Green trade war a threat

Australian
Friday 20/3/2009 Page: 1

FEARS are rising of a global green trade war if Copenhagen climate change talks fail, after US Energy Secretary Stephen Chu suggested the Obama administration would consider "carbon tariffs" against countries that had not put a cost on pollution when the US introduced its emissions trading regime. "If other countries don't impose a cost on carbon, then we will be at a disadvantage .. . (and) we would look at considering perhaps duties that would offset that cost," Mr Chu told a house science panel.

Mr Chu said a carbon tariff would help "level the playing field" if other countries hadn't put a cost on carbon when a US emission trading regime came in. Climate Change Minister Penny Wong said protectionist carbon tariffs could be "very costly for a small, open economy like Australia" and would in any event be very difficult to administer. "However, we do need to be aware of the potential for unilateral and protectionist action, ostensibly in pursuit of climate goals," Senator Wong said.

"There are live proposals for border tariffs in a range of major economies. This reminds us there are international risks from not acting responsibly to reduce our carbon pollution in Australia." Both industry and environmental groups agreed the rising threat of "green protectionism" made success at the UN negotiations in Copenhagen in December critical.

Australian Chamber of Commerce and Industry chief executive Peter Anderson said: The rise of green tariffs would be a nightmare scenario for Australia. We would lose, and lose badly, in a green trade war." Mr Anderson said the threat made Australia's proposed free permit compensation for trade exposed industries "all the more important". Australian Conservation Foundation chief executive Don Henry said the country's proposed industry compensation was "encouraging the protectionist tendencies in other nations".

The debate over green protectionism came as The Climate Institute Australia think-tank claimed major Australian corporations had been "loose with the truth" because they had protested at the allegedly crippling cost of emissions trading while failing to implement relatively inexpensive energy efficiency measures that could save them between $28 million and $62 million a year.

Analysing figures the companies must supply under a law enacted by the Howard government, the Climate Institute Australia has calculated that 20 of Australia's biggest polluters had identified, but not implemented, energy efficiency measures that could reduce emissions by 1.2 million tonnes a year.

That means that under an emissions trading scheme, the measures could save the companies $28 million a year at a low $23 a tonne carbon price. BlueScope Steel could save at least $6 million a year, according to the calculations. Analysis by Innovest late last year revealed BlueScope would receive more than $170 million in government compensation in the scheme's first year in 2010.

BHP Billiton could save $3.8 million a year and Rio Tinto $3.7 million. Alcoa, whose jobs loss claims were used by the Opposition in its political attack on the ETS, could save $3.7 million a year. Xstrata, which has claimed 1000 job losses, did not provide enough information under the mandatory reporting scheme to be included in the analysis.

The Business Council of Australia, one of the few leading business groups that has not called for the ETS to be delayed, said businesses were deferring decisions on energy-efficient investments because of the lack of certainty about national climate change policy.

In the meantime, a Labor dominated parliamentary committee has insisted the Government should toughen its emission reduction targets. The joint standing committee on treaties, chaired by Labor backbencher Kelvin Thomson, called for Labor to abandon its target of a 60% reduction by 2050 in favour of an 80% reduction.

Senator Wong repeated the Government's promise to seek a mandate for a tougher target at the next election if Copenhagen came up with an ambitious international goal. In Australia, the cement industry, the food and grocery industry and the Australian Manufacturing Workers Union have expressed support tot a carbon tariff on imports.