Australia govt rejects coal compensation report
By Rob Taylor, Reuters, Fri May 8, 2009 3:59am EDT
CANBERRA, May 8 (Reuters) - Australia's government shook off on Friday coal industry warnings that 10,000 jobs would be lost and 16 coal mines forced to close unless a planned national carbon emissions trading scheme was dramatically overhauled.
The centre-left government's exclusion of coal mining from compensation measures promised to the biggest polluting firms exposed to overseas competition was "seriously flawed", new research for the Australian Coal Association (ACA) said.
"It is effectively a A$10 billion ($7.55 billion) claim for assistance," junior Climate Change Minister Greg Combet told Reuters by telephone.
Australia is the world's largest coal exporter. Prime Minister Kevin Rudd this week announced a one year delay to the world's most sweeping cap-and-trade scheme outside Europe, pushing the start of the scheme back until mid-2011.
Rudd also offered concessions to big industry in Australia, including a low fixed carbon price capped for a year at A$10 and increased eligibility for free emissions permits, including 95 percent for the heaviest export-oriented polluters.
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But the ACA said while the coal industry was well above emissions levels of other similar industries slated to receive mid-level allocations of 66 percent free permits, like LNG and chemicals, it received just 4.5 percent.
"The industry under the current version of the Carbon Pollution Reduction Scheme will pay to the government over A$14 billion in the first 10 years," said Ralph Hillman, the ACA's executive director.
Combet, charged with troubleshooting compensation negotiations with coal miners and waste firms, said the report wrongly based its modelling on upper-level carbon reduction targets the government had set, which will be adopted only if the world acts together to curb emissions.
But the government was working with the industry and high emissions mines would receive assistance from a A$750 million package, he said.
"It is a unique industry in that from mine to mine the level of emissions can vary to extraordinary lengths," he said.
The government's plan for the scheme set aside coal mining because few mines emit enough carbon emissions to warrant compensation. But the report for ACA said 79 percent of coal produced came from high-emission mines.
Business leaders are calling on the government and conservative opponents to resolve differences over the carbon trading scheme as Australia slides into recession.
Laws underpinning the carbon trading scheme will enter parliament later this month, with the government facing near certain defeat as the conservatives line up with key independents and Greens to oppose Rudd's amended plan.
Australia produces only 1.5 percent of world carbon emissions, but is one of the largest per capita polluters due to its reliance on coal-fired electricity for 80 percent of its energy requirements.
Electricity generators are in negotiations with the government over concerns that promised sector compensation will will not be enough to close a A$100 billion capital and refinancing shortfall.
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