Positive Environment News

Rio, Woodside Urge Australia government To Modify Carbon Tax

Date: 07-Mar-11
Author: Rob Taylor

Two of Australia's biggest natural resources firms criticized the government's plan to put a fixed price on carbon emissions, saying that without significant changes, the scheme could be potentially disastrous for Australian businesses.

Global miner Rio Tinto said the government must offer more generous compensation and protection under the carbon scheme while Woodside Petroleum, the nation's largest oil and gas producer, said it should be outright exempt due to its production profile.

Rio said the government's 2009 compensation offer was no longer a valid basis for talks as it was now clear that any international emissions reduction plan is all but a "distant mirage", and Australia must acknowledge this to avoid putting local firms at a disadvantage over international peers.

"Businesses unable to pass a carbon price through to customers, which is most businesses competing in international markets, would simply have to absorb it," David Peever, Rio's Australian managing director said on Monday.

"Depending on the magnitude of the carbon price, this may be manageable when market conditions are favorable and margins are healthy. But when the cycle turns down, it will inevitably be disastrous," he wrote in a letter in The Australian newspaper.

The Labor government last month unveiled its third model for curbing emissions, opting for a fixed price on carbon from July 2012, but has yet to agree on the actual starting price and other details that big business and investors need.

Prime Minister Julia Gillard, whose predecessor was dumped last year after two failed attempts to address climate change, said polluters would pay a yet-to-be-determined fixed price, then move to a market-based system within five years.

Rio has estimated the company's annual carbon tax bill would be about A$154 million if the tax was set at A$20 a metric ton for every metric ton of carbon pollution.

Rio's export operations would have faced an additional A$3 billion cost over 10 years from a carbon emissions trade scheme proposed in 2009 and which offered almost A$50bn in compensation to industry and mining over the first decade.

In a criticism directed at Australian Greens backing Gillard's one-seat government, Peever, a member of the government's consultative business roundtable on climate change,

called for "real world" modeling of industry transition being forced by the carbon price.

"We must also ensure that investment and job losses do not become an unintended consequence of an otherwise well-intentioned national determination to play our part in mitigating climate change."

Woodside Petroleum, meanwhile, said it should be exempt from paying any carbon tax at all, as a trade-exposed exporter.

"Woodside believes the company's trade-exposed exports should be exempt from any price on carbon, given the absence of an international agreement on pricing greenhouse gas emissions," it said.

"The company accepts the government's intention to put a price on emissions associated with products consumed domestically such as natural gas, but recognizes this will lead to an increase in costs for consumers."

Woodside said liquefied natural gas had an important role in lowering greenhouse gases and Gillard's government should acknowledge that with a carbon tax exemption.

(Editing by Balazs Koranyi)

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