australia: April 21, 2008

There is growing concern by industrial and heavy users of electricity that the Government’s Mandatory Renewable Target or MRET will cause significant price increases. Many fear that potential price increases will, in turn, undermine the efficiency of the Federal Government’s strategy to cut Greenhouse gas emissions. A meeting in early April between members of the Australian Aluminum Council (AAC) and economist Ross Garnaut, raised a number of pressing issues regarding climate change.

Professor Garnaut is reviewing climate change for the current Government headed by Prime Minister Kevin Rudd. The AAC has long opposed the MRET. AAC Chief Executive Ron Knopp said the AAC supported a national emissions trading scheme; however, there was a risk that energy emissions in intensive industries would be placed at a disadvantage by high targets therefore making their products less competitive in global markets.

Climate Change Minister Penny Wong has acknowledged that industries, like those in the AAC, should receive financial incentives to ensure their products remain competitive in the global markets. Many Australian industries compete with companies located in countries imposing no levy on carbon emissions.

The Government has announced that State and Federal MRETs will be merged so the targets will be national and uniform and therefore not be applied unfairly to any Australian business. The plan has a target of 20 percent of the country’s total generation coming from renewable sources by 2020.

Despite concerns by a number of industry participants about the cost of the MRET, a recent study released by consultants McLennan Magasanik Associates found the potential economic impact of a MRET to be minimal – costing each Australian consumer $10 - $30 by 2050.