Monday, July 14, 2008

Aluminium industry 'at risk' *

Adam Morton 
The Age, July 15, 2008

* See Steve's comment at bottom

AUSTRALIA risks losing its entire aluminium industry if the introduction of carbon trading is botched, a leading union has warned.

Contradicting other unions that played down the likelihood of job losses, the Australian Workers Union yesterday launched a report arguing the industry's 15,000 jobs would be lost to countries with less environmentally sound policies unless it was properly compensated under the carbon pollution reduction scheme.

Under carbon trading, polluting companies will have to buy permits for their greenhouse emissions.

The report, by left-leaning think tank Per Capita, says Government must work with the aluminium industry to ensure it both cuts emissions and continues to employ thousands of Australians. Australia's seven alumina refineries and six aluminium smelters employ 12,000 full-time workers and 3000 contractors.

Union national secretary Paul Howes said refining a tonne of alumina in Australia created 50% less emissions than in China.

"If this industry shifts to China because of climate-change imposts we only worsen global pollution," he said.

But the report also found that, even at a relatively low carbon price of $19 a tonne, Australia would be better off if its alumina refineries stayed open but its more polluting smelters closed.

Mr Howes said the report showed the importance of the aluminium sector to often-neglected regional communities. It estimates the sector's jobs are worth more than $1.1 billion.

"The people in regional Australia will suffer the hardest hit, especially if we are wrong-footed on climate change," he said.

Mr Howes called on the Government, which releases its carbon trading green paper tomorrow, to consider partially exempting aluminium for up to five years, either by excluding it temporarily or setting a discounted carbon market price.

Money saved should be spent on developing carbon-neutral energy sources, such as solar, hydro and nuclear power, he said.

The Per Capita report is at odds with another report released yesterday by the Climate Institute. It argues the world's most efficient aluminium smelters are in Africa, weakening the argument that sending manufacturing offshore to developing countries will increase global emissions.

Tim McAuliffe, Alcoa's manager of environment and sustainability development, disputed the Climate Institute's interpretation.

"If a refinery was relocated, its emissions would go up significantly. If a smelter was relocated they may not go up a lot, but it's still carbon leakage (sending the same emissions and jobs overseas) - it would still be a crazy outcome for the Australian economy," he said.

The aluminium industry acknowledges that it uses vast amounts of power to smelt the ore. Alcoa's Australian operations are responsible for 6 million tonnes of greenhouse gas a year.

Mr McAuliffe said the company had greatly improved its energy efficiency since the 1990s.

He said it had cut direct emissions from smelting by 61% since 1990. Emissions from refining were down 11% in the same time.

Mr McAuliffe said Alcoa could not pass on the cost of carbon trading to its customers as its prices were largely determined by the international marketplace.

"It is absolutely critical to our future sustainability in Australia that the trade-exposed emissions-intensive sector is managed properly," he said.

"(But) the key for us is the Government has recognised it would be nonsensical if plants close in Australia, jobs go offshore, and the emissions rise in other countries," he said.

[Comment from Steve: Wouldn't it more more productive if the industry were to "future-proof" itself by planning its own transition to clean energy, instead of engaging in scare campaigns about job losses and industry being forced to move to those "wicked" countries overseas. If the industry chooses to move overseas to protect profits, knowing the environmental consequences, it will only serve to expose its own moral bankruptcy.]

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