The Business Council of Australia (BCA) — representative of the 100 largest companies in Australia — has threatened that its members will be "forced" to relocate offshore if the federal government's Carbon Pollution Reduction Scheme (CPRS) is implemented.
On August 21, the BCA released a study examining how 14 large carbon-emitting companies might be affected by the federal government's proposed carbon emissions trading scheme (ETS). The study, Modelling Success: Designing an ETS that works, argues that large carbon-emitting companies in the cement, sugar, paper, electricity, gas and other industries will be severely disadvantaged by the proposed ETS structure, given that they face competition from international companies not affected by the extra costs.
"We want to ensure that industry plays its part but that the cost is kept at a level which allows them to stay in Australia, rather than move to a less demanding jurisdiction", threatened BCA president Greg Gailey, quoted in the August 22 Australian.
The BCA-commissioned study demands that polluting industries pay less (preferably nothing) for permits to pollute, that the scheme start later than 2010 and that the already-too-modest target to cut carbon emissions by 10% by 2020 (based on emissions at 2000) be either severely slashed or abandoned altogether until an international ETS is established.
Modelling Success argues that the proposal to compensate high carbon emitters is insufficient. The CPRS green paper limits compensation to those companies that produce more than 1500 tonnes of carbon per $1 million in revenue.
The BCA argues that this unfairly disadvantages large polluters who fall just below the cut-off. It says companies should be forced to pay a maximum of 3-5% of their gross income for permits, at which point any remaining permits should be allocated for free. The BCA also demands that the cost of carbon be restricted to no more than $20 per tonne, half the level of the European carbon price.
The Rudd government has all but agreed to cave in to these demands. Despite treasurer Wayne Swan saying on August 22 that there was not a "bottomless pit" of money to compensate industry, the August 27 Australian quoted sources indicating that the government was likely to incorporate many of the BCA's demands.
An emissions trading scheme, however constructed, will not reduce carbon pollution quick enough to prevent the threat of run-away climate change. That will need a radical plan of conversion to renewable energies, combined with a phasing-out of polluting energies like fossil fuels. In any such transition it is the workers who lose jobs as polluting companies close, and their communities — not the companies themselves — who should be compensated.
By calling for a reduction in the costs of permits to the biggest industries, the BCA is arguing that funds raised to compensate consumers and workers from the sale of permits should also be cut. The BCA proposal would further force the cost of dealing with climate change onto working people, who would still face higher energy bills, and away from business, whose profitability would be guaranteed. They pollute, and we pay to fix it.
The BCA plan has been rejected by the Southern Cross Climate Coalition, which includes the ACTU, the Australian Conservation Foundation, the Australian Council of Social Service and the Climate Institute. It was "simply an attempt to shirk responsibilities for doing their fair share to tackle dangerous climate change and a grab for tax payer handouts", according to an August 22 SCCC statement.
Adopting the BCA's recipe to further water down the CPRS would make a bad plan worse. Its likely success is already deeply compromised by the proposal to give free pollution permits to the biggest carbon polluters. The BCA plan would lower costs to polluting industries even further, at the expense of the climate, workers and consumers. Only business's profits will benefit. The plan should be rejected.