Penny Wong in clash with carbon emitters 

Tensions are emerging between major greenhouse emitters and Climate Minister Penny Wong after a number of hostile meetings before the release of the Government’s green paper on emissions trading in July.

Senator Wong has told small groups of chief executives from major power and other energy-intensive companies that the Rudd Government’s election promise of a renewable energy target was “not negotiable”.

One of these meetings in Melbourne last Tuesday completely broke down, with Senator Wong reportedly furious at the way she was being treated by the eight business leaders present, telling them “you wouldn’t treat (former Treasurer) Peter Costello the way you are treating me”.

Those present at the meetings, described by a spokesman for Senator Wong as “frank and robust,” included Rio Tinto Australia managing director Stephen Creese, International Power executive director Tony Concannon, Alumina Limited chief executive John Marlay and senior executives from Exxon Mobil, CSR and BHP Billiton.

Big business and economists are growing concerned about the Government’s refusal to budge on its 20 per cent renewable energy target by 2020 on top of an emissions trading scheme.

The target was announced by Labor during the election campaign last year but has been widely criticised by economists and industry, claiming it will only drive in 10,000 new wind turbines at the expense of cheaper gas-fired power but not reduce greenhouse emissions any further.

Labor’s promise was political but uncosted: the only estimates have come from the renewables industry, which said it would cut power costs by 5 per cent, and the gas industry, which says it will cost $1.8 billion by 2020.

The Productivity Commission last week launched a scathing attack on the proposed targets in its submission to the Government’s Garnaut review on climate change policy.

When flagging their concerns about the renewable energy target at the recent meetings, some industry representatives were told it was government policy and therefore not part of the negotiations about the design of an emissions trading scheme.

The value of the renewable energy certificates produced by renewable energy generators has more than doubled since the election. This suggests hoarding by some traders who believe their value will increase in the future caused by a shortage of new renewable energy generators to meet the increased target.

Members of the solar panel installation industry yesterday met Environment Minister Peter Garrett to raise their concerns over the introduction in the budget of a means test on the $8000 rebate.

Senator Wong is also understood to have signalled the Government’s reluctance to compensate owners of coal-fired power stations for the multi-billion-dollar losses in asset values they face with the introduction of an emissions trading scheme in 2010.

Sources from the meetings have reported disquiet from industry over the lack of transparency in the assumptions used by Treasury to model different trading scheme models and greenhouse gas abatement trajectories.

Treasury is due to report in August on the results of its economic modelling being conducted for both the Rudd Government and the climate change review led by professor Ross Garnaut. It is understood some of the frustration at these meetings arose after Senator Wong asked unprepared chief executives for more detailed data on their business costs.

The Rudd Government is pushing ahead with its aggressive program to have a green paper ready by July and draft legislation finalised by the end of the year.

Matthew Warren, Environment writer

The Australian

30 May 2008