One solution to ETS options

The Rudd Emissions Trading Scheme legislation is a process where the Government sells or gifts certificates to pollute, and as such is not a Carbon Pollution Reduction Scheme. This fact is best exampled by the Rudd government’s action in including compensation to cover increased electricity charges to low-income families because it knows electricity generators are going to, and for technical reasons have to, continue to pollute, pay for the certificates and pass the cost on to consumers.You will, in fact, be paying to maintain the existing pollution.At BlueScope Steel, similar circumstances exist. A blast furnace cannot make steel without burning carbon, with the associated emissions. The industry has been improving that process for 100 years and there is probably little improvement available.So BlueScope must buy certificates to pollute. The Government offers them some free certificates for a limited time but the managing director says they are not enough and his business will not survive. In today’s intensely competitive market, the purchase of one certificate is one too many.But view it from the other side of the argument. Through buying or receiving free certificates, BlueScope gains the legal right to emit exactly the same quantity of CO2 pollutants as it does now.So where is the climate advantage? Worse still, BlueScope must deal at every trading level with intense international competition. Under the Rudd Emissions Trading Scheme it is argued costs of certificates to pollute will be cheaper if bought offshore. But from whom? Well, it’s your biggest competitor China, who, because it does not propose an ETS but is investing billions in low-emissions technology, will have many certificates to sell. The United States Congress narrowly passed an ETS, which will have no material effect on US industry until 2025. It may never pass the US Senate.The US has also restructured its vehicle industry, reducing manufacturing costs in one sector by about $1500 per car. It has provided billions of dollars of free capital. What then is the future of the Australian car industry and the steel it consumes when managers in Detroit sell cheaper cars of US manufacture in Australia, while our steel producers must increase their prices, buying certificates to pollute?The Australian manufacturer has few options. The first is to close down and/or relocate overseas. Wage cuts to Chinese levels is another.Green energy jobs sound attractive, but the cost of energy they produce will be higher than the certificates and so create the same problem.So who will create private sector jobs to sell energy that no-one can afford?An ETS guarantees increased costs to maintain the CO2 pollution necessary in so many industries. There is, however, a solution – for Government to invest directly in energy efficiency, and some renewables that produce large quantities of energy in a predictable fashion. Initial debts can be recovered over extended periods.For every $1 billion of government funds invested in proven technologies, it is my belief a real cut in CO2 emissions from the electricity sector can be achieved with corresponding decrease in electricity charges.Instead of taxing business out of business and workers out of jobs, Mr Rudd should be investing in carbon reductions that deliver benefits, not obstacles.Wilson Tuckey, Liberal Member for O’Connor, Western Australia.
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