Australia’s government played down the impact of a carbon price on steel and aluminum producers on Wednesday, saying its planned carbon tax would add only a fraction to the cost of their goods.
Australia’s two largest steel makers BlueScope and OneSteel Ltd are among the country’s top carbon emitters, and BlueScope has warned that Australian manufacturers would shed thousands of jobs under the carbon tax.
Less than 1,000 companies that are the largest polluters in the country will have to buy a permit for every ton of pollution they emit.
Climate Change Minister Greg Combet said once industry assistance was taken into account, a A$20/metric ton carbon price would add only A$2.60 to a metric ton of steel, currently worth around A$800, and A$18.70 to a metric ton of aluminum, currently worth around A$2,500.
“In other words, the carbon cost relating to the core pollution activity for steel would be one third of one percent of the value of a ton of steel and three quarters of one percent of the value of a ton of aluminum,” Combet told the National Press Club.
The government wants a fixed-price carbon tax to start in July 2012, ahead of an emissions trading scheme three to five years later, under its key policy to curb carbon emissions and fight global warming.
Analysts and the government’s top climate adviser, Ross Garnaut, have suggested a starting price for carbon emissions of between A$20 ($21) and A$30 a metric ton.
But the government has yet to announce a price, what sectors will be included and how much households or industry will be compensated for the new impost.
A multi-party committee of government, Greens and independent lawmakers is working on the final details of the policy, and Combet said he hoped to introduce legislation to parliament in the third quarter of 2011.
Garnaut has proposed the government allow limited trading during the fixed-price period, with five to 10 percent of undated permits available for trade, to help establish a forward price for carbon and to help set up the carbon market.
Combet said the multi-party climate committee was considering the issue, and was in discussions with experts on how the scheme will operate.
“We are considering issues such as that,” Combet said.
Australia’s opposition is running a strong political campaign against the tax and has warned it would push up prices. Opinion polls show the public remains concerned about the tax.
In a bid to counter the political opposition, Combet said more than half of the revenue from the tax will be spent on compensation for low- and middle-income earners.
“We expect that millions of households will be better off under the carbon price arrangements and the assistance will be permanent,” he said.
Treasury documents released this month said a carbon tax would increase household costs by between A$580 and A$863 a year, and consumer price inflation by up to 1.5 percent.
