the Australian economy is not restructured for a low carbon future.

“If a 12-month delay allows business to better adapt to the shock of the global financial crisis and plan for a low carbon future, then that is what is needed,” CFMEU national president Tony Maher said.

“Now we can stop the scare-mongering from big business about insolvency and job losses.”

The federal government aims to push the scheme legislation through mid-year and plans to set the initial caps for the scheme in 2010.

The legislation, if passed, will lead to the creation of the Australian Climate Change Regulatory Authority, which will have various powers to implement the scheme.

The Australian Greens party is likely to view the scheme’s targets as too weak and the Labor government will need their support to pass through the legislation.

Opposition leader Malcolm Turnbull wants the legislation delayed and subject to more debate while independent Senator Nick Xenophon is not expected to support it.

Most read Archive



Most read Archive