The fossil fuel industry and its carbon intensive allies are lobbying the Rudd government to minimise or eliminate any impact on their sales and profits from an emissions trading scheme. They want to stall the development of competing green energy sources and force other sectors of the economy and community to take the load in reducing greenhouse emissions.

Industry is pressing for:
1. Free pollution permits and compensation so coal power can still be cheaper and ignore its environmental cost.
2. No mandatory renewable energy target - as promised at the election by the Rudd government and which would see 20% of our energy coming from renewable sources by 2020 and compete with coal power.

They also want the states to give up on energy efficiency programs (such as targets for electricity retailers and energy saving plans for big consumers) even though there is no equivalent and imminent federal scheme on the horizon. The Australian Industry Greenhouse Network comprised of all the major fossil fuel based sectors opposes any state or federal energy efficiency efforts directed at industry. However, there are big barriers to energy efficiency that a trading scheme can’t solve; and efficiency is the first practical and cheapest strategy to reduce emissions.

It’s ultimate hypocrisy for the coal power, mining and allied industries to say they want ‘broad coverage’ of the economy in a carbon trading scheme in order to share the costs around – but they don’t want to bear their share of the costs!

Who are the main industry opponents?

• Australian Industry Greenhouse Network
• The National Generators Forum, made up of all the coal power plants
• Rio Tinto
• Shell
• Minerals Council of Australia

Trade Exposed Energy Intensive Industries
Industries such as aluminium and steel export their product and argue the extra costs of an Australian emissions trading scheme will make them less competitive in the international market, if other firms don’t incur similar costs. They are pressing hard for free permits or compensation.

The position of environmental groups is:

• The need for any adjustment assistance should be subject to a rigorous, transparent assessment process and take into account any existing subsidies or favourable tax treatment.
• To avoid market distortions and “windfall gains”, free permits should not be given away or “grandfathered” to trade-exposed energy-intensive industries. Any adjustment assistance should be separated from the emissions trading scheme system.
• Border tax adjustments are a more equitable, effective and transparent method of avoiding leakage of emissions internationally than free allocation of permits.
• Any adjustment assistance should be conditional on the industry funding and participating in a long term, low carbon transition plan. Industries such as aluminium smelting must plan to move away from their reliance on coal-fired power in the near future.
• Any adjustment assistance should only be available until international competitors face similar carbon constraints.