“Any emissions trading scheme must support energy and greenhouse improvements, while ensuring investment and jobs in Australia.  It is vital we get this right for the future of the Australian alumina and aluminium industries, and for the workers and communities who rely on our continuing presence.” Alan Cransberg, MD of Alcoa of Australia

The potential impacts to the aluminium industry of the Federal Government’s proposed National Renewable Energy Target, as well as the emissions trading scheme, were raised by Alcoa of Australia’s MD, Alan Cransberg, during his address to the CEDA (Committee for Economic Development of Australia) Resources Overview in Perth earlier this month.

Mr Cransberg indicated that the Australian aluminium industry cannot tolerate cost imposts from the National Renewable Energy Target (NRET) that competitor countries do not face.  This comes on top of increased costs for the sector from the emissions trading scheme.

“It’s vital that industry is not hit by further cost increases under a National Renewable Energy Target,” he told the packed audience.
Under the proposed scheme, large energy users must purchase Renewable Energy Certificates (REC).

“This exposes the Australian aluminium smelting industry to significant cost increases – none of which can be passed onto customers in the absence of a comparable impost on international competitors,” he said.

The National Renewable Energy Target must be applied in a way that recognises the emissions intensive trade exposed sector or it will become harder and harder for these industries to do business in Australia, he said.

Commenting on the proposed emissions trading scheme, he was also clear that the most critical issue for the Australian aluminium industry was regarding certainty in permit coverage and ensuring any erosion of permit allocation does not occur at an unsustainable rate.

“The greatest concern I have is that any shielding for emissions intensive trade exposed industries will fail if allocations are eroded too quickly,” he added.

Commenting on the permits afforded to the industry (aluminium smelting would initially receive permits for around 90% of baseline emissions, alumina refining would receive around 60% of baseline emissions), Mr Cransberg said that while these are important to the industry’s future in Australia, they are not a “free ride”.

“Our operations face significant financial imposts not faced by competitors in China, Russia, the Middle East and elsewhere.

“And like other commodity exporters, cost increases cannot simply be passed on to overseas customers,” he explained.

“The aluminium industry will continue to ensure governments understand what is at stake here, and we will also continue to improve energy efficiency and reduce emissions within our business.”

Alcoa continues to work to ensure that renewable energy is part of the Australian energy supply mix and works in partnership with the Portland Wind Farm which connects to the grid through the Portland Aluminium Smelter in Victoria.