MAC: Mines and Communities

A taxing debate reaches its climax down-under

Published by MAC on 2011-10-18
Source: Sydney Morning Herald, Climate Spectator

Australia passes its carbon act

Last week, the Australian government passed its "carbon tax" legislation, marking the first time that a major industrialised state has attempted to price, and place a cap on, its greenhouse gas emissions.

Acrimonious debate around the proposal had evoked the often-irrational fears, both of the rightwing opposition and some business and mining representatives, that the country is now headed for economic dissolution, if not bankruptcy.

See:  Australian PM Introduces Controversial Carbon Laws

Following passage of the law, the government now sets about implementing a package of "clean energy" bills. The Australian Coal Association has published a report by the consultancy group ACIL Tasman, which estimates that fifteen mines may now have to close prematurely, with the loss of over two thousand jobs.

But, according to Giles Parkinson of Australia's Climate Spectator, such fears are unwarranted, and the overall costs of reducing carbon emissions from existing mines may be considerably lower than claimed in the report.

With some Aus$300 million already earmarked to help the steel industry meet its reduction targets, it is unlikely that any Australian government, whatever its political hue, will radically challenge the country's extractive industry, however dubious its claims.

For a summary of these suspect claims, see: Australia's carbon tax debate ignites

Abbott can't roll back the carbon tax, says Gillard

Sydney Morning Herald

12 October 2011

THE Coalition would never be able to repeal Labor's carbon tax, the Prime Minister, Julia Gillard, predicted as Tony Abbott maintained total opposition to all aspects of the plan before its expected passage through the House of Representatives today.

The opposition's stance left the fate of $300 million in steel industry grants in the hands of the Greens, who reluctantly agreed to support the assistance - additional to carbon tax compensation - despite the absence of any criteria or conditions for its payment. The Coalition also appeared likely to join Labor in opposing an amendment by the crossbench West Australian National, Tony Crook, to exempt some businesses from increases in fuel excise.

Meanwhile, major business groups launched a final appeal to have the carbon tax deferred or watered down. The Business Council of Australia appealing for safeguards to be inserted so the carbon price could be wound back if the economy deteriorated or global climate talks failed comprehensively.

The Australian Industry Group called for the starting price to be cut from $23 to $10 and the Australian Chamber of Commerce and Industry urged Parliament to reject the carbon pricing bills altogether.

The public galleries are booked out to witness the final vote on the legislation and subsequent question time today. The Opposition Leader maintained his angry rejection of it as it passed its first hurdle at the second reading stage last night.

Mr Abbott said if the government was so sure the carbon tax was such a good idea it should take it to a general election.

The only amendment the Coalition proposed - to defer the bills until after a federal poll - was opposed by Labor. The support of Greens MP Adam Bandt and independents Rob Oakeshott, Tony Windsor and Andrew Wilkie paved the way for the bills to pass.

Mr Abbott has vowed to repeal the carbon pricing regime if he becomes prime minister, even if it requires a second, double-dissolution election.

Labelling Mr Abbott ''the biggest wrecker to ever serve in a leadership role'', Ms Gillard insisted a repeal would never happen because it would involve taking associated compensation from pensioners and families and ''repudiating the views of every living Liberal leader''.

Malcolm Fraser and John Hewson have joined the ''say yes'' campaign on the tax. John Howard proposed an emissions trading scheme at the 2007 election but subsequently said he would not have implemented it after the failure of the 2009 Copenhagen meeting to reach a binding agreement.

The 19 ''clean energy future'' bills are expected to pass the Senate by the end of the year, with the first fixed-price phase of the scheme to begin in July.

Their passage will follow more than 10 years of debate. The issue cost former Liberal leaders Malcolm Turnbull and Brendan Nelson the job and former prime minister Kevin Rudd's shelving of his scheme prompted the poll slump that preceded his removal.

Mr Turnbull, still a supporter of carbon pricing, voted with the Coalition to oppose the bills at second reading, something he is required to do to remain on the opposition frontbench.

Read more:

Facing up to carbon reality

By Giles Parkinson

Climate Spectator

11 October 2011

For much of the past decade, and particularly the last three years, the cheapest and most effective means of reducing carbon liability has been to try and avoid it altogether.

That's given handsome bonuses and fees into the hands of PR spinners and lobbyists across the globe, and the party is likely to continue for another few years yet in the US and elsewhere. So given that this option will effectively expire in Australia sometime on Wednesday, should the House of Representatives pass the Clean Energy Future Package, it is not surprising that the anti-carbon tax brigade have given it one last big shove.

Centre stage has been sought by a newly formed group called Manufacturing Australia, which has apparently emerged for a last gasp attempt at derailing the package, drawing on the same sort of scare tactics as Tony Abbott's Opposition, and the same questioning of the science as much of his Coalition.

The figurehead for this new group is Dick Warburton, the former Reserve Bank board member who was deprived of an effective forum at the BCA [Business Council of Australia] and is no doubt delighted that he has a new platform to express his doubts about the science, and his lack of faith about carbon markets. But it is not entirely clear that his members - which include Amcor, Bluescope Steel, CSR and Boral - are entirely happy being associated with his remarks.

We asked several to endorse Warburton's comments about climate science on the record, but they wouldn't. One expressed a view that they had understood the lobby group was to have been more concerned abut "broader manufacturing issues" than the carbon price. That seems disingenuous at best. It is clear that Warburton's zeal is based more around ideology than business management, but some companies might be happy to have a bet each way.

Consider Warburton's views about carbon markets, which figure prominently on the climate-denialist website, the Galileo Movement. Warburton says companies don't like markets because they offer too many variables. That seems to undermine the basic tenor of the capitalist credo, and it certainly isn't the view of Qantas and Virgin who, as we reported a fortnight ago, had lobbied to be included in the ETS [Emissions Trading Scheme] (rather than face a fixed fee via excise duty changes), and the 20 other companies that are likely to join them. Most companies have far greater liabilities to manage each day, in the form of currency and commodity movements.

Qantas and Virgin acted because, now that the die is cast, the task of business is to set about finding the next cheap alternative to dealing with their carbon liabilities. For many, this will lie in a market system, most likely through the purchase of credits overseas. For others, it will lie in tweaking their domestic operations, and producing emission reductions that had hitherto remained hidden.

This was the point underlined, albeit unwittingly, by the Australian Coal Association on Monday, which issued an updated report from ACIL Tasman that estimated how many mines may close prematurely (15) and how fewer "future" jobs would be created (2100) if the package went through.

The problem with the ACIL Tasman report, as with many like it, is that it works on the basis that most company executives are dolts who are incapable of making decisions that could reduce a potential liability. We talked on Monday to ACIL Tasman, who confirmed the analysis is a "simple" product of adding a carbon price to a spread sheet and making a note when the Ebitda goes into the red. It takes no account of the inability of any individual mine owner to take action to reduce its emissions.

So it's a partial assessment at best. As we reported last week, the Indian-controlled coal miner Gujarat NRE has found that a few "simple" changes to their planned mine extension can actually reduce their liability by around 80 per cent. Gujarat had been considered one of the coal companies most heavily exposed to a carbon price, and had produced some startling predictions about the price of beer rising to $60 a schooner and the end of civilsation as we know it.

But on closer inspection it found new ways of reducing its emissions, including separating new workings from old workings, and using ventilation controls and gas drainage techniques, that could reduce its emissions significantly and cut its exposure from around $16 a tonne to $2.70 a tonne. It would not go out of business. Indeed, it now says its mines should be viable for another 30 years.

And this is exactly the sort of reflection, analysis and action that a carbon price is designed to effect. You can expect this story to be repeated across the country. And if think tanks such as ClimateWorks are correct, then the cost of even domestic mitigation is likely to be much lower than now thought. Though in the case of low hanging fruit such as energy efficiency, you can lead a horse to water, but you can't make them drink - unless you legislate.

So, after much debate for the course of Tuesday, the Clean Energy Future will finally go to a vote on Wednesday morning. Should it be passed, as expected, then it is as good as law, because passage through the Senate is guaranteed, and the ALP can repatriate the several dozen defibrillators that wags have suggested have been shadowing Labor MPs around the traps for the last few weeks.

Then Labor has to work on an even more challenging task: Having turned climate change from a positive to a negative in the last 12 months thanks to its political backflips and procrastinations, it now has to try and reverse that by the time the next election is due in 2013. Proper management of the carbon pricing regime - so that practically no one notices it is there - will be essential to achieving that. It may not be a positive, but it could become a neutral factor.

Labor can, however, take heart that elections can be won by a centre-left government with an unpopular leader that promotes action on climate change and investment in clean energy technologies.

In the Canadian province of Ontario, the leftish Liberal Party last week defied expectations and got re-elected, despite a handsome lead in pre-election polls for the Progressive Conservative Party, which had promised to repeal incentives for green energy, dump a plan to encourage Samsung to invest $7 billion to establish renewable energy manufacturing plants centre, and to reverse a commitment to join the same regional cap-and-trade scheme being established by California.

Of particular interest to Labor will be the fact, that less than a year before the election, the sitting Ontario government trailed the Opposition by double figures head to head. And just three months before the vote, polls indicated a 41 per cent to 22 per cent preference for the Tories in approval ratings.

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