14/10/2010 - 00:00

Support building for a price on carbon

14/10/2010 - 00:00

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A PRICE on carbon is garnering elevated support from the Western Australian business community as part of a suite of recommendations to tackle climate change.

Support building for a price on carbon

A PRICE on carbon is garnering elevated support from the Western Australian business community as part of a suite of recommendations to tackle climate change.

The trail of thought at the recent WA Business News boardroom forum, which gathered some of the key participants in the WA renewable energy sector, was that if carbon remained a ‘free’ commodity, consumers would not value it.

Yet the debate remains as to the best way forward – a tax on carbon or an emissions trading scheme.

Alcoa general manager of climate change Tim McAuliffe said he would bring in an ETS, not a carbon tax.

Mr McAuliffe told the forum that, despite the policy vacuum surrounding carbon, it remained an important strategic business issue for Alcoa, which was a company with one of the largest carbon footprints both in Australia and internationally.

“Our energy costs are a significant part of our input costs, some 20-30 per cent of our bottom line, so if we are going to respond to [climate change] with a carbon price, we need to get on it and do it,” Mr McAuliffe said.

“From the viewpoint of our industry, we need to take a slow and steady approach and we need to see the shape of the carbon cost curve first – it needs to be such that it gives us a chance to adapt.”

Mr McAuliffe’s comments preceded those of other leaders in industries that have large carbon footprints. Wesfarmers chairman Bob Every said last week that a price on carbon was “inevitable” and should be a tax; and BHP Billiton chief executive Marius Kloppers recently backed a price on carbon in the form of a tax, rather than a potentially fluctuating ETS.

“I would also support a carbon tax to contribute to the sharing of the cost,” SunPower chief executive Bob Blakiston told the boardroom forum.

“But we can’t tax ourselves out of existence; there needs to be a proper debate by informed people rather than by those who have a self-interest program in place.”

Mr Blakiston said both industry and government needed to consult with experts who knew how to bring about a cultural shift towards energy, rather than simply rolling-out a policy that was not sustainable.

WA Sustainable Energy Association chief executive Ray Wills said that if the government wanted to achieve real change, it should put more money into the sector.

“Governments, both state and federal, should be 100 per cent renewable energy powered by 2015 – they could go out tomorrow and get Synergy to buy it for them, no problem,” Mr Wills suggested.

“The same is true for an efficient vehicle fleet, or efficient buildings, that would then translate into market stimulus.

“The government spends just shy of $1 billion on energy; imagine if that was directed into the renewable energy market. From a WA perspective, that would be approximately $20 million.”

Mr Wills also stated his support for an ETS, rather than a tax, which he said were fundamentally different approaches. And he wasn’t alone when he put it to the boardroom forum that energy efficiency was also a critical component to addressing climate change.

“If you mandate energy efficiency in the building industry, for example, then that’s the new benchmark,” he said.

The federal government, having come under pressure from rising electricity tariffs, released a report from the Prime Minister’s Task Group on Energy Efficiency this month in a bid to introduce energy efficiency measures.

As part of a targeted 30 per cent improvement in national energy efficiency by 2020, the report recommended more efficient, cost-reflective price signals in energy markets.

“Our society does not place proper value on energy, we all take it for granted in the way we interact with it – we treat it like air,” Pacific Energy managing director Adam Boyd told the WA Business News forum.

Mr Boyd said cost-reflective pricing was “absolutely paramount” to driving energy efficiency because the only way to get consumers to start treating it like a scarce resource was to price it properly.

The key measures discussed at the boardroom forum – a price on carbon, energy efficiency and cost reflective pricing – were all backed by the task force’s report, which found that all three needed to be addressed in order to reduce emissions.

Further to this, the task force stated that national electricity markets, along with energy efficiency providers, “should be able to effectively identify and implement solutions to help the economy make the transition to a future carbon price”.

“We haven’t started the whole journey on energy efficiency at all,” Synergy managing director Jim Mitchell said.

“We need a carbon model that only changes the industries that matter; in Australia, that’s only 1,100 anyway. And we also need proper education, a discussion about what true costs are and getting people to react to the visible signals.”

 

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