With a certain irony it’s been revealed that aluminium smelter Alcoa’s Australian assets have faced higher energy costs since the country’s carbon price laws were repealed.
The revelations challenge one of the primary criticisms of the former Labor government’s carbon price mechanism laws, which were repealed last year by the conservative Liberal-National government.
Fairfax Media reports the higher energy costs were revealed by Alcoa’s local joint venture partner, Alumina Limited, which said its energy costs had risen in the six months since the carbon price was repealed, once currency fluctuations were put aside.
“Excluding the currency impact, energy costs were higher than 2013 levels mainly due to increased prices and the loss of carbon tax credits in Australia,” the company said.
The outcome demonstrates the extraordinary level of compensation granted to big industrial companies under the carbon price, in a bid to shield them from rising power prices.
Fairfax Media reports Alumina Limited owns 40 per cent of 20 Alcoa assets around the world, including three power-hungry alumina refineries in Western Australia and the power-hungry Portland Aluminium smelter in Victoria.
The partners also ran the Point Henry aluminium smelter in Victoria, which was shut down in early 2014.
After expressing deep concerns about the impact a carbon price would have on their Australian operations, Alcoa and Alumina Limited were granted the highest level of compensation available under the carbon price introduced by the Labor government on July 1, 2012.
Fairfax Media reports the Grattan Institute’s energy director, Tony Wood, said the rise in energy prices described by Alumina Limited demonstrated the perverse nature of the compensation scheme put in place.
“Since the whole issue of the carbon price in its various forms were raised, certain industries shouted very loudly about how they were going to be put out of business and that they needed to be compensated,” he said.
“That compensation has been provided and this shows it produces some very perverse outcomes.”
The half-year results just published by airline Qantas were also affected by the removal of the carbon tax, with the airline estimating the repeal delivered a $59 million boost to its $367 million underlying profit.
Upon the repeal of the carbon price legislation last year, the federal environment department stated on its website that the repeal would “lower costs for Australian businesses and ease cost-of-living pressures for households”.
