26 April 2015
Manufacturers urge caution on post-2020 targets
Energy-intensive manufacturers have urged the Abbott government not to adopt aggressive post-2020 emissions reduction targets and have backed its direct action policy as desirable relative to the former Labor government's carbon tax.
Last week, federal Environment Minister Greg Hunt claimed the first auction from the $2.55 billion emissions reduction fund, the centrepiece of the Coalition's direct action climate policy, was a "stunning result".
Forty-three companies will be paid $660 million to eliminate 47 million tonnes of carbon at an average price of $13.95 per tonne of carbon.
Mark Chellew, the chairman of lobby group Manufacturing Australia, said his members were still evaluating the result but "the early signs are that direct action has potential".
"The carbon tax was punitive on energy-intensive manufacturing and was driving jobs offshore," he said.
Half the price per tonne
Brickworks managing director Lindsay Partridge said the $13.95 a tonne was approximately half the price per tonne his company faced under the carbon tax.
"The carbon tax was the worst outcome," he said.
Last week, the Climate Change Authority recommended a target to cut greenhouse gas emissions by 30 per cent by 2025, a target Mr Hunt described as "onerous", and by 40 per cent to 60 per cent by 2030.
CCA chairman Bernie Fraser said an emissions trading scheme, which like the carbon tax is a scrapped Labor climate policy, could be a mechanism used to reach that target.
Direct action aims to reduce emissions by 5 per cent by 2020 and governments around the world have been invited to announce their post-2020 targets ahead of climate change talks in Paris in December.
Leadership position not backed
Mr Chellew said Australia should not be taking a leadership position on reductions.
"To go for such large targets if we aren't seeing similar moves offshore would be unwise," he said.
"Most Australians agree we have a problem with climate change but that doesn't mean we should be exporting jobs offshore."
Mr Partridge said that Australia "shouldn't get ahead of our international peers" on reductions.
The United States has committed to cut emissions by 26 to 28 per cent below 2005 levels by 2025 and China has said it will reach peak emissions in 2030.
The Australian Industry Group has estimated the net present value cost for Australia to adopt the high-end US target at approximately $26 billion.
Argument for more gas
Mr Chellew and Mr Partridge said that lowering the cost of gas by increasing supply could also be an effective way of reducing emissions.
"There is an argument that gas and climate change should be considered together," Mr Chellew said.
"As a form of energy, gas is much less carbon intensive than coal so clearly having more gas in Australia is better for our climate targets."
Mr Partridge said that the US had dramatically reduced its emissions since the shale gas revolution.
Earlier this month, Manufacturing Australia said politicians must intervene in Australia's "dysfunctional" gas market to halt soaring prices, and bolster competition and supply or risk losing up to 83,000 manufacturing jobs.
The Australian Competition and Consumer Commission is conducting an investigation into the gas market.