MARKET I OPPORTUNITY
Is Australia’s carbon tax a solar opportunity?
After a difficult journey through the political process the Australian government finally announced a new policy that will tax carbon emitters and invest in alternative energies. Could such a move provide new market impetus for the solar industry?
F
acing the full impact of the carbon tax in Australia will be the manufacturing industry, in which Wayne Swan, Deputy Prime Minister & Treasurer predicts 9 out of 10 companies will be negatively impacted. 950,000 manufacturing professionals claim that they are under pressure, due to the additional Carbon Tax on raw material and feel that they are unable to compete against international companies, who don’t have to pay the extra taxes.
Moreover, the Australian Trade and Industry Alliance have suggested that less than 10% of the 1.05 million professionals within the manufacturing industry will benefit from the Government’s new ‘Jobs and Competitiveness Program’, launched to help support business affected by the Carbon Tax.
The Program will provide $9.2 billion of assistance over the first three years of the carbon pricing mechanism to safeguard jobs in industries which are heavy polluters, but also face strong international competition. However critics are doubtful that this contribution will be adequate.
On the other side of the argument a spokesperson for Climate Change Minister, Greg Combet defends the new legislation; stating that the government’s $9.2 billion ‘Jobs and Competitiveness Program’ has been designed to support industries, particularly manufacturing and alumina production and that 40% of revenue generated from the Carbon Tax is to be invested in business and industry to help them adjust and to encourage a switch to cleaner forms of energy.
Comparative policies
The CRC Energy Efficiency scheme is a mandatory carbon emissions reporting and pricing scheme, in the UK, to cover all organisations using more than 6,000MWh per year of electricity. Which has been put in place to address similar carbon issues as the Australian Carbon Tax, however it might be argued that there is no single industry which is under pressure and that there is a reduced burden on smaller businesses.
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www.solar-international.net I Issue I 2012
Significantly the CRC Energy Efficiency scheme doesn’t threaten to produce job losses, and according to a report prepared by SFS Economics for the Australian Trade and Industry Alliance, the “European Union’s carbon pricing scheme will likely protect 14.6 million manufacturing jobs with up to 100% free permits for
151 industry sectors – which amounts to 42% of EU manufacturing jobs.”
A Mixed Response The Carbon Tax plan has drawn a mixed initial response. Even before it was announced, some of Australia’s biggest mining companies and banks had supported a carbon price. Other business leaders are more circumspect. There are conflicting arguments and perceptions across industry, finance houses and government. The world’s largest aluminium company, Rusal own 20% of the giant Queensland Alumina Refinery and employs 72,000 people. They are reporting that large scale projects, which provide hundreds of jobs, are having to be halted due to Carbon Tax. Reputedly they are expecting to pay between $30 – 40 million in the first carbon tax year and over the next ten years, having to spend $400 million on carbon tax which John Hannagan, Rusal Australia’s Chariman, believes could be better spent on the expansion of the plant and future energy projects.
Contrary to this view, Elaine Prior, Director and Senior Analyst with Citi Investment Research, said the overall impact of the Carbon Tax is not expected to materially change the valuations of companies in the ASX200 and that it should not have a detrimental effect on the longevity of a company.
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