Export sector ‘faces $5bn burden in first five years’: Miners step up attack on ETS

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THE mining industry has stepped up its attack on the Government over its proposed emissions trading scheme, producing figures that reveal the export coal sector will face a $5 billion carbon burden in the first five years alone if the system becomes law.

The strongly worded criticism from the Minerals Council of Australia came as the Government revealed in an answer to a question on notice that it did not know which 1000 high-carbon emitters would be forced to buy permits to cover their emissions.

The council’s deputy chief executive Brendan Pearson writes in The Australian today that there is a misconception there will be “wheelbarrow loads” of free permits to protect the competitiveness of the export sector.

He argues that Australia is being put at a disadvantage in its coal production at a time when Britain is looking to expand production.

“These policy developments are contributing to some perverse outcomes,” he writes. “The Guardian reported last month on proposals to open 58 new coal mines in the United Kingdom. Meanwhile, in Australia — the world’s largest coal exporter — production in the coal sector is being scaled back.”

A spokeswoman for Climate Change Minister Penny Wong said the Government’s primary objective had been to get the balance right and “to set in place a scheme that reduces carbon pollution and supports economic growth”.

Coal mining, which produces vastly different amounts of methane depending on the geological make-up of a mine, is not eligible for free permits but, after intensive last-minute negotiations, it is being offered $750million over five years in a special abatement fund to help mines reduce their emissions.

About 5 per cent of permits — worth about $700 million in the first year — will be offered for free to brown-coal-fired generators and the dirtiest black-coal-fired generators to partially compensate them for the greatly increased costs and to guard against sudden plant closures and disruptions to electricity supply.

Mr Pearson warns that if Prime Minister Kevin Rudd’s promise to reduce Australia’s emissions to 5per cent below 2000 levels by 2020 is to succeed, Australia will have to eliminate 250 million megatonnes of carbon dioxide emissions from current business-as-usual projections.

“That’s nearly equivalent to the 2006 emissions of Australia’s entire electricity and transport sectors,” he writes.

The mining council intervention comes as the Government examines which companies will be covered by the ETS. In an answer to a question on notice by Acting Opposition Leader Warren Truss, the Government reveals it does not know which 1000 companies they are.

In the answer, Treasurer Wayne Swan says the number is an “initial estimate informed by analysis undertaken for the Government in development of the National Greenhouse and Energy Reporting System.”