A new report by the Business Council of Australia examining the impact of the Rudd Government’s proposed emissions trading scheme (ETS) on 14 real-life businesses has found three companies would have to shut immediately and four would lose 32% to 68% of t
A new report by the Business Council of Australia examining the impact of the Rudd Government’s proposed emissions trading scheme (ETS) on 14 real-life businesses has found three companies would have to shut immediately and four would lose 32% to 68% of their earnings.
The report involved 14 companies from the sectors likely to be hit hardest by an ETS – including minerals processing, manufacturing, oil refining, coal mining and sugar milling – opening their books to consultancy Port Jackson Partners, which then modelled the potential impacts of an ETS.
Based on a carbon price of $40 a tonne, the report finds three of the companies would shut immediately and four companies would be forced to radically restructure as a result of losing up to 68% of their profits before tax. The rest of the companies would have to take action to cut costs and may delay or abandon investment plans.
BCA president Greg Gailey says the report is the first attempt to demonstrate the impact of an ETS on real companies.
“While these case studies have focused on 14 businesses, there can be no doubt these outcomes would also apply more broadly across the relevant industry sectors,” he says.
The BCA says it supports the principle of an ETS, but the scheme must be designed in such a way that protects the Australian economy.
“If we design a scheme that makes businesses unviable the end result will be relocation of vital export earning industries to other countries. This will cost Australian jobs without any reduction in global emissions. Australia will simply reduce its greenhouse gas emissions by exporting them to other countries.”
While it should be stressed that the ETS will only affect around 1000 companies, mainly in heavy industries, the BCA’s criticisms will give the Government pause as it considers the timing and implantation of the scheme.