Tough love 'vital' for polluters

• Katharine Murphy and Mathew Murphy
• The Age, July 5, 2008
• http://www.theage.com.au/national/tough-love-vital-for-polluters-20080704-31xl.html?page=-1

BUSINESS has been given a tough love message on climate change: the environment needs more help than you do, so stop lobbying the Government for special treatment.

Professor Ross Garnaut wants an emissions trading scheme that covers most sectors of the economy and provides no hand-outs for big polluters such as coal-fired power generators.

The only sectors that would receive compensation under his scheme would be "trade-exposed" industries such as metal producers, and agriculture if the farm sector was brought into the carbon trading system.

But the Federal Government is unlikely to take his advice, with cabinet ministers arguing that other emissions-intensive industries, such as manufacturing and power generation, would need help to adjust to a low-emissions economy.

The Government's climate adviser says in his draft report, released yesterday, that all emission permits should be allocated on a "competitive basis" — not handed to business for free.

Professor Garnaut told the National Press Club yesterday that the Government should resist the intense lobbying for compensation and protection if it wanted to avert the dangerous effects of climate change.

"We're suggesting that there should be a lot of discipline," the Australian National University economist said. "Almost every company in Australia is trade exposed and emissions intensive. It will be a nightmare if there is an attempt to compensate them all."

But power generators slammed Professor Garnaut's draft report, describing it as an "ambulance at the bottom of the cliff" exercise. "We would rather have a fence at the top of the cliff and an orderly transition away from coal, and in particular brown coal, to renewable energy," said National Generators Forum executive director John Boshier.

"Garnaut talks about 50% of compensation going to households, 20% going to research and development and 30% going to the trade-exposed sector but it leaves 83% of generators, that is the coal generators, with no compensation and a tough future."

Wayne Kayler-Thomson, chief executive of the Victorian Employers Chamber of Commerce and Industry, said Victorian businesses were particularly vulnerable under the Garnaut model.

"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," he said.

"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 … a 50% increase in power bills."

Victorian Energy Minister Peter Batchelor warned the state's businesses and consumers that they could bear the greatest cost from an emissions trading scheme.

"It is a function of the energy intensity of our brown-coal resource," he said.

ACTU president Sharan Burrow said business needed to share the load in meeting the economic challenge of climate change.

"Unions call on responsible sectors of business to support Professor Garnaut's report and work with governments, unions and the community to grow green jobs, green our workplaces and put measures in place to ensure a just transition for families and industry to a low-carbon future," she said.