Tuesday 9 December 2008

Heavy emitters claim ETS will force them out

Summaries - Australian Financial Review
Wednesday 26/11/2008 Page: 4

The lead and zinc smelter at Port Pirie in South Australia is the town's largest employer, however the smelter's owners, Belgium-based Nyrstar, says its future is under threat because of the national emissions trading scheme. According to chief operating officer, Greg McMillan, modelling undertaken by Nyrstar shows that $70 million a year would be lost at a carbon price of $40 per tonne, enough to force its smelters at Port Pirie and Hobart to be closed down.

A number of emissions intensive, trade-exposed (EITE) industries have warned that the Federal Government's proposed scheme could lead to 'carbon leakage' whereby companies will be unable to pass on a carbon price to their customers, thus putting them at a disadvantage to overseas competitors. According to government proposals, the most emission-intensive companies would receive 90 percent of their emissions permits for free, with less intensive companies receiving 60 percent. Companies such as Nyrstar and liquefied natural gas producer Woodside Petroleum will miss out on permits given they are not sufficiently emissions intensive.

The Business Council of Australia has proposed new EITE investments be exempted from Australia's cap; while the Australian Industry Greenhouse Network - who represents large emitters such as CSR, Alcoa and Rio Tinto - has proposed that the cap on limits be increased to 45 percent - from 20 percent. During September, Climate Change Minister Penny Wong said a balance needed to be met between providing assistance and not putting Australian companies to a disadvantage. Recently, a report from the International Energy Agency noted that experience suggested carbon leakage was not as great a problem as was claimed.

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