 |
|
|
|
|
|
|
Alcoa's position on Climate Change
Alcoa has long recognised the need to respond to the challenge of climate change. We took an early voluntary global leadership position on addressing climate change and reducing greenhouse gas emissions and have been successful in reducing our greenhouse footprint.
In Australia, Alcoa is reducing greenhouse gas emissions through energy efficiency, productivity improvements and new technology. In 2003, we achieved our target of reducing global direct greenhouse gas emissions by 25% from a base year of 1990. Since 2003, we have further reduced global direct greenhouse gas emissions to 33% below 1990 levels.
Our position on the Carbon Pollution Reduction Scheme
Alcoa’s position on emissions trading has remained consistent throughout this debate. Our position is clear: we support a CPRS that delivers reductions in greenhouse emissions without compromising the international competitiveness of Australian industry and jobs. Striking the right balance it critical, and if the Government doesn’t get it right then there will be significant economic implications for our industry.
We have spent a great deal of time talking with the Government, and other members of parliament, to ensure the challenges that the alumina and aluminium industries face are well understood. We believe a scheme that addresses the greenhouse challenge, while protecting Australian industry and jobs is achievable.
International Competitiveness - It is important to understand that implementing a carbon price scheme in Australia represents an international competitiveness challenge for Alcoa and other companies that are Emissions Intensive & Trade Exposed (EITE). For companies that pass on their costs to customers, the scheme may be manageable. Alcoa, however, cannot pass on its costs. We do not set our own alumina or aluminium price - the price is set by the London Metals Exchange (LME) which is independent of Alcoa. This means that Alcoa will have to absorb the cost increase resulting from the implementation of an Australian CPRS. If we are absorbing a cost, that our competitors overseas are not, we are at an international competitiveness disadvantage.
Carbon Leakage - 'Carbon leakage' is one of the other significant issues the Federal Government is being urged to consider under a CPRS. If Australian companies cannot remain internationally competitive they will be forced to move their businesses offshore to countries which do not have emissions trading or similar schemes in place. In some cases this could lead to greater carbon emissions and be more damaging to the environment - this is 'carbon leakage'. For example, Alcoa’s alumina refineries in Australia are amongst the most greenhouse and energy efficient in the world. Every tonne of alumina made by Alcoa in Australia produces less than half the greenhouse emissions and uses just over half the energy than alumina made in China. For these reasons, it is important EITE industries are recognised under the Government’s CPRS.
Under the current proposal, EITE industries would be provided with partial recognition. Aluminium smelters would initially receive permits for up to 90% of direct CO2-equivalent emissions and alumina refineries would receive permits for up to 60% of direct CO2-equivalent emissions.
There are several key changes to the CPRS that Alcoa has called for, and will continue to push for as part of the Parliamentary process - they are:
- All emissions intensive trade exposed (EITE) components of our business (alumina refineries, aluminium smelters & Alcoa ARP) should receive at least 90% carbon permit assistance;
- We believe there should be no erosion of EITE permit allocations until our competitors overseas adopt a comparable carbon price;
- Ensuring industries, particularly in Victoria, are not penalised via the Electricity Allocation Factor (this covers our indirect emissions) because of the limited energy supply options currently available in Victoria. The Electricity Allocation Factor should not prejudice the future of our aluminium smelters. Read more about the Electricity Allocation Factor.
Our position on the Renewable Energy Target
On top of increased costs for the industry from a Carbon Pollution Reduction Scheme, is the Renewable Energy Target (RET). This is also an international competitiveness issue and the Australian aluminium industry would suffer additional cost imposts from the RET that competitor countries do not face. Under the RET, large energy users must purchase Renewable Energy Certificates (REC).
Alcoa believes the improvements made during the passage of the RET legislation are recognition that the design of such schemes is critical in maintaining the international competitiveness of emission intensive trade exposed (EITE) industries like alumina and aluminium.
Because aluminium smelting is the most electricity intensive industry in Australia, it is many times more exposed to RET costs than any other industry.
|
|
|
|
|
