Environment initiative will hit economy, jobs warn Australian industry leaders

The Australian government's carbon trading scheme had come in for severe criticism from one of Australia's respected businessmen Graham Kraehe who termed the initiative as a bigger economic threat than the global downturn. He said the proposal was deeply flawed in its approach to emissions-intensive exporters and should be delayed.

He added that scheme would also prevent a $1-billion investment in clean power at Port Kembla.

Addressing an Australian Institute of Company Directors event in Brisbane, Kraehe said the Australian economy will survive the economic downturn but may not survive the Carbon Pollution Reduction Scheme (CPRS).

Kraehe added that the local steel industry with a workforce of 91,000 would be the worst hit by the changes and that a large number of regional workers would be at risk.

He said BlueScope Steel was not likely to sign off on a $1billion cogeneration plant at Port Kembla required under the proposals as it would severely hit the company's bottom line.

Kraehe, who is also on board of the Australian Reserve Bank, said there was general agreement that Australia was in, or on the brink of recession and unemployment could increase and it was distressing that the government was still pushing the 2010 CPRS deadline despite its obvious and serious flaws.

Kraehe's comments support the depositions of BlueScope chief executive Paul O'Malley and OneSteel chief executive Geoff Plummer to a senate select committee on climate change. He described the plan as a ''$2.5-billion de-stimulus package'' that would seriously impact Australia's competitiveness for the worse.

The emissions trading scheme, or CPRS, is scheduled for implementation in July 2010 but faces defeat when it is presented in the Senate in June this year.

The government has been urged by coalition senators to go back to the basics and formulate a properly modelled and considered plan that would factor in the outcome of the UN climate change summit, which will be held in Copenhagen in December.

Kraehe said BlueScope supported the government's environmental and economic objectives on climate change but urged businesses to participate in a more open debate with the government. 

He added that the government had failed to address the concerns of business over the issue.

Woodside Petroleum also warned of widespread job losses in the liquefied natural gas sector from the scheme.

Woodside Energy executive vice-president Robert Cole in his submission to the Senate Select Committee on Climate Policy in Brisbane that getting the design of the CPRS right was of vital importance.

He told the committee that a failure in getting the design right would result in Australia's natural gas exports falling to half the size by 2030.

He said that Australia current production amounted around 9 per cent of the world output of LNG and a potential exists for Australia of tripling the exports, but the danger was it could forgo the opportunity.

He added that the lost opportunity could be worth tens of billions of dollars in investments and tens of thousands of potential jobs.

He said that LNG contributed to global greenhouse reduction.