Energy target will cost thousands of aluminium jobs

AUSTRALIA’S aluminium industry says the Federal Government’s renewable energy target (RET) will cost it $700 million over the first decade of the scheme and threaten 5000 jobs in regional centres. In a submission to the Senate inquiry into the Government’s renewable energy legislation, seen by BusinessDay, the Australian Aluminium Council called for ‘‘a true 90 per cent exemption’’ from the full costs of the RET. Under the Government’s proposal, Australia will have to source 20 per cent of its electricity from renewable sources by 2020, equivalent to 45,000 gigawatt-hours. The big polluters, which are deemed to be at a disadvantage to international competitors operating without an emissions trading scheme, will be exempt from using renewable energy above a target of 9500 gigawatt-hours. But the aluminium industry, which consumes about 15 per cent of Australia’s electricity and contributes more than $5 billion to Australia’s exports each year, says it will need to slash capital expenditure and jobs to meet the combined cost of the RET and the carbon pollution reduction scheme, estimated by the industry to cost it $4 billion over the first 10 years. ‘‘Each of Australia’s aluminium smelters spends in the order of $50 million annually on sustaining capital,’’ the council said. ‘‘Faced with additional RET costs, much of this local spend on regional employment, equipment and supplies will evaporate. ‘‘The RET bill … does not provide a 90 per cent exemption from RET to any industry due to the extension of original mandatory renewable energy target (MRET) liabilities. The exemption figure for aluminium smelting is actually 55 per cent.’’ The council said a ‘‘true 90 per cent exemption’’ would protect jobs, particularly those at the six regional smelters in Portland, Geelong, Hunter Valley, Tamar Valley and Gladstone, which employ 5000 people. ‘‘The alumina and aluminium industry accepts that Government intervention is justified in response to climate change,’’ the council said. ‘‘The position we have … advocated would see additional costs of $1.3 billion imposed on the Australian alumina and aluminium industries over the first 10 years. ‘‘If unamended, this bill will have significant economic consequences for the aluminium industry.’’