This submission is provided in two parts – a response to some statements in the Climate Change Authority’s draft report; and answers to some of the specific questions posed. Both parts focus on Chapter 5 of the draft report: "Addressing international competitiveness concerns".
Our main concern is that Australian alumina refineries and aluminium smelters compete directly for markets and investment with facilities in other jurisdictions that are unlikely to face carbon costs for many years.
The Australian Aluminium Council (AAC) believes that any policy approach to climate change should not harm the competitiveness of Australian businesses and industry – this intent had been affirmed by the Government in earlier stages of emissions reduction policy development.
However, we are concerned that the proposed safeguard mechanism rules do not deliver on this intention.
The Council welcomes the proposed changes in the Shipping Legislation Amendment Bill 2015 that will allow our member companies access to shipping at more internationally competitive rates, as well as give them the flexibility to secure vessels for single voyages. However, the introduction of emergency permit measures would reduce risks to supply where unforeseen events have occurred in the supply chain.
The Council is concerned that the Australian domestic gas market is currently neither efficient nor deep. The alumina and aluminium industries consider the following as evidence that the current domestic gas market is not functioning effectively:
• There is insufficient diversity of supply in most regions;
• There is limited long-term contracting available in the market;
• Pricing is not transparent; and
• A large proportion of the current supply is not exposed to the domestic market, regardless of price and terms.
The impact of climate policy on Australian facilities is dependent on the costs imposed on those facilities by domestic policy, relative to the costs imposed on competing facilities by policies in their country.
The AAC strongly urges the inclusion of an emissions intensity test as part of the safeguard mechanism design, to ensure some of the world’s most efficient facilities are not penalised for “business as usual” incremental production growth.
Overall, the Facilities Method would provide an efficient way for projects that will have a material impact on emissions at a whole-of-facility level to bid into the ERF. However, the Council notes that it may be appropriate to prioritise the development of a methodology that could effectively credit the real reduction in emissions from the original production level that is achieved by this type of project.
In setting PM standards it is particularly important to take into account the variable level of natural background particulate matter in the ambient air environment. The basis for the values for PM standards should also be appropriate when applied in the measurement of concentrations in regional locations, where much of the Australian aluminium industry is located.
The Council discusses the work done by the Australian aluminium industry in ensuring the dramatic decrease of emissions of perfluorocarbons (PFCs) since 1990, and suggests that no change is necessary regarding PFCs in the Ozone Act.
The Council comments on the effects on the bauxite, alumina and aluminium industry of the agreements of the Minamata Convention on Mercury.