The nation’s biggest manufacturers have accused Julia Gillard of failing to consult business over her plans to introduce a carbon price next year that could cost the top 200 companies a combined $3.3 billion a year.
In a reaction reminiscent of the mining industry’s attack on Kevin Rudd’s mining tax, steelmakers BlueScope and OneSteel said they were blindsided by yesterday’s announcement that a fixed price would be put on carbon from July next year before transition to a trading scheme.
Paul O’Malley, chief executive of the nation’s biggest manufacturer, BlueScope Steel, said he was worried the government would send emissions offshore by taxing and potentially killing manufacturing in Australia.
“We are very disappointed about the lack of consultation with industry ahead of today’s announcement,” Mr O’Malley said.
“The proper forum for discussion of critical details that affect industry is the Business Roundtable, not the Multi-party Committee on Climate Change, which contains no members from businesses affected by this policy.”
OneSteel boss Geoff Plummer had similar concerns.
“It’s disappointing and concerning when you’ve had no active negotiation in a process that’s so important and has so much potential to achieve outcomes that are counter to what’s intended.
“If you look at our results, steel manufacturing had an earnings before interest and tax loss of $90 million, so it is clearly unaffordable for us to have imposts our competitors don’t have.”
BHP Billiton, which has called for a carbon tax, welcomed the new carbon price, while Westpac, which is calling for a trading scheme, also applauded the move, as did AGL Energy.
Research by RepuTex suggests the top 200 companies will face annual carbon costs of up to $3.3bn if a carbon price of $25 a tonne is imposed.
Utilities, industrials and energy and materials companies would take the lion’s share of the burden.
Direct carbon costs would account for 51 per cent of the total S&P/ASX 200 carbon liability, while the rest of the cost would be indirect impacts such as higher electricity prices and supply chain costs, the report says.
The Energy Supply Association of Australia, whose members include AGL and Origin Energy, welcomed the announcement but said there was uncertainty over core aspects of the carbon policy.
“The issues for us will hinge very much on what are going to be the carbon prices, and what that means for ensuring an orderly transition in electricity generation to a low-emissions future,” ESAA chief executive Brad Page said.
There was a “strong case” for transitional assistance to ensure there were not “terrible shocks” to electricity markets and prices.
When then prime minister Kevin Rudd was negotiating his emissions trading scheme, some modelling suggested that investors in electricity generators would face a loss on asset value in the first decade of the scheme of $9.4bn to $10.5bn; other modelling put the figure at $2.3bn.
AGL chief Michael Fraser said it was a good first step in providing power investment certainty.
“An initial fixed price of between $20 and $30 (a tonne) would be an appropriate starting point, and we would support the move to a market-based mechanism such as an ETS as quickly as possible,” Mr Fraser said.
Origin Energy chief Grant King said the price would need to be at least $25 a tonne to inspire new baseload gas generation.
ERM Power chairman Trevor St Baker said the plan would hit all businesses.
“All of industry is trade-exposed one way or another, not just the big boys who export,” Mr St Baker said.
“Every industry that pays electricity has to pay that extra bill, and it goes straight to jobs.”
The carbon price will apply to the energy sector, transport, industrial emissions and waste. It will not hit the agricultural sector.
