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Coal industry threatens carbon tax mine closures
Wednesday, 20 April 2011 12:00
Coal industry threatens carbon tax mine closures
Alexandra Kirk reported this story on Wednesday, April 20, 2011 08:09:00
TONY EASTLEY: The coal industry has warned the only way it will be able to cut emissions from coal mines between now and 2020, under the Government's carbon tax scheme, is by closing mines.
The Australian Coal Association says the Government should go back to the drawing board after the Climate Change Minister Greg Combet indicated compensation would be based on the framework of Kevin Rudd's emissions trading scheme.
Coal executives met the minister yesterday as did Coal Association chief executive, Ralph Hillman. He told Alexandra Kirk coal mining is profitable at the moment but a carbon tax would inflict major change.
RALPH HILLMAN: This is going to impose an $18 billion cost on the coal industry over the next 10 years. Globally competitive coal market, this is a cost our competitors in other countries like South Africa won't have to wear - Indonesia, Columbia, Mongolia and there's plenty of coal out there.
What it's going to mean is that investments that would have taken place in Australia won't take place or some of them won't. So you'll see a diminution in the growth of the industry and you'll see jobs lost.
But you won't see any impact on global emissions because the coal will be mined in those other countries and the emissions will go up just the same.
ALEXANDRA KIRK: Now you said this would be the effect of an emissions trading scheme too, so are you saying the outlook is the same for any carbon pricing model?
RALPH HILLMAN: It is unless there's proper measures taken to preserve the competitiveness of Australia's trade exposed industries.
ALEXANDRA KIRK: But your aim is to get as much compensation for your industry as possible so people will expect you to say that there'll be dire consequences if you don't get more out of the compensation.
RALPH HILLMAN: We didn't, the industry didn't ask the minister yesterday for more compensation, it really asked him to go back to the drawing board. The EU's managed to do this in a way which does not negatively impact the competitiveness of its trade exposed sectors, why can't we do that too?
So I really asked him to think about it again. The companies have put in front of the minister - some of the companies and we'll be doing more of this later - the impact of what he is proposing on the net present value or the profitability or viability of projects they have on their books.
At least the reductions of 30 and 40 per cent which simply means that projects won't go ahead.
ALEXANDRA KIRK: New coal mines are still being slated for opening and that was in the full knowledge that the Government would put a price on carbon.
RALPH HILLMAN: There was a risk of a price on carbon but it has always been stated by both sides of politics that in placing a price on carbon in Australia, the competitiveness of trade exposed industries would be properly preserved.
We were told yesterday by Mr Combet that we, as before, even though the coal industry qualifies, they don't want to include us in emissions intensive trade exposed.
ALEXANDRA KIRK: But you still are getting $1.5 billion worth of compensation that you would have got under the emissions trading scheme?
RALPH HILLMAN: No specific number has been mentioned but we take it that that's a sort of starting point in the Government position.
But really, the fact is no other country in the world, including the EU which has a emission trading scheme, even the Waxman-Markey legislation in the United States did not include huge emissions from coal mining in their scheme because they are too hard to measure and there is no available abatement technology and none prospective for probably 10 years.
ALEXANDRA KIRK: So you want to be given free permits?
RALPH HILLMAN: One way of course I suppose is to include us in EITE (energy intensive, trade exposed), another way - but that we've been told can't be - is to exclude fugitive emissions from coal mining from the CPRS for a period of say 10 years while we work on the technology.
But as one of the CEOs pointed out to Mr Combet yesterday, if you are objective here in taxing coal mines is to cut fugitive emissions in order to meet your minus five per cent target, the only way you're going to do that is by closing mines.
There is no technology that miners can suddenly pull out of their pocket and apply that's going to get those emissions down. Closing mines is the only option.
TONY EASTLEY: Coal Association chief executive, Ralph Hillman speaking there with Alexandra Kirk in Canberra.
http://www.abc.net.au/am/content/2011/s3196326.htm
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