Monday, July 14, 2008

PM's $5bn green gamble against Treasury advice

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By Piers Ackerman
Herald Sun, July 15, 2008 07:00am

PRIME Minister Kevin Rudd is set to announce a controversial $5 billion scheme to slash carbon emissions.

The plan, which will call for carbon to be captured and stored in forests and oceans, will be outlined in the Government's discussion paper on its planned emissions trading scheme to be released tomorrow, Treasury sources said. But the same sources said the Rudd Government would be going against Treasury advice if the expensive scheme to store carbon in the seabed or in deeply submerged subterranean strata went ahead.

They said Treasury had warned against announcing such a proposal because the carbon sequestration technology was largely untried.

"This is another theoretical approach to a problem," one source said. "Not only is it very costly, no one knows whether it is a realistic storage solution for carbon emissions.

"The Rudd Government appears determined to proceed, however, even though Treasury asked that, at the minimum, it refrain from taking such action until after next year's UN summit on climate change in the Danish capital Copenhagen meeting, when it will be seen what measures other developed nations may take."

The use of so-called "carbon sinks" can take the form of storing carbon in plants and soils, oceans or buried in deep rock deposits.

Resources Minister Martin Ferguson is on the record as saying there are good arguments for implementing carbon sequestration.

Mr Ferguson said sequestration would encourage investment and commercialisation of the technology, which was a safe way to allow continued carbon-based power generation with reduced environmental impact.

His draft sequestration legislation sets up a framework for access to Commonwealth waters, defined as beginning three nautical miles offshore, as well as multiple-use agreements allowing the continuation of other commercial activities such as fishing and oil drilling.

He said Commonwealth body Geoscience Australia had identified numerous sites where greenhouse gases could be stored. And he nominated high-carbon emission areas of Victoria, Western Australia and southern and central Queensland as having "adequate storage capacity nearby".

The carbon storage row comes after Mr Rudd previously ignored Treasury advice, and that of three other ministries, when he pushed ahead with the Government's FuelWatch program.

In Opposition, he was critical of the Howard Government for ignoring Treasury and pledged that his government would be more receptive to advice from its bureaucrats.

Emissions scheme 'could cost jobs'

Treasury is not the only body concerned at the possible effects of the Government's Green Paper on climate change.

Australia's largest trade union, the Australian Workers Union, has released a report that predicts 15,000 jobs could be lost in the aluminium sector alone if the penalties contained in the ETS drive the industry offshore.

AWU national secretary Paul Howes said regional communities and economies would be crippled at a potential cost of up to $1.12 billion.

"We know, by keeping good jobs in industries like aluminium smelters and refineries here in Australia, we are actually helping in the battle against greenhouse gases," he said.

Environmentalists, however, say that Australians would not suffer if the aluminium sector closed and the industry went offshore to more modern plants. Climate Institute chief John Connor told the ABC yesterday that many foreign aluminium smelters were more efficient.

Farmers also expressed their concern that the discussion paper might pick an "arbitrary" date for the inclusion of agriculture in an ETS.

Opposition Leader Brendan Nelson will cut short his week-long holiday to lead the Opposition's response to the Government's climate change Green Paper. 

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