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Issue #1476      13 October 2010

BHP-Billiton’s “call” for a carbon tax

Marius Kloppers, chief executive of BHP-Billiton, is said to have recently called for the introduction of a carbon emissions tax in Australia. In point of fact, he hasn’t actually said that he wants a carbon tax.

BHP iron ore train arriving at Port Hedland.

What he did say is that a price will eventually be placed on carbon emissions, that when this happens the pricing mechanism should take the form of a carbon tax, and that it should be imposed prior to any international agreement being reached on measures to cut carbon emissions, in order to protect Australia’s trading position regarding coal exports.

Greens leader Bob Brown hailed the statement as a victory for common sense, and it has been welcomed in some quarters as an encouragement for the Australian government to tackle our appalling per capita emissions level, now the highest in the world.

BHP-Billiton’s position is certainly an improvement on that of other mining corporations involved in the mining and export of coal, the major source of carbon emissions from human industry. These companies, and the federal Opposition, are bitterly resisting any moves to reduce emissions that might have any adverse impact on mining industry profit levels.

However, BHP-Billiton still aims to maximise its profits and retain its position as top dog in the mining world, and its policy regarding carbon emissions pricing is entirely consistent with these objectives.

Facing up to the climate

Scientists have long predicted an increasing incidence of extreme weather events, such as the long droughts in Australia and the terrible flooding of Pakistan. BHP-Billiton knows that as the impact of climate change becomes ever clearer, public pressure for governments to tackle it will become irresistible. It is very conscious of the slump in support for the ALP and Coalition, and the rising popularity of the Greens during the recent federal elections.

It is also aware of growing concern about climate change within the corporate world. In order to prevent the financing of new coal-fired power stations in Australia, Greenpeace has indicated that it intends to utilise its tactic of pressuring banks to refuse funding for socially-obnoxious projects, which it used with remarkable success in the campaign to prevent construction of the infamous Gunns pulp mill in Tasmania.

BHP-Billiton is therefore intent on moving quickly to protect its long-term business interests, both within Australia and overseas. Regarding international agreement on carbon emission pricing, Kloppers commented: “We do believe that such a global initiative will eventually come, and (that) when it does, Australia will need to have acted ahead of it to maintain its competitiveness.”

He then spelt out the company’s preferences that the Australian government should “let the market work” by returning carbon emissions taxation money to companies that reduce their emissions level.

Save the mine, lose the world

BHP-Billiton’s interests lie in reaching a favourable carbon tax agreement with the Gillard government (which has promised to protect the coal industry), winning the support of the independents in order to get the agreement passed in parliament’s Lower House, and presenting it to the recently-elected Greens senators as a fait accompli when they take their places next July.

The company wants an agreement that would protect its enormous investments in coal and natural gas, energy sources of potentially vast profit. It will still seek to persuade governments to take as long as possible in reducing the use of coal for power generation, to replace coal with natural gas (which produces lower emissions), and to refrain from the predominant use of renewable energy sources, which are not commodities, being given by nature free of charge.

Kloppers acknowledged that alternative energy sources including geothermal energy, wind power, hydropower and natural gas, could contribute to Australia’s energy requirements.

However, he issued a veiled threat against any substantial reliance on them as energy sources, commenting: “Importantly, the government must avoid using (carbon taxation) funds for general spending or to back ‘winning technologies’ – the outcome of which will likely be disappointing emissions reductions and slower growth”.

Regarding the type of pricing mechanism, Kloppers observed that the government could utilise “a combination of a carbon tax, land use actions and a limited trading scheme (for example, for stationary electricity production only)”.

However, the company’s interests do not lie in the introduction of any pricing mechanism that would rapidly and adversely affect the company’s profit levels – for example the Danish government’s carbon tax, which resulted in a nine percent reduction in emissions over 22 years, or the US acid rain emissions trading scheme that achieved a 50 percent cut in emissions over 17 years.

The climate struggle

Klopper’s statement is highly significant in that it represents a monumental break in the ranks of the minerals industry. That industry has vigorously opposed the introduction of any carbon pricing initiative or new minerals taxation, and was instrumental in the replacement of the leaders of each of the two biggest Australian political parties when they threatened to do so. The industry was a major factor in Australia’s negative role at the disastrous Copenhagen climate conference.

The need to reduce greenhouse gas emissions is terribly urgent. Rising temperatures are leading to the thawing of the earth, threatening the release of subterranean methane over the vast permafrost regions of northern Europe and Russia. The mass release of methane at the end of the Permian period resulted in a 10 degree increase in global temperatures over 20 years, which almost wiped out life on earth. The planet now faces the same threat of mass extinctions of species.

The change in BHP’s position regarding carbon pricing is certainly welcome. However, the company is definitely not intent on reducing Australia’s emission of greenhouse gases, particularly carbon dioxide, from our coal-fired power stations or from the company’s own industrial plants, if this means endangering its profit levels.

The mining, electrical and high-energy industries which are primarily focused on maximising their profits by promoting the continued use of coal as the world’s dominant energy source remain the major obstacle to Australia meeting its climate change responsibilities.  

Next article – Wave Hill still fighting for equality

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