Basic flaws remain in CPRS, Hooke

Changes to the Carbon Pollution Reduction Scheme (CPRS) do not address its central flaw, according to Minerals Council of Australia Chief Executive Officer Mitchell H Hooke.

Today’s announced changes to the Carbon Pollution Reduction Scheme (CPRS) do not address the central flaw in this proposed emissions trading scheme (ETS) – the decision to embark on full permit auctioning from the outset of the scheme – according to Minerals Council of Australia Chief Executive Officer Mitchell H Hooke.

“These are changes at the margin,” Hooke said.

“They will not materially improve the environmental outcomes or reduce the economic impact of the scheme.”

According to Hooke, under today’s changes, instead of being hit with $10 billion in carbon costs over the first five years of the scheme, the minerals sector faces an impost of $9 billion.

“The Minerals Council of Australia (MCA) has consistently argued that many of the shortcomings in the proposed CPRS can be addressed with one simple change – a phased approach to the introduction of full auctioning of emissions permits,” he said.

“All other nations, in establishing comparable emissions trading schemes, are adopting a phased approach to full auctioning.

“There is broad international consensus that the environmental effectiveness of an ETS is not dependent on the full auctioning of permits.”

The MCA has welcomed the Government’s recognition that its CPRS needs changes.However, change must be directed at the underlying fundamentals not just tinkering at the margins, according to the MCA.

“Business’ need for certainty is not served by the kind of certainty this scheme will deliver,” Hooke said.

“The proposed one year delay amounts to little more than a temporary stay of execution for thousands of mining jobs and billions of dollars in investment including in breakthrough low emissions technologies.”

Hooke said the losses won’t be mitigated by the changes to the so-called ‘compensation’ measures for emissions intensive and trade exposed (EITE) firms.

“Ninety per cent of Australian mineral exports will still receive no shielding from the full carbon price ahead of their international competitors,” he said.

“The continued arbitrary exclusion of coal mining from compensation measures is inexplicable — coal mining meets the criteria of the Government’s CPRS yet has been unilaterally excluded.

“The result will be a severe impact on the coal mining regions in Queensland and New South Wales and the inevitable increase in coal exports from Indonesia, Russia, Colombia and South Africa.”

MCA researchers suggest that the impact on various minerals sectors will be comparable to the Government’s own Treasury modelling forecasts that coal mining output will be slashed by 35 per cent by 2020.

“A phased approach to full auctioning of permits will establish a carbon price signal without putting the economy into reverse,” he said.

“It will reward firms who reduce their emissions. It will also raise sufficient revenue to ensure low and fixed income earners are not economically disadvantaged.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.