The recommendations of the Garnaut Report handed down today will probably affect Victoria more than other States, but raise as many questions as answers, says VECCI.
“In a sense, our strengths are our weaknesses”, says VECCI Chief Executive Officer Wayne Kayler-Thomson.
“Victoria more than any other State has the potential through our technological know-how to adapt and even profit from climate change. This is partly because we are the nation’s heavy manufacturing, engineering and transport capital, accounting for around thirty percent of the nation’s manufacturing output and jobs.
“However, manufacturing and transport are energy-hungry and, historically, competitively-priced brown coal has been an economic advantage to Victorian manufacturing, benefiting not only households but attracting aluminium, steel, paper, cement, plastics, chemicals, automotive and food manufacturers, as well as thousands of jobs and the creation of significant exports.
“However, the Garnaut Report proposes little adjustment assistance for brown coal generators. Draft modelling by the electricity sector suggests a carbon price of only $45 a tonne would be enough to close three out of the four brown-coal power stations in Victoria and others in South Australia, NSW and Queensland, causing a 50 per cent increase in power bills.
“An emissions trading regime will need not just structural adjustment assistance for communities such as the Latrobe Valley, as proposed by Garnaut, but direct help for brown coal electricity generators in the form of permits or direct assistance.
“Garnaut has also been vague as to the extent to which trade exposed energy intensive industries may need assistance, with more information to come in the supplementary draft. Unless competing industries in other countries are exposed to the same price pressures, an increase in energy and transport prices associated with the introduction of an Australian emissions trading scheme could lead to a loss of competitiveness by Victoria’s manufacturing industry. A carve-out for particularly price sensitive industries such as aluminium should be seriously considered. Energy represents 30 percent of the cost of producing aluminium, an industry we would not want to lose offshore to countries with lower environmental standards.
“While further information on design and implementation issues associated with an emissions trading regime will be welcomed in the supplementary draft, its ultimate credibility will rest on its ability to materially reduce carbon emissions at low cost to our economic competitiveness and living standards.
“The Rudd Government needs to ensure that its response to Garnaut delivers a credible, lasting scheme”, says Mr Kayler-Thomson. |
