Carbon trading cost to Hunter business

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CARBON trading could cause a third of small to medium Hunter businesses to fold because of rising energy costs, the Hunter Valley Research Foundation has warned.

Chief executive Wej Paradice said the Hunter’s economic base could be far more affected by the introduction of an emissions trading scheme than any other regional economy in Australia.

Speaking at the foundation’s 46th annual Sydney lunch at Parliament House yesterday, Dr Paradice said a survey of Hunter businesses found fewer than a third believed they were prepared for the impacts of a carbon pollution reduction scheme.

He said most small to medium enterprises estimated that their electricity charges and fuel costs each accounted for less than 6 per cent of their total operating expenditure.

“However, more than 10 per cent reported that their fuel costs represented more than a quarter of their operating expenditure,” Dr Paradice said.

“We have therefore estimated that the viability of approximately a third of those Hunter businesses could be threatened with medium-term increases in energy costs, specified in the survey as a 50 per cent increase above recent highs during the next five years.”

Dr Paradise said more than 54 per cent of businesses did not believe they could simply pass on the additional costs to customers.

He also predicted carbon trading could lead to a decline and eventual phase-out of aluminum production.

“The aluminium sector is the most emission-intensive trade-exposed sector within the region,” he said.

In order to position itself for carbon trading, the Hunter would need to access some of the $2.15 billion transition money offered by the Federal Government.

“Not only do we need to identify the relevant disproportionate impacts on our regional economy but we also need to be well prepared to take advantage of the opportunities that will be provided.”