Dear Matthew,

Good article and I agree with most of it but I'm wondering if you can expand a little on the following section?

"The smelter gobbles up nearly a quarter of the state's energy at a price heavily subsidised by all Victorians."

"For electricity, it uses the Anglesea coal mine and power station, which Alcoa operates, and for another of the input materials, bauxite, it can access that from one of its own mines in Western Australia."

If Alcoa uses the electricity it produces itself from the plant it owns in Anglesea then how do they end up getting subsidies from Victorians for power? 

I accept that they do but am unsure of the mechanism.

I agree on some key points but disagree on others. I wouldn't call Germany a success story as in recent years (ie not going back to the Berlin wall era) emissions have increased and GDP has declined. The bit about bailing out Greece is an excuse they will trot out. Secondly non-hydro renewables wind and solar are of little use to a process that requires steady baseload power to prevent the molten metal from solidifying in the electrolytic cells or 'pots'.

If Anglesea power station closes that will reduce Victoria's exorbitant CO2 emissions from brown coal. That is just the start since presumably the workers will seek re-employment in other energy hungry industries. Nuclear power albeit free from carbon tax cannot provide the cheap electricity rates smelters have come to expect. What irks me is that China may fill the gap using aluminium made with the help of Australian bauxite or alumina and electricity partially from Australian coal, yet they pay no carbon tax. Clearly there should be a carbon tariff on aluminium imports with the presumption they use mainly coal fired electricity.

We could also increase the recycling fraction from about one third to two thirds. A refundable deposit on soft drink cans seems to work in SA and could go national. When we swig a can of drink on a hot day we're ignoring the energy that went into it. Lastly we could simply pay more for aluminium which has always been underpriced.

Matthew Wright

I have no disagreements with the rent seeking accusations but you've left out vital points.

First - the upswing in Germany's aluminium industry and apparent downswing in Australia's much larger smelting industry has to do with changes in the exchange rate. The $A is way up, hence the downswing in the local industry. These changes would completely swamp any affect due to any imposts due to carbon. Obviously a carbon tax is meant to be an additional cost designed to drive behaviour, otherwise what is the point of it? To pretend that it won't have a major effect is absurd. In this case the affect is overwhelmed by other factors.

Second - where is the assurance that the Germany industry is not subsidised on power prices as ours is? I'd be very surprised if the industry over there had to buy power at ordinary, industry prices. When the Europeans build vast, nearly useless wind farms and PV plants, they tend to throw the cost on the private consumers. This is certainly the cast in Denmark, but I don't know about Germany. You need to establish this.

Your analysis of power prices in Victoria has some merit but you've wrecked your article with unjustified international comparisons.

Isn't the phasing out of industries like the aluminium industry the whole point of the carbon tax? The Brown-Gillard government has determined that Australia is to have a low carbon economy so Alcoa and companies like it will be phased out. Whatever one thinks about industries that rely on government support to survive, it cannot be denied that a large component of Alcoa's difficulties is a result of deliberate government policy.The confusion at the heart of government thinking is revealed when the Prime Minister meets Alcoa workers, expresses sympathy with their plight and promises to help.

Fortunately, the Australian economy is restructuring reasonably effectively and, after a brief spike, unemployment can be expected to decline again later this year or early next year.

Alcoa is subsidized with $300 / ton output for power. They were supplied 95% of carbon credits free. Alcoa is a dead horse and been dead for some time. The high dollar is too much.

Good article, Matthew. Aluminium smelting in Victoria is the 'carbon dirtiest' industry in Australia, producing some 4% of our carbon emissions from subsidized brown coal fired electricity at less than 3 c / kWh. It's the obvious first candidate to close if we are reduce CO2 emissions.

The carbon tax is not behind this latest move though as they'll get 95% of their emissions Scot free for several years yet, under the over generous compensation given to these 'trade exposed' industries.

Agree with Taswegian, we should lead the world in putting a carbon tax on aluminium and other imports that are more emissions intensive than an accepted benchmark. The notion of free trade will have to be turned around in order to get recalcitrant nations up to speed up their action on carbon.

PS Curm - 'nearly useless wind farms and PV plants'- negative and unsubstantiated statement. Many European nations including Spain and Germany and indeed our own state of SA have more than 20% of this generation in the grid already. How can fuel free power that contributes to energy security and reduces emissions be 'useless'?

Just some quick words on Germany and its manufacturing industry: Germany is now third behind the US and Russia in world wide arms sales.

http://www.thebeginner.eu/europe/181-the-german-arms-industry

Senior Victorian, it must be nice for you, & Julia Brown to take the broad picture, "It will all be OK in a year or so", if you are nicely secure. Not so nice for a worker, with a big mortgage, & a couple of kids at school.

We've had a rash these ratbags being something of the year, & they all seem to be anti CO2, & believers in global warming. Well, what do you know, when our PM is trying to gather supporters for her fool policies, the band wagon riders get covered in confetti.

The problem is the way we are going, Greece, & the rest of Europe bar Germany, here we come.

Europe, except Germany, is a perfect example of a tertiary service economy, & anyone with half a brain can see, they don't work. Sooner or later everyone runs out of money to pay for their washing, if no one actually produces something. Hell, we're even importing our washing machines.

Yes I know it's hard for our academics & dreamers to believe, but it is only when you produce something, that you generate wealth. Teaching teachers is all well & good, but someone has to pick up the bill. Currently without our miners we'd all be starving.

With our wealth of minerals & coal, we should be the steel & aluminum producer for all Asia, not a rapidly failing bunch of public servants, flogging off our dirt.

Leave the conspiracies for Arjay. Hasbeen hates any thing to do with an alt; source of energy. He is just going to get used to it.
Alcoa has been in its last throws for years. It's no surprise for the workers. The plant is old and inefficient. People are not buying local cars like before. So local use of aluminium alloy's is limited.

Roses1

Germany has nothing like 20 per cent power from alt energy - 10 per cent is closer - and certainly not in winter. The PV panels which are a feature of its alt energy program have been buried under snow for weeks. SA may get 20 per cent.

But to prove that those alt energy projects are anything but useless you'd have to show that they actually save carbon. Bear in mind that wind farms have to be built virtually in addition to the fossil fuel plant network (the Australian Energy Market Operator has declared the capacity factor it will allow for wind farms and it is very low), and that their use on the network will require major changes in the way it is operated and the mix of conventional plants it will use. There is also the question of additional spinning reserves that have to be kept handy when there is more wind power on the system.

All of those points greatly reduce the carbon savings from those projects, possibly to nill, and a lot of carbon has to be generated to manufacture them in the first place. The savings the green industry sometimes claim for those things are assumed savings. they don't take any of hidden penalties into account.

This has all been discussed many times, in this forum and elsewhere. The wind farms - actually there is no PV in Aus apart from the rooftop stuff - are useless. They are there to make the greens feel better, and increase electricity prices. They have no other use.

Dream on 579.

I'll dance on the grave of global warming, & I hope the gravy train is in it, when I do.

I really hope people like you are investing in those wind farms. Promoting the fraud as you do, has probably cost thousands of dollars of other peoples taxes.

HasBeen what has it got to do with global warming. Coal and oil are getting dear these days.
The big smelter in WA is running its power on Gas, a better option at least. There was a hold up with the gas pipe line, but that has been overcome. Of course Abbott accused the Carbon Tax for the hold up, but that was debunked by Alcoa.
An other day of negativity from the opposition, nothing new there, they can not bring them-self to be curious about the economy at all.

Wow, you've really got me this time 579. Here I was thinking all these extra costs, & the "carbon tax" was designed to price fossil fuels out of the market. You know, to stop the "global warming" that the whole con is based on.

Best be careful there, you're forgetting your lines. Julia won't be pleased.

People need to realise that we need aluminium refineries to keep the electrical network stable, as they act as our hydro stations. Having very little hydro power, due to lack of water, the refineries provide the only large consumer of power that can be supplied at the convenience of the generating authorities. That is why they get their power so cheaply. If Eraring Power Station were to ring in and say that they had a problem with No2 alternator, and that their output would fall by 500 Mw in 3 minutes time, the order would just go out "Kill the refinery", and balance would be restored. The refineries can go without power for 5 hours before the pots cool down. Hydro is the only continuous source of power that can go from zero to 100% output in 60 seconds, but the capacity in Tasmania and the Snowy is insufficient to stabilise the eastern state network. As the proportion of erratic sources of renewable power in the network increases, the refineries will become even more important for network stability. (For technical dummies that means the mains voltage staying at 240 volts).

plerdsus

a useful point.. um, is that actually what they do or is it surmise on your part? Can they switch the smelter on and off a lot and still preserve efficiency, for example? wind power would have a lot of ups and downs during the day. Interested..

Yes Curmudgeon, that's how it works. It is all based on the fact that it is not possible to store electricity (cheaply at any rate) and that it has to be used as it is generated. That is the same reason that people have off-peak hot water systems. The electricity for them is provided at the convenience of the generating authority (usually at night when they have a lot of surplus power to dispose of). They just send a control pulse down the line to the selected area, and all the off-peak systems are turned on. The tank insulation keeps the water hot, so it doesn't matter to you just when it was heated. In the same way, Alcoa doesn't care when the aluminium is produced, as long at it is produced. (By the way, I had a career in electrical engineering).

The carbon price is raising airfares between $1.50 and $8 for long haul.
Qantas is axing 500 jobs, hopefully the CEO is one of them. Profit is down 83 % If there was 500 jobs that didn't need to be there, why take so long.
Joyce says qantas is going to trial an alt fuel later in the year.

Yes, thanks plerdsus for confirming that versatility about fossils; the big coal powered plants can rotate their generators for reasons other than maintainence, mainly reduction in demand. This is the reason why alarmists can claim the capacity factor of the big coal plants is < 100%. In fact it is not; coal is 24/7.

One of the other lies of the alarmists is that renewables can also be versatile; in fact hey have no flexibility at all; whenever an alarmist sprouts rubbish about the renewables I just ask them whether wind and solar can guarantee 4 hours power in a weeks time. The answer of course is no; in fact wind and solar cannot guarantee power at any time.

The Point Henry smelter is small (disadvantaged in terms of economy of scale), 30 years old (almost certainly energy inefficient compared to new plants). Even on cheap power it must be a short term proposition. They have a point about the carbon tax, but $A/$US of 1.05 and above is the cruncher.
Note that they are not talking about closing down the more modern, larger Portland plant with its excellent deep facilities.