Business Council of Australia releases analysis on emissions trading system
Monday 25 August 2008
The BCA unveiled its analysis on the federal government’s ETS saying the ETS Green Paper “leaves too much scope for uncertainty for business to continue to invest in existing and new facilities”.
In a report commissioned by BCA on the application of the Green Paper’s ETS to 14 businesses across a range of Australia’s trading sector, including minerals processing, manufacturing, oil refining, coal mining and sugar milling.
- Compensation for many EITE (emissions-intensive, trade-exposed) businesses is not sufficient to prevent them either reducing their operations or moving them offshore in the absence of a global price in carbon;
- Companies immediately below the proposed free permit allocation threshold get no compensation while those above the threshold will get 60 per cent or 90 per cent of their permits free, producing significantly distortionary impact;
- There is no allowance for growth in EITE businesses required to meet future demand; and
- There are high levels of uncertainty about how the scheme will work in practice.
- Three will have to shut immediately;
- Four will have to fundamentally review their operations to remain viable after losing between 32 per cent and 63 per cent of their pre-tax earnings;
- The rest will have to take immediate action to reduce their costs; and
- Many potential investments will not take place.
In recognizing that global warming is a global concern which requires a global solution, the BCA believes the government is moving in the right direction in responding to climate change but an emissions reduction scheme must recognize business reality if it is to encourage the investment required to reduce emissions and maintain a healthy economy.
