CARBON in CONFLICTPublished by MAC on 2012-04-02
Source: Business Spectator, ABC, AAP, Bloomberg, BEN
An Australian Special
Australia's carbon tax legislation has been greeted by many observers as something of a benchmark for other countries to follow.
However, according to Professor Alan Pears of RMIT University it has a critical flaw.
Put simply, this is that the current scheme merely frees up more permits for other emitters to use, so there's no effective cut in the total amount of carbon emissions.
Professor Pears argues that fixing this flaw is easy: "[P]ut in place a mechanism so that when anyone - state governments, local councils, businesses and households - cut emissions voluntarily beyond what they're required to do by laws, the appropriate number of carbon permits is cancelled."
In a similar broadside against Australia's carbon tax, Business Spectator's Alan Kohler argues that:
"Despite the obvious concerns about it from business and the community generally, the carbon tax won't actually do much to reduce carbon emissions because of the compensation and offsets that have been promised".
Says Kohler: "Emissions trading is the cheapest way to reduce carbon emissions because businesses can buy permits from overseas. At the moment European permits cost less than $15 per tonne and certificates from the Clean Development Mechanism, which will qualify as Australian permits, cost around $5 each".
So why should the mining industry and other carbon-intensive producers worry? According to Kohler, "the cost to Australian businesses will immediately fall to the floor price of $15 a tonne when emissions trading starts in 2015."
Nonetheless, he says:"[T]he real question is whether Australia can or should meet its emissions target simply by buying permits from overseas.
"It's true that climate change is global not national, so it doesn't really matter where a tonne of carbon is removed, but would it be acceptable politically, here and overseas, for Australia not to actually reduce its emissions and simply pay other countries to do it?"
Mining supremo Clive Palmer has been grabbing the headlines down-under, as he charges the country's Greens with accepting finance from the CIA (yes, the US Central Intelligence Agency).
And what might be the CIA's nefarious purpose in offering such funding? Why, to undermine the country's beloved industries, of course!
Palmer's also now launching a High Court challenge to the carbon tax itself.
In a careful appraisal of whether Palmer's suit has any chance of success, climate change lawyer Felix Green says the tax doesn't actually pose a fundamental threat to Australia's extractive enterprises:
"[I]f one wanted to undermine the Australian coal mining industry, a suitably equipped foreign power might aim a little higher than supporting what is, ultimately, an extremely modest impost on a small proportion of greenhouse gas emissions associated with coal mining."
"The carbon price is low, particularly gassy coalmines will receive some government compensation and, in relation to exported coal, only the emissions from the mining process, such as methane released from underground mines, is subject to the carbon tax.
"Emissions embodied in the exported coal itself, which account for a far greater amount of the environmental damage caused by coal, are not covered by the scheme".
Meanwhile, an environmental group from the Hunter Valley (one of the country's biggest coal fields) has secured a court ruling that a coal mining company must impose carbon-offset conditions on its direct emissions.
Nonetheless, any indirect emissions - let alone those embodied in coal sent for export- remain outside the legal remit.
[Comment by Nostromo Research, 1 April 2012]
A flawed carbon pricing scheme lets states dump climate action
By Alan Pears
Business Environmental News Network (BEN)
27 March 2012
In the past few days we have seen two states, Victoria and Queensland, announce cut-backs on action to reduce greenhouse gas emissions.
|Australia's Hazelwood power plant uses the most emission
intensive type of coal - but gets $270 million subsidy under
new carbon tax rules. Source: Sydney Morning Herald
They have been able to justify this by pointing out, correctly, that their actions would not cut Australia's overall greenhouse gas emissions beyond the national target.
The Commonwealth Government's Clean Energy Future scheme design is flawed. I, along with Richard Denniss from the Australia Institute, the Voluntary Carbon Markets Association and others have been pointing out this flaw and showing how it could be fixed, for over three years.
The problem is that if a state government, council, business or household voluntarily cuts its emissions beyond what it is legally required to do (for example, under building energy regulations), this simply frees up more permits for other emitters to use, so their efforts don't cut the total amount of carbon emissions. But Canberra econocrats and politicians have simply turned deaf ears.
The frustrating thing is that this flaw is easily fixed. In fact, the Commonwealth Government has actually addressed this issue for forestry and agricultural activity through its Carbon Farming Initiative. Extra permits are issued for the carbon stored: these permits can be sold or retired, and count as "real" abatement. But the government has been determined in its resistance to applying a similar approach to energy efficiency, renewable energy, low emission energy and most waste management.
The solution is simply to put in place a mechanism so that when anyone - state governments, local councils, businesses and households - cut emissions voluntarily beyond what they're required to do by laws, the appropriate number of carbon permits is cancelled.
State governments, councils, households and most businesses won't normally be involved in the carbon trading scheme, but their extra effort does cut Australia's overall greenhouse gas emissions. This should be reflected in the market: the total number of permits available should be reduced by an amount corresponding to the abatement they have voluntarily achieved. This reduces the number of permits available to other emitters, effectively tightening the national cap in proportion to the amount of voluntary abatement.
Why isn't it possible for emissions reduction to operate this way? The rationale for this policy failure has never been made clear. One possibility is that policy makers felt that an extra mechanism would contaminate and complicate the theoretical "elegance" of their carbon trading scheme.
Another is that the government knows there is a lot of low-cost abatement available from sustainable energy and waste, and it wants to include the contribution of this abatement as part of achieving its target. If there is no mechanism to account for and recognise state government abatement, the Commonwealth government can claim those reductions as its own.
Yet another possible reason is that econocrats and politicians just don't understand how to design a policy to mobilise community action on cutting emissions. Whatever the reason, the folly of this approach is now being seen: it has provided a convenient excuse for state governments to back away from action on climate.
The failure doesn't just affect state government action. Already many businesses and local councils that are cutting emissions have been forced to turn away from supporting local emission abatement, to buy overseas carbon permits. They can't use Australian abatement (from energy or most waste) projects to offset their emissions because they do not meet carbon accounting standards. So they would risk prosecution by the ACCC if they did try to take credit for supporting local abatement action. How perverse.
In turn, this means investment in local abatement industries and projects has been diverted overseas, just when we need to build this capacity. It also means we're missing out on jobs growth and economic development. How bizarre.
It's not too late to fix this problem. The mechanisms created for the Carbon Farming Initiative, Renewable Energy Target and proposed National Energy Saving Initiative can be adapted to track voluntary action that cuts emissions from energy and waste. Then well-intentioned local councils, businesses, and households could get due credit for their abatement efforts, and state governments would no longer have an excuse to avoid their responsibility to cut emissions. And a powerful new mechanism that empowers the community to cut emissions harder and faster would be unleashed.
All that's needed is the political will and a bit of common sense.
This piece originally appeared on The Conversation. Alan Pears is the Senior Lecturer, Global Studies, Social Science & Planning at RMIT University.
Carbon offset conditions imposed on coal mining operation
By Lucinda Morphett, Colin Biggers & Paisley (Law firm)
Business Environmental News Network (BEN)
27 March 2012
Ulan Coal Mines required to offset carbon emissions.
The recent Land and Environment Court decision in Hunter Environment Lobby Inc v Minister for Planning  NSWLEC 221 has effectively upheld the validity of a condition requiring a NSW coal mine to offset carbon emissions.
Ulan Coal obtains approval to consolidate and expand extraction
Ulan Coal Mines Limited, based in the Mudgee district of NSW, sought and obtained approval from the Minister of Planning under Part 3A of the Environmental Planning and Assessment Act 1979 (NSW) to consolidate a number of pre-existing approvals and expand its maximum rate of extraction from 10 million tonnes per annum (Mtpa) to 20 Mtpa.
The Minister imposed a range of standard operating conditions on Ulan Coal, requiring the mining operator to manage and mitigate the environmental impacts of the mining operation, including a requirement that Ulan Coal "implement all reasonable and feasible measures to minimise the release of greenhouse gas emissions from the site to the satisfaction of the Director General."
Environment lobby seeks to impose range of conditions on Ulan Coal
The Hunter Environment Lobby Inc (HEL), dissatisfied with the Minister's decision, commenced proceedings as an "objector" in the Land & Environment Court, challenging various aspects of the Minister's approval.
What HEL ultimately pressed was the imposition of a range of conditions addressing the mining project's impact on climate change, groundwater and biodiversity.
Offset of carbon emissions to address climate change concerns
One of the more contentious issues pressed by HEL was a condition requiring Ulan Coal to offset scope 1 carbon emissions (direct emissions as a result of the mining activity) and scope 2 carbon emissions (indirect emissions, such as the use of diesel and electricity at the facility) produced by the mining operation. This condition was to be achieved by requiring Ulan Coal, upon exceeding certain carbon emission limits, to purchase carbon credits to offset the emissions.
The thrust of HEL's argument was that the mining project would exacerbate global climate change and would increase Australia's contribution to greenhouse gas (GHG) concentrations in the atmosphere, contrary to the principles of inter-generational equity and the conservation of biological diversity and ecological integrity. It argued that the current conditions imposed by the Minister, though well intended, did not go far enough in addressing GHG.
Ulan Coal and the Minister opposed the conditions being pressed by HEL. They did so on the grounds that the carbon offset condition had not been imposed on any other mining operation in NSW and was therefore discriminatory. They also argued that a national carbon pricing scheme was a preferable means, from a policy and economic perspective, to drive reductions in GHG emissions.
Court examines powers to impose carbon offset condition
The Court found that it was within the Minister's power, and that of the Court, to impose a carbon offset condition on Ulan Coal, in a modified form to that pressed by HEL. In relation to Ulan Coal's mining operation, the Court held that it was appropriate to impose an offset condition on scope 1 carbon emissions, but not on scope 2 emissions, on the basis that scope 2 emissions are not emissions which Ulan Coal could control entirely.
Court finds that imposing carbon offset condition not discriminatory
The Court found that imposing the condition was not discriminatory, but merely the first occasion on which the condition had been pressed.
At the time the judgment was handed down, the Court acknowledged that no carbon pricing scheme was operating in Australia, but accepted that once a carbon price is in place (from 1 July 2012), the prospect of similar conditions being imposed may be not as likely.
The matter was again heard in Court in February 2012 in relation to the exact conditions that may be imposed. The judgment in relation to the conditions has been reserved.
Decision sets significant precedent for carbon intensive industries
The extent to which the decision will apply to projects which directly produce significant GHG in NSW (and which do not fall within the "top 500 carbon emitters" to be caught by the Federal scheme) still remains uncertain.
In any event, the decision sets a very significant precedent which will be closely monitored by many carbon intensive industries in NSW over the coming months.
For more information on planning and environment law, please see the website of Colin Biggers & Paisleyhttp://www.cbp.com.au/Expertise/Owners-Corporation-construction-defect-disputes-(1 or contact Lucinda Morphett at email@example.com.
Source: BEN -- http://ben-global.com/Main/Home.aspx
The ABC, Australia's BBC, Turns Climate Inaction Truth Upside-Down Downunder
By Dr Gideon Polya
3 April 2012
The ABC (Australia's equivalent of the UK BBC) has an appalling record of mal-reportage and lying by omission on all kinds of matters from horrendous war-related deaths to the worsening climate crisis (see "ABC Censorship": https://sites.google.com/site/abccensorship/). Australia is a world leader in greenhouse gas (GHG) pollution but the ABC has been reporting that Australia is leading the world in tackling climate change and ignoring the acute seriousness of the climate emergency.
In March 2012 I sent a carefully composed letter to Australian MPs and media about Australia 's appalling climate change inaction. As far as I am aware only one significant medium published this letter, namely the Green Left Weekly which is outstanding for correct and humane reportage of important matters . Indeed outstanding expatriate Australian journalist John Pilger has the stated: " Australia has the most restrictive media in the western world. Censorship by omission denies Australians their democratic right to make sense of whole stratas of political and foreign policy. That's why Green Left Weekly is a beacon, doing a job of honourable journalism, as an agent of people, not power" (see: http://www.greenleft.org.au/node/50457).
My letter published by Green Left Weekly is reproduced below (see Gideon Polya, "Climate inaction", Letters to the Editor, Green Left Weekly, 24 March 2012: http://www.greenleft.org.au/node/50457):
" Australia is a world leader in annual per capita greenhouse gas pollution. Pro-coal, pro-gas Australian PM Julia Gillard has an appalling record of climate change inaction falsely dressed up as the opposite.
The most outrageous untruth of Gillard Labor is that it is "tackling climate change" for a "clean energy future" - but in reality its policies in 16 major areas involve increasing Australia's already disproportionately high greenhouse gas pollution. For detailed analysis Google "Australian PM Julia Gillard's appalling record of climate change inaction".
Thus, under the fraudulent carbon tax-emissions trading system Australia's domestic greenhouse gas pollution will increase from 578 Mt CO2-e in 2010 to 621 Mt CO2-e in 2020. Most of the claimed "160 million tonnes" of greenhouse gas savings in 2020 will be purchased overseas and Australia 's domestic plus exported greenhouse gas pollution will be 1.7 times greater in 2020 and 4.2 times greater in 2050 than that in 2000.
Tackling climate change means decreasing greenhouse gas pollution, but Australia 's domestic plus exported greenhouse gas pollution will be 10% bigger in 2013 after six years of Labor than that under the Coalition in 2007.
Voters must punish Labor for its egregious lying and climate change inaction.
Dr Gideon Polya,
The various major areas of the ABC were sent a copy of this letter but the taxpayer-funded ABC has subsequently published a diametrically opposite and utterly incorrect view that Australia is actually leading the world in tackling climate change!
Thus the respected financial journalist Alan Kohler on the ABC's The Drum (28 March 2012) stated: "Losing our lead: emissions targets increase ahead ... The idea that Australia is leading the world on climate change is quickly becoming untrue" (Alan Kohler, "Losing our lead: emissions targets increase ahead", The Drum, 28 March 2012: http://www.abc.net.au/news/2012-03-28/kohler-emissions-targets-increase-ahead/3916840). These statements incorrectly assert that Australia is a world leader in climate change action but that this situation is changing rapidly and that Australia may shortly lose this asserted "lead".
The ABC has been reporting incorrectly on this matter for some time. Thus in 2007 the ABC reported the then Coalition Federal Government Environment Minister Malcolm Turnbull denying climate change inaction in an interview: " Well, that's completely untrue. Australia is leading the world on climate change. Let's go through it. We are hitting our benchmark. We're going to meet our Kyoto target. We are leading the world to reduced deforestation, the second largest source of emissions " (see " Turnbull attacks Labor's energy plan", ABC Radio National AM, 31 October 2007: http://www.abc.net.au/am/content/2007/s2076584.htm).
The present Gillard Labor Federal Government has utterly false mantras that they are "tackling climate change" for a "clean energy future" and these are duly reported by the ABC. Thus an ABC Search of the phrase "tackling climate change" yields 487 results and a search for "clean energy future" yields 209 results. Further, climate scientists and biologists argue that we must decrease atmospheric carbon dioxide (CO2) from the present dangerous 392 parts per million (ppm) to about 300 ppm CO2, a level that has not been exceeded until the last century for 800,000 years (for a detailed presentation of such expert opinions see the 300.org website and "300.og - return atmosphere CO2 to 300 ppm": https://sites.google.com/site/300orgsite/300-org---return-atmosphere-co2-to-300-ppm). However ABC Searches for "300.org" and "300 ppm CO2" yield zero (0) results and 1 result, respectively (Google Searches yield 75,700 results and 75,400 results, respectively).
The reality is that Australia is one of the worst countries in the world for annual per capita greenhouse gas pollution. Far from "leading the world on climate change" Australia is one of the world's worst countries for man-made climate change as set out in my letter (above) and as summarized below (also see Gideon Polya, "PM Julia Gillard's appalling record of climate change inaction", Green Blog, 8 March 2012: http://www.green-blog.org/2012/03/08/australian-pm-julia-gillards-appalling-record-of-climate-change-inaction/):
1. "Annual per capita greenhouse gas (GHG) pollution" in units of "tonnes CO 2 -equivalent per person per year" (2005-2008 data) is 0.9 (Bangladesh), 0.9 (Pakistan), 2.2 (India), less than 3 (many African and Island countries), 3.2 (the Developing World), 5.5 (China), 6.7 (the World), 11 (Europe), 16 (the Developed World), 27 (the US) and 30 (Australia; or 64 in 2010 if Australia's huge Exported CO 2 pollution is included). Thus Australia's current annual per capita domestic plus exported GHG pollution is currently 71 times worse than Bangladesh's annual per capita GHG pollution (see "Climate Genocide": https://sites.google.com/site/climategenocide/).
2. In 2009 the German Advisory Council on Climate Change (WBGU) determined that for a 75% chance of avoiding a 2 degree C temperature rise, the World must pollute less than 600 Gt CO2 between 2010 and essentially zero emissions in 2050. Unfortunately Australia (through disproportionately huge annual fossil fuel burning and exports) and Belize (through disproportionately huge annual deforestation) have already used up their "share" of this terminal greenhouse gas (GHG) budget. Some examples below of how many years left relative to 2010 before each country exceeds its "fair share" of atmospheric GHG pollution: Belize (0.8 years), Qatar (1.3), Guyana (1.4), Malaysia (1.9), United Arab Emirates (2.0), Kuwait (2.4), Papua New Guinea (2.5), Brunei (2.8), Australia (2.8; 1.1 if including its huge GHG Exports) ... Maldives (37.9), Kyrgyzstan (37.9), Burkina Faso (37.9), India (40.1), Cook Islands (40.1), Bhutan (42.4), Yemen (45.1), Tajikistan (45.1), Mozambique (45.1), Rwanda (45.1), Burundi (45.1), Lesotho (48.1), Swaziland (48.1). Australia had already used up its "fair share" by mid-2011 and is now stealing the entitlement of other countries (see Gideon Polya, "Shocking analysis by country of years left to zero emissions", Green Blog, 1 August 2011: http://www.green-blog.org/2011/08/01/shocking-analysis-by-country-of-years-left-to-zero-emissions/).
3. Just as EU Creditor nations seek to reign in Debtor nations in an ongoing financial crisis, so Climate Creditor countries should act in the worsening climate crisis to reign in Climate Debtor countries of which the worst is the US with a Net Climate Debt of $9.7 trillion based on a price of US$100 per tonne CO2. In sharp contrast to the US , India and China have Net Climate Credits of $6.5 trillion and $2.3 trillion, respectively. In terms of Net Per Capita Carbon Debt (US$ per person) of Climate Debtor countries, ranks 4th in the world: United Kingdom (33,307), United States (31,035), Germany (27,856), Australia (23,900 or 24,265 if including the effect of its huge GHG Exports on its Climate Credits), Russia (17,529), Canada (15,560) (see Gideon Polya, "Shocking analysis by country of Climate Debt of greenhouse gas polluters", Bellaciao, 14 December 2011: http://bellaciao.org/en/spip.php?article21491 ; also see "Climate Debt, Climate Credit": https://sites.google.com/site/climatedebtclimatecredit/).
Rational risk management that is crucial for societal safety requires accurate reportage. The taxpayer-funded ABC (Australia's equivalent of the UK BBC) must be condemned for incorrect reportage and lying by omission over many serious matters of which climate change action is the most serious (see "ABC Censorship": https://sites.google.com/site/abccensorship/).
Dr Gideon Polya has been teaching science students at a major Australian university for 4 decades. He published some 130 works in a 5 decade scientific career, most recently a huge pharmacological reference text "Biochemical Targets of Plant Bioactive Compounds" (CRC Press/Taylor & Francis, New York & London , 2003). He has published "Body Count. Global avoidable mortality since 1950" (G.M. Polya, Melbourne, 2007: http://globalbodycount.blogspot.com/); see also his contributions "Australian complicity in Iraq mass mortality" in "Lies, Deep Fries & Statistics" (edited by Robyn Williams, ABC Books, Sydney, 2007: http://www.abc.net.au/rn/science/ockham/stories/s1445960.htm) and "Ongoing Palestinian Genocide" in "The Plight of the Palestinians (edited by William Cook, Palgrave Macmillan, London, 2010: http://mwcnews.net/focus/analysis/4047-the-plight-of-the-palestinians.html). He has published a revised and updated 2008 version of his 1998 book "Jane Austen and the Black Hole of British History" (see: http://janeaustenand.blogspot.com/) as biofuel-, globalization- and climate-driven global food price increases threaten a greater famine catastrophe than the man-made famine in British-ruled India that killed 6-7 million Indians in the "forgotten" World War 2 Bengal Famine (see recent BBC broadcast involving Dr Polya, Economics Nobel Laureate Professor Amartya Sen and others: http://www.open2.net/thingsweforgot/ bengalfamine_programme.html ). When words fail one can say it in pictures - for images of Gideon Polya's huge paintings for the Planet, Peace, Mother and Child see: http://sites.google.com/site/artforpeaceplanetmotherchild/ and http://www.flickr.com/photos/gideonpolya/ .
Australia's crushing climate trap
By Alan Kohler
28 March 2012
Australia will have to increase its greenhouse gas reduction target from the current 5 per cent by 2020, to at least 15 per cent within two years under the policies of both the ALP and the Coalition.
That's because the conditions for doing that look like being met. Remember... the government's reduction target is 5 per cent below 2000 levels unilateral, and 15 per cent if "major developing economies commit to substantially restrain emissions and advanced economies take on commitments comparable to Australia's".
The Opposition has signed up to both the 5 per cent and 15 per cent targets, although it hasn't mentioned the second one for a while.
It's clear that science is beginning to reassert itself on this subject after a few years on the sidelines following the debacle in Copenhagen in 2009.
Current advanced country pledges already suggest a 10-20 per cent reduction from 1990 levels by 2020. China has imposed quotas on carbon emissions and is likely to have an emissions trading scheme in place by 2015; it already has them in nine provinces. The action being taken by other developing countries is already sufficient for a 15 per cent reduction in Australia.
The idea that Australia is leading the world on climate change is quickly becoming untrue. Moreover the delays caused by the 2009/10 political convulsions, which saw both the opposition leader and the prime minister sacked over climate change, will mean Australia ends up paying a much higher price than it would have.
The recommendation on Australia's target will come from the Climate Change Authority, to be chaired by former Reserve Bank governor and industry super champion, Bernie Fraser.
Even the 5 per cent reduction from 2000 levels is starting to look nearly impossible given the increase in emissions since the target was set; 15 per cent would represent a crushing burden for Australia's businesses.
Australia's carbon emissions are already 5 per cent above 2000 levels. At the current rate of increase, they will be 23 per cent above the 2000 level by 2020, or 690 million tones of CO2 equivalent.
That means the 5 per cent reduction target to which both parties have committed is already a 23 per cent, or 160 million tonne reduction from business as usual. Reducing by 15 per cent from 2000 - which looks like being the target - means we would have to cut emission by one-third from BAU.
If that were achieved by cuts in Australian emissions, it would need a carbon price in the hundreds of dollars, or direct action that would bankrupt the Government.
As things stand the tax of $23 per tonne will stand for three years to be replaced by emissions trading in 2015. Despite the obvious concerns about it from business and the community generally, the carbon tax won't actually do much to reduce carbon emissions because of the compensation and offsets that have been promised.
The impact of the target will only start in 2015, when it will determine the number of permits emitting businesses will have to buy.
It's possible that a new Coalition government will dismantle the whole thing next year, but that would be a Humphreyan courageous decision: first the rest of the world clearly is taking action to reduce emissions, so that if Australia just dropped out of the project and dropped its targets the cost would be very high; and second, if the Coalition tried to use its "direct action" plan to meet the targets, the cost to the budget would be horrendous.
That is especially true on both counts if the target is 15 per cent by then. If the world is doing enough to justify a 15 per cent target according to Bernie Fraser's CCA, which it almost certainly will be, then the Coalition could hardly dump Australia's targets altogether. "Direct action" to meet even a 5 per cent target is unaffordable; 15 per cent is laughable.
Emissions trading is the cheapest way to reduce carbon emissions because businesses can buy permits from overseas. At the moment European permits cost less than $15 per tonne and certificates from the Clean Development Mechanism, which will qualify as Australian permits, cost around $5 each.
On that basis the cost to Australian businesses will immediately fall to the floor price of $15 a tonne when emissions trading starts in 2015.
At that price, the cost of meeting the 5 per cent reduction target would be $2.4 billion in total. A 15 per cent target would cost $3.2 billion.
But the question is whether Australia can or should meet its emissions target simply by buying permits from overseas. It's true that climate change is global not national, so it doesn't really matter where a tonne of carbon is removed, but would it be acceptable politically, here and overseas, for Australia not to actually reduce its emissions and simply pay other countries to do it?
This is a question that is exercising the minds of the policymakers in Canberra now - how to pitch Australia's scheme so that the targets are met without crushing our industries but without, in effect, simply buying and preserving forests in Borneo while continuing to produce most electricity from coal.
By the way, most of the increase in carbon emissions between now and 2020 will come from export energy projects, principally coal, coal seam gas and LNG, as well as some from transport and industry direct combustion - almost none of it from electricity generation.
In effect it's a double whammy from the resources boom: a high dollar plus a larger climate change burden.
Why Clive's carbon challenge should fail
By Fergus Green
28 March 2012
Coal mining magnate Clive Palmer this month vowed to launch a High Court action challenging the Commonwealth's carbon tax, then at a press conference he claimed the Australian Greens are being funded by the CIA to undermine the Australian mining industry.
Whether or not there is any objective basis on which to analyse the veracity of the latter claim is unclear, but there is plenty of law and fact on which one can analyse the constitutionality of the carbon pricing scheme, whether or not Palmer goes through with his challenge.
Let's start with some basics:
-- The Commonwealth has the power under the Constitution to make laws with respect to, among other things: "taxation" (defined by the High Court to mean a compulsory exaction of money by a public authority for public purposes, enforceable by law, that is not a payment for services rendered and is not a pecuniary penalty); "corporations"; and "external affairs" (which includes international affairs and relations). It is these three Constitutional powers on which the Commonwealth has relied most heavily in drafting the carbon legislation;
-- The Constitution also provides that any law imposing taxation must deal only with taxation, and that the Commonwealth cannot impose any tax on "property of any kind belonging to a State";
-- While many legislative provisions are supported by more than one Constitutional head of power, any particular provision need only be supported of one head of power to be valid.
-- In defending any challenge to the carbon scheme, the Commonwealth would need to demonstrate that all relevant provisions enjoy the support of at least one of those (or other) heads of power, and that any tax imposed under the scheme must be imposed under a separate piece of legislation and must not constitute a tax on state property.
The carbon legislation is complex. The primary act, running to a cool 364 pages, is the Clean Energy Act 2011, the principal objective of which is to reduce Australia's greenhouse gas emissions in line with its international obligations and long-term emissions reduction target. Among many other things, the Clean Energy Act:
-- Defines the circumstances in which a "person" (which includes non-natural persons, like corporations and statutory authorities) will be a "liable entity" for the purposes of the scheme;
-- Outlines that a liable entity will have an annual "unit shortfall" equal to the difference between the volume of greenhouse gas emissions emitted by the entity in a year and the number of "emissions units" (each of which is equal to one tonne of carbon dioxide equivalent greenhouse gas) the person surrenders to the scheme regulator. The aim is that the unit shortfall number for each liable entity will equal zero for each year of the scheme's operation - in other words, every liable entity will acquire and surrender the number of emissions units that equals the emissions for which they are responsible in each year;
-- Sets a scheme-wide "carbon pollution cap", which limits the number of carbon units that may be issued;
-- Provides for the issuance of carbon units in various ways. During the first three years of the scheme, in which the carbon price will be fixed, carbon units will be sold by the government regulator at the fixed price, while units with a vintage year of 2015/16 and beyond (the floating price phase) will be auctioned. The Clean Energy Act and associated regulations also provide for the issuance of a number of free carbon units to eligible "emissions intensive trade-exposed" industries and the most emissions-intensive coal fired power generators.*
But the scheme contains no obligation on liable entities to surrender enough emissions units to avoid a unit shortfall (the reason for this is discussed later). Since no "compulsory exaction of money" occurs in the levying of the fixed unit charge or the charge paid for the purchase of units at auction, these charges are unlikely to be considered "taxation".
Rather, the unit charges, along with the other aspects of the Clean Energy Act described above, are more likely to derive their Constitutional validity from the corporations power (insofar as they apply to corporations). The High Court has favoured a broad interpretation of the corporations power, giving the Commonwealth wide scope to regulate the affairs of corporations. There is no obvious reason why the power would not extend to regulating the production of greenhouse gases by corporations.
There is also a strong case that the scheme would be supported by the "external affairs" power. The strongest argument is that the scheme implements commitments made by Australia under international treaties. Although the first commitment period of the Kyoto Protocol (and therefore Australia's emissions target under it) expires at the end of 2012 and may not be replaced, Australia has ongoing obligations under international law to reduce its greenhouse gas emissions and to implement emissions reduction policies and measures, including under article 4(2) of the UN Framework Convention on Climate Change.
Additional arguments, though not as strong as the treaty-based argument, could also be made based on previous applications of the external affairs power by the High Court, namely that the scheme, in reducing Australia's greenhouse gas emissions, regulates: matters that have an effect on matters or things external to Australia; matters that are capable of affecting Australia's relations with other countries; and matters of manifest "international concern". These and other arguments concerning the external affairs power are likely to be particularly important in supporting the application of the scheme to non-corporations such as statutory authorities (e.g. local councils that own landfill waste facilities).
None of the above aspects of the scheme impose any obligation on liable entities to avoid a "unit shortfall". The incentive to do so, rather, arises from a separate piece of legislation - the Clean Energy (Unit Shortfall Charge - General) Act 2011 - which imposes an obligation to pay a charge (set at a rate significantly higher than the fixed price, or the average benchmark auction price, of carbon units, as applicable) in respect of every unit for which the entity has a unit shortfall under the primary legislation.
It is highly likely that the unit shortfall charge will be considered by the High Court to be "taxation" within the meaning of the Constitution: it is a compulsory exaction of money (a liable entity with a unit shortfall must pay the prescribed charge) by a public authority (the scheme Regulator) for a public purpose (the revenue will go into the Commonwealth's consolidated revenue for government purposes) that is not a payment for services (the charge is not referable to any rendering of services by the Commonwealth) and is not a pecuniary penalty. The charge is unlikely to be considered a "penalty for having a unit shortfall" since there is no obligation to avoid a unit shortfall under the primary act - instead it is a charge designed to incentivise the surrendering by liable entities of a number of emissions sufficient to equal their annual emissions for the purposes of the primary act. This may seem a little tortuous, but legislation structured in materially the same way has been held by the High Court previously to constitute a valid law with respect to taxation. For example, the High Court has held that the compulsory superannuation guarantee shortfall charge under the Superannuation Guarantee Charge Act 1992 (Cth) - imposed on employers who do not pay their employees' minimum superannuation contribution under the Superannuation Guarantee (Administration) Act 1992 (Cth) - is a tax (not a penalty), even though it was clearly designed to incentivise payment of the superannuation under the primary legislation.
If, as appears likely, the unit shortfall charge is taxation, the Clean Energy (Unit Shortfall Charge - General) Act 2011 will be a valid law with respect to taxation since it deals only with the imposition of that charge.
Finally, it is highly unlikely that the Court would consider that the unit shortfall charge would impose a "tax on property of any kind belonging to a State" contrary to section 114 of the Constitution. The unit shortfall charge is a tax on the non-surrender of emissions units, not a tax on the ownership or holding of property. While the emissions in respect of which the units must be surrendered emanate from facilities which, in the case of state authorities, may be situated on state property, the connection between the tax and the property of the state in these circumstances is too remote to offend the prohibition in section 114.
Based on the body of Constitutional jurisprudence that has been illustrated by the High Court over many decades, all key elements of the carbon scheme are likely to be constitutionally valid.
Of course, one cannot rule out the possibility that all current and previous members of the High Court have been installed and backed by the CIA for the specific purpose of developing Australian Constitutional law along lines that would, eventually, support the implementation of a carbon tax with a view to undermining the Australian coal mining industry.
But if one wanted to undermine the Australian coal mining industry, a suitably equipped foreign power might aim a little higher than supporting what is, ultimately, an extremely modest impost on a small proportion of greenhouse gas emissions associated with coal mining. The carbon price is low, particularly gassy coalmines will receive some government compensation and, in relation to exported coal, only the emissions from the mining process, such as methane released from underground mines, is subject to the carbon tax. Emissions embodied in the exported coal itself, which account for a far greater amount of the environmental damage caused by coal, are not covered by the scheme.
Instead of threatening legal challenges of dubious merit, Clive Palmer should be counting his lucky stars that his companies operate in one of the most coal-friendly countries in the world.
* Subject to various limitations, liable entities can also surrender units generated through the Commonwealth's Carbon Farming Initiative and, in the floating price phase of the scheme, eligible units from international schemes such as the UN's Clean Development Mechanism.
Fergus Green is a climate change lawyer and policy analyst. The views and legal opinions expressed here are his own.
Xstrata Wins Approval for Biggest Australian Coal Mine
By Joe Schneider
27 March 2012
Xstrata Plc, the world's largest exporter of power-station coal, won court approval to build the A$6 billion ($6.3 billion) Wandoan coal mine in Australia that opponents say threatens the Great Barrier Reef.
Carmel MacDonald, president of the Land Court of Queensland, ruled today that opponents hadn't proved the mine would cause environmental harm justifying it being blocked.
"It is difficult to see from the evidence that this project will cause any relevant impact on the environment," MacDonald wrote in the 148-page ruling posted on the court's website.
Environmentalists argued in court that mine approvals should take into consideration the long-term effects of exporting coal and burning it, as well as the immediate impact in the project vicinity. A victory by environmental group Friends of the Earth would have made it more difficult for companies including Vale SA and BHP Billiton Ltd., which have about 30 mines in development in Queensland, to get approvals.
The burning of coal from the Wandoan mine in power plants in China and elsewhere will contribute to greenhouse gases linked by scientists to global warming and damage the Great Barrier Reef, Friends of the Earth argued in court in August.
MacDonald cited expert evidence presented by Xstrata that said if it doesn't mine the coal, demand for the fossil fuel will be met by mines elsewhere and the impact on the environment won't change.
Bradley Smith, a spokesman for the Brisbane chapter of Friends of the Earth, said the group is considering appealing the ruling.
Xstrata Coal Queensland Chief Operating Officer Reinhold Schmidt said the court ruling acknowledges the company has "followed a thorough and rigorous environmental assessment and review process."
Xstrata won initial state approval for the mine, about 350 kilometers (220 miles) northwest of Brisbane, in November 2010 and federal approval in March of last year.
The mine's initial capacity is intended to be 23 million metric tons a year, expanding to 63 million tons, Xstrata said in an e-mailed statement last month.
The project will have a "very significant economic benefit" for the region, creating 1,700 jobs and providing governments with about A$3.7 billion of royalty payments over the 30-year life of the mine, Xstrata's lawyer David Jackson said during the trial. Xstrata will also pay about A$500 million a year in port charges, to ship the coal abroad, he said.
The company said it's spending A$250 million on reducing pollution from the project.
Xstrata owns 75 percent of the project, with Itochu Corp. and Sumitomo Corp., each holding a 12.5 percent stake. The companies are studying options for the project's development, Xstrata said.
The exported coal will create as much as 1.3 billion tons of carbon emissions over 30 years, or 0.15 percent of annual global emissions, Smith said during the trial.
Those emissions will contribute to climate change, which has already harmed the Great Barrier Reef, Smith said.
"Upward of A$1 billion could be lost to local Queensland communities every year from climate impacts on the Great Barrier Reef," he said.
The marine park stretches more than 3,000 kilometers along the Queensland coast. The coral reef is longer than the Great Wall of China and the only living thing on earth visible from space, according to its website.
Climate change not enough to stop mine - court
27 March 2012
A COURT has ruled the issue of climate change is not enough to stop the development of one of the biggest coal mines in the southern hemisphere.
Friends of the Earth (FoE) and nine landowners had attempted to block state government approval of Xstrata's $6 billion, 11,000-hectare open-cut coalmine near Wandoan in a hearing in the Land Court in Brisbane.
The environmental group was the first in Australia to argue for the outright refusal of a mine based on its climate-change impacts.
Lawyers acting for FoE told the court last year that the mine would produce 30 million tonnes of coal a year, creating 49 million tonnes of greenhouse gas emissions from the power used to run the mine.
The emissions created by end users burning the coal would account for 0.15 per cent of annual global pollution, with predictions 1.3 million tonnes would be emitted over the 30-year life span of the mine.
However, experts called by Xstrata argued it would be pointless to ban the mine, and that the demand for coal would have such a great economic benefit to the state that it would outweigh environmental concerns.
This view was upheld by Land Court President Carmel MacDonald, who released her reasons for dismissing the application today.
"The issue of climate change is clearly a matter of general public interest and a matter which may militate against the grant of the proposed leases," she said.
"However, it is only one of a number of matters that the court must weigh up in considering whether the public right and interest will be prejudiced by the project.
"I conclude that the climate change objection did not justify a refusal of the proposed mining leases."
Mrs MacDonald recommended the mining leases be granted, subject to a number of conditions, including the exclusion of some landowners' properties from the lease areas.
She also recommended that Xstrata work closely with the Department of Environment and Resource Management to develop a system to monitor ground water in the area and its effect on landowners.
Xstrata says the verdict acknowledges the company has followed a "thorough and rigorous environmental assessment and review process".
"Xstrata Coal has acted openly and honestly throughout each stage ... in accordance with all legislative requirements," Xstrata Coal Queensland chief Reinhold Schmidt said in a statement.
"Today's recommendation recognises our ongoing commitment to environmental management and our willingness to listen to, and accommodate, individual landholder needs."
The Wandoan mine was awaiting final approvals from the state government, the Xstrata statement said.
The Australian Greens say if the project is approved it will be the largest coal mine in the southern hemisphere.
"The climate impacts would devastate the Great Barrier Reef and the $6 billion it contributes every year to our economy," Australian Greens Senator Larissa Waters said.
Farmers fight mine but horse has bolted
By Jamie Walker and Jared Owens
28 March 2012
AUSTRALIA'S biggest open-cut coalmine will engulf rich farmland, west of Brisbane, after a court rejected a last-ditch bid by local farmers and greens to lock the gate because it would exacerbate climate change .
The rolling cattle and cropping country around Wandoan has become a battleground of the competing interests to produce wealth from mining, food from the land and to abate Australia's greenhouse contribution.
Caught in the middle are life-long farmers such as Pat Devlin, 61, who last night vowed to stay put after the Queensland Land Court ruled to allow multinational Xstrata to press on with the huge coalmine that will border his property. "We're going to sit it out right here," he said. "If they do start mining, we will be pushing as hard as we can to make sure they meet the environmental conditions . . . they are not going to shut us up."
His neighbour, John Erbacher, a son of one of the soldier-settlers who opened up the district after World War II, was not so sure.
"We're shellshocked," he admitted. "At the moment, I have no idea what we are going to do."
The Wandoan mining lease application originally covered 32,000ha and took in 42 properties owned by farming families, 39 of which reached negotiated settlements with Xstrata before those remaining went to court. The Wandoan mine, when in full operation, would yield about 7 per cent of Australia's 2010-11 coal production of 405 million tonnes.
The battle for Wandoan has been waged on multiple fronts, with Xstrata at one point threatening to pull the pin on the $7 billion coal development had the federal government's mining tax gone ahead, as initially proposed by then prime minister Kevin Rudd.
The case in the Land Court, brought by eight landholders including Mr Devlin and Mr Erbacher and backed by the Friends of the Earth conservation group, turned on the proposition that the mine should be stopped because of its climate change implications.
Lawyers for Friends of the Earth submitted that the mine's eventual output of 30 million tonnes of coal a year would be produced at a cost of 49 million tonnes a year in greenhouse gases.
The emissions created by end users burning the coal would account for 0.15 per cent of annual global pollution, with predictions that 1.3 million tonnes would be emitted over the 30-year life span of the mine.
However, experts called by Xstrata argued it would be pointless to ban the mine, and that economic benefit outweighed the environmental concerns.
Land Court president Carmel MacDonald yesterday sided with the company.
"The issue of climate change is clearly a matter of general public interest and a matter which may militate against the grant of the proposed leases," she said.
"However, it is only one of a number of matters that the court must weigh up in considering whether the public right and interest will be prejudiced.
"I conclude that the climate change objection did not justify a refusal of the proposed mining leases."
Mr Devlin said the ruling was disappointing, but not unexpected.
"We always knew that it was going to be hard to win in the Land Court, and even then the minister could step in and over-rule that," he said from his cattle property, about 20km west of Wandoan township, five hours' drive from Brisbane. "But to me, it wasn't just about us.
"I was brought up the son of a soldier settler and I believe this land should be preserved for food production in the interests of the whole country. We can't just keep on going destroying our best land. What are we going to feed people?
"And if this mine goes ahead, it will destroy the land around here, no doubt about it." The network of up to 16 coal pits planned by Xstrata, and granted conditional environmental approval by the federal government last March, will encroach to within 500m of the northern boundary of Mr Devlin's 650ha property, which he took over from his father, Frank, an airman in World War II.
Mr Erbacher, 56, said his position was even more precarious: much of his 1000ha spread will be subsumed to store explosives for the mine.
"There's not much of a community left around here as things stand," Mr Erbacher said. "We're still trying to digest what happened today."
Recommending that the mining leases be granted to Xstrata, Ms MacDonald set a number of conditions, including the exclusion of some landowners' properties from the lease areas.
Unions to step up strike action against 7 BHP coal mines
28 March 2012
SYDNEY - Union workers will step up industrial action against seven Australian coal mines operated by BHP Billiton , which are among the largest in the world, a union official said on Wednesday.
The mines, operated under the BHP Billiton-Mitsubishi Alliance joint venture, have a combined output capacity of more than 58 million tonnes per year, representing about a fifth of annual global trade.
BHP Billiton spokesman Antonios Papaspiropoulos said the union actions would affect production from the mines, which yield predominantly metallurgical coal used in steel making, though the full impact would not be known until the current quarter's production figures are tallied.
"It will have an impact but those sort of figures won't be available until the next production results are put together," Papaspiropoulos said.
BHP will release its March-quarter production data on April 18, the company said on its website. BHP warned in January that labour talks along with heavy rains in the region were affecting production volumes.
Papaspiropoulos said the company would bypass unions and go straight to employees in hopes of resolving the dispute.
"A new impasse has been reached," he said. "We have no choice now but to go back to our employees by way of a ballot and seek their guidance as to the way forward."
Stephen Smyth, district president of the Construction Forestry Mining and Energy Union (CFMEU), told Australian Broadcasting Corp. union workers also wanted to see an end to the long-running disagreement over wages and working conditions, but that talks with BHP had recently "gone backwards".
"At this stage industrial action will escalate at all seven mines," Smyth said.
About 3,500 unionised workers started a 48-hour strike late Tuesday in response to what the union said was management going back on in-principle clauses previously agreed with its workforce.
An additional 1,500 non-union, directly employed staff and a further 5,000 contractors will not be affected, Papaspiropoulos said.
The union action extends a lengthy dispute over working conditions in which workers have staged rolling work stoppages since mid-2011.
BHP held an employee ballot late last year as well, but the proposed agreement was voted down.
The union has been pushing for greater job security and more pay for its members.
Billion-dollar Queensland coal dispute worsens
By Matt Peacock
ABC News (AM programme)
28 March 2012
TONY EASTLEY: Hopes of a settlement to the long-running industrial dispute on the Queensland coalfields have evaporated, with angry coal unions accusing BHP of reneging on an agreement already in place over rosters.
Coal miners last night resumed strike action at all seven of the company's Bowen Basin mines which supply one fifth of the world's coking coal.
Union negotiators are warning that this is now likely to be a long and bitter campaign which will disrupt billions of dollars worth of coal exports.
Matt Peacock reports.
MATT PEACOCK: Negotiations between BHP and Mitsubishi's BMA Company and the coal mining unions have dragged on for more than 15 months, with industrial action already leading to a recent build-up of ships off the Bowen Basin coast as the billion dollar trade lay paralysed.
Over the past fortnight it's been the wet weather though that's stopped the coal more than industrial action. And as the two parties sat around the negotiating table there was some glimmer of hope that the dispute might finally be resolved.
But a breakdown over the key issue of rosters saw the unions recommence strike action at all seven mines last night with Stephen Smyth, the district president of the CFMEU mining union, believing the company has deliberately escalated the dispute.
STEPHEN SMYTHE: We see this as a threshold matter, particularly in relation to the issue of rosters which, you know, we thought we'd put to bed over six months ago.
MATT PEACOCK: What you're saying is in effect that negotiations are going backwards.
STEPHEN SMYTHE: Yes, certainly have. We're very disappointed that actually there's two or three clauses that we originally agreed to on principle that are now suddenly went from being agreed matters to matters now that in our view are not agreed.
So we've actually gone backwards. We haven't gone forwards, that's for sure.
MATT PEACOCK: All seven mines are going on strike for 48 hours, but do you anticipate week-long stoppages and those kinds of things in forthcoming weeks?
STEPHEN SMYTHE: Yes, certainly. That's another thing we'll go back and talk to the members about. But at this stage industrial action will escalate to all seven mines and we'll take it from there.
Because our members are very- they want an end to this. We want an end to it. But we want an end to it with a decent agreement of conditions and entitlements. And at this stage what BPH have done today is nothing more than a slap in the face for our members - their employees, as they like to tell us.
MATT PEACOCK: Quite some time ago BHP - or BMA, their subsidiary operating company - said that these issues were not negotiable. They were managerial prerogatives, in effect. Isn't that just BHP sticking to its guns?
STEPHEN SMYTHE: That may be their view. But you know we were making some slight progress two weeks back when we sat down and worked through some of the outstanding matters, and we actually believed that we started to make some progress.
They had the ability to trial rosters. You know, we'd agreed to that yet they've come now and changed the clause so that all goes.
So you know, we say that through good, hard negotiations we've come to a landing where we negotiated a position and because they don't like it they now change it.
MATT PEACOCK: BMA was unavailable for comment but in a letter to the unions it's declared the parties have now reached an impasse and it will be putting a proposed agreement to an employee ballot during April - although if previous votes are any guide, there's little chance it will be accepted, with the dispute now likely to escalate into one of the costliest and most protracted industrial conflicts for decades.
TONY EASTLEY: Matt Peacock reporting.