is both appropriate and sensible. Our concerns… have been recognised and substantially addressed.” BlueScope Steel, which will be the major beneficiary of the STP, is also happy. Managing director and CEO Paul O’Malley said, “The government has worked with the Australian steel industry to achieve an outcome which recognises it is trade-exposed.” He also supports a sectoral approach to the carbon emissions issue. “This is a pragmatic solution to a complex problem,” he said. “The STP will minimise the impact on the Australian steel industry… and it signals the government’s intention to limit the potential pass-through of coal emissions costs onto steelmakers.” The AWU has always worked to protect employment in the steel industry, and stands side-by-side with employers in this instance to ensure not a single steelworker’s job is sacrificed to the carbon price. The union has lobbied hard to keep jobs in this key manufacturing industry safe, recognising that with the continuing multibillion-dollar
resources boom generating the need for more infrastructure and construction, once there is a certainty about the carbon price situation in Australia, newer and even bigger investment will flow. The aluminium industry will get compensation cover set at 94.5 per cent of emissions. Excess refining permits will be allowed in Western Australia to go towards smelting in Victoria, where dependence on brown coal will be recognised by an additional allowance. Alcoa Australia is generally pretty happy with the provisions and most importantly – on the back of a 27 per cent rise in revenue in the second quarter of this year – has confirmed there will be no job losses at Portland or Port Henry “in the foreseeable future”. The cement industry, zinc smelting and the plastics and glass industries will also benefit from the two levels of government compensation (94.5 and 66.6 per cent) as calculated by assessment of energy intensity. Oil refining gets 94.5 per cent compensation and the carbon
price will not apply to petrol, LPG or diesel used in light vehicles operated by private motorists and small businesses.
HOW DOES CARBON PRICING WORK? The government calls it the Carbon Price Mechanism. There will be a starting fixed price on carbon of $23 a tonne, to be introduced from July 1, 2012, rising by 2.5 per cent each year. This is a precursor to a market-based emissions trading scheme and a flexible price cap that will operate from 2015. The units of compliance are called “carbon permits” and each one represents one tonne of CO2 greenhouse gas emissions. Industry will be able to bank, auction and eventually trade these carbon permits. Of course, this may impact on everyday life, such as increased energy cost, but the government is adamant that business and households – especially pensioners and low- and middleincome families – will be compensated. Ninety per cent of households will get assistance through tax cuts and/or payment increases to reduce the pain.