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The Forum > Article Comments > What am I bid for this emissions permit, still in wrapper? > Comments

What am I bid for this emissions permit, still in wrapper? : Comments

By Gerard Brody, published 13/6/2008

Senator Wong must not fall for the argument that energy generators and other energy intensive industries will shoulder the burden of climate change unfairly.

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This is a good assessment albeit a little simplistic with respect to tis treatment of TEEIs. There are a range of issues here not least with respect to the nature of trade exposure. For the industry I am familiar with, cement manufacture, we are a minnow-sized, domestic, import-competing industry with very little ability to pass on costs. Regional surplus capacities dwarf our own and shipping costs, markets, our whole supply chain infrastructure is amenable to import of clinker (the domestic industry currently requires about 10% imports).

It is the case, that additional cost imposts will make domestic cement manufacture unviable. We are already seeing developments towards lower business-risk import capability which will lead to a rapid replacement of the order of another 10-20% of imports under an ETS and then a decade long drop in maintenance investment which will see a total of 50 - 60% of manufacture move offshore.

What is the climate change benefit? Nil to negative. The Australian industry competes by virtue of a high rate of technology adoption - we are among the most efficient producers in the world. To ship cement (as clinker or cement) to Australia will lead to a net increase in global CO2 emissions - outsourcing our CO2. We will become dependent for our built infrastructure on the capacity and demand constraints of our regional competitors.

We are not unhappy to see the inevitable price signal. I disagree with the comment that business is positioning for windfall profits. Yes this occureed in stage 1 of the EUETS but was a clear leasson learned and administrators of future schemes including ours, will always ensure that allocation is conservative to ensure that this does not occur. Cement is likely to see an initial price signal based on no allocation for indirect emissions (electricity) as well as benchmarking of performance to which we are not completely opposed.

It is my belief however, that the majority of these allocation hurdles can be simply addressed by utilising a border equity transitional mechanism that treats imports of emissions-intensive materials in the same way as locally manufactured materials.
Posted by c-lifeform, Monday, 16 June 2008 10:13:57 AM
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