ExxonMobil's head of refining for Australia and New Zealand, Glenn Henson, told a meeting of more than 50 Coalition MPs and senators in Canberra yesterday that at a carbon price of $20 a tonne, rising to $50, petrol refining in Australia would cease to be profitable.

 

The ETS as currently structured made it likely Australia's petrol would be supplied from refineries in Asian countries that did not put a price on carbon, Mr Henson told the group.

 

"We wanted to make sure the Coalition fully understood the consequences of what the Government is proposing," a spokesman for Exxon said.

 

"We wanted to explain that the long-term viability of our business could be threatened."

 

ExxonMobil has never supported an Australian ETS, but many in the Coalition are angry that some major business groups have broadly backed the Government's emissions trading plans and its timetable to introduce the scheme by 2010.

 

Nationals senator Ron Boswell told the Coalition partyroom earlier this week that business leaders had rejected the "lifeline" thrown to them by the Coalition to use the Senate to delay the scheme.

 

"If these turkeys in business want an early Christmas, they should try to negotiate the emissions trading scheme in the Senate with Labor and the Greens," Senator Boswell said, according to Opposition sources.

 

For its part, the Rudd Government is firming in the view that the global economic crisis means the effects of the emissions trading regime should be cushioned when it begins in 2010.

 

Senior government sources told The Australian this week the global economic slowdown was consolidating a view that there should be a "soft start" to the trading scheme, possibly along the lines advocated by government adviser Ross Garnaut of a low fixed carbon price for the first two years and a range of reduction trajectories depending on the

outcome of the UN climate change summit in Copenhagen next year.

 

European leaders have been unable to reach agreement on how to apportion the emission cuts of 20 per cent by 2020 to which they have already collectively committed.

 

A leaders summit this week was deadlocked after Italy suggested the financial crisis meant the commitment should be renegotiated, Germany sought free permits for emission-intensive industries, and former communist bloc members said they should shoulder far less of the burden.

 

Many Australian business leaders have been urging the Government to press ahead with its 2010 start date to achieve certainty, and because they believe the caution imposed by the current economic environment gives them the best chance to lock in a low early carbon price and gentle emission reduction trajectories.

 

The Business Council of Australia, the Minerals Council of Australia and the Australian Industry Group have recently backed the Government's timetable and urged ministers to concentrate on getting the scheme design right.

 

Malcolm Turnbull has called for the Government to delay its scheme by one or two years, to get the detail right and avoid introducing it as business struggles with the economic downturn.

 

Paul Howes, national secretary of the Australian Workers Union and vocal critic of aspects of the Government's emissions trading plans, agrees with the business leaders who see the current economic climate as providing an opportunity to get a soft start and a more business-friendly scheme.

 

"These uncertain economic times mean it is even more important to get a clear idea of where we are going," he said. "They also mean we need a very soft start and we have to get the design right."

 

Climate Change Minister Penny Wong told a London audience this week the Australian Government did not believe the global economic crisis was a reason to delay implementing an emissions trading scheme.

 

The Government has said it will unveil the Treasury modelling on which it will base its scheme by the end of this month, with the final scheme design to be released by year's end.

This article was taken in full from The Australian Newspaper, Wednesday 3 December 2008.