Aussies waking to the rort?
Glenn Milne | August 17, 2009
Article from: The AustralianNow greedy bankers fuel a looming EFChttp://www.theaustralian.news.com.au/st ... 35,00.html
THE endgame of the Senate politics of climate change is almost upon us.
Kevin Rudd is now seeking to maximise negotiating pressure on Malcolm Turnbull to pass his emissions trading scheme by de-coupling his Renewable Energy Targets bill. But just as he does, some cracks are staring to appear in the support base that has so far sustained him in this debate.
By this I mean the broadly sanguine position adopted by business in response to the prospect of an ETS. Rudd and his Climate Change Minister Penny Wong in their sustained assault on Turnbull have consistently evoked the mantra of "business certainty". By this they mean that with a policy response to climate change inevitable it is manifestly in the interests of business for government to get on with the job sooner rather than later and Copenhagen bedamned.
Rudd and Wong have so far been supported in this objective by the peak group representing business, the Business Council of Australia.
When the government called for submissions to provide the basis for its green paper on the Carbon Pollution Reduction Scheme - the basis for the ETS bills currently before the Senate - the BCA responded by saying it supported such a scheme, with only a caution that greater compensation would be needed to stop some companies moving offshore.
And when Turnbull produced his own model last week, the BCA was one of the first groups out of the box warning that the Frontier study's 10per cent commitment, funded by offshore permit purchases, would "bring with it a substantial cost thatwill impact on business operations and particularly government revenues".
It was statements such as that from business that helped legitimise Wong's jarring declaration that the Frontier study was less of a "hybrid" model than a "mongrel", unnecessarily aggressive language in too quick time which the government's weekend decision to de-couple the RET legislation from the ETS suggests it may now collectively regret.
But what's now becoming clear is that the BCA is not speaking with one voice; beneath the surface Babel is threatening to break out.
How do we know this? Because of the circulation this week of an internal analysis by some members of the council who have been increasingly angered by the peak group's acquiescence in the face of Rudd's climate-change plans.
What's driving this rebellion is the purest of all motives from where the BCA sits: profit. But the internal critics of the BCA aren't the ones who stand to make them. Their complaint is that the pro-ETS stance of the BCA is being unduly influenced by those who stand to make the mostmoney out of an ETS coming into law.
The analysis suggests that it is the skewing of the current BCA membership towards financial and legal institutions that is driving it into the arms of the Rudd government.
First the paper's assumptions: while it is impossible to know the exact emissions profile of every BCA company because companies are not yet required to publicly report their emissions, the paper's estimates are based on the emissions profiles of different industry sectors from the government's own carbon pollution reduction green paper. The BCA has 109 members in total. Of these, 35 have definite carbon permit liability. That is, they will have to buy permits under the government's CPRS. Seven have a likely carbon permit liability and 67 have no permit liability. It's the 67 who are at issue here.
The background paper says that of the 42 companies with a liability or likely to have a liability, 25 have raised public concerns either directly (through green paper submissions) or through their business lobby. Four support the CPRS and 13 have said very little publicly.
The thrust of the analysis is this; that the BCA's heavy population of banking, finance insurance, services and legal industries only has a combined emissions profile of about 2 per cent of national emissions.
The breakdown is: banking, non-bank finance, insurance sector and financial services each account for less than 0.1 per cent of national emissions. The legal, accounting, marketing and business management sector accounts for 0.8 per cent of national emissions.
When it comes to the CPRS, says the paper, these 67 companies out of the BCA's 109 members in these areas simply out-vote the remaining members most affected by the ETS: the miners and manufacturers.
And it is these 67 companies that stand to make the most money out of the government's scheme. An example, according to the author of the report, who for obvious reasons prefers to remain anonymous: KPMG is charging companies a minimum $250,000 to audit the emissions intensity of individual facilities captured in the CPRS net. Of which there are many hundreds.
The point as well as the allegation is clear, and it is made from within the group's own membership: the peak body's stand on the ETS has been driven by considerations of greed rather than good policy or national interest considerations.
And if you don't think it is these sorts of players who stand to make a poultice out of an ETS, don't rely on my clandestine interlocutor from the BCA. Just turn to the latest report from the Committee for Economic Development of Australia released last week.
In it CEDA's director of research and policy, Michael Porter, warned there was "a very threatening prospect that emissions trading would create a vast and uncertain set of derivatives trades based on carbon debts and credits".
Derivatives. Remember them? Porter certainly does: "A carbon bubble", he says, could eventually dwarf the recent GFC problems.
He goes on: "The trades will be vast because the big polluters won't be trading (greenhouse gas) emissions but carbon emission derivatives under a poorly understood and infant policy: the CPRS.
"If Wall Street's manipulation of debt and derivatives gave us the global financial crisis, the emissions trading (system) is certain to give us much worse."
It would be interesting to know what Glenn Stevens thought of this. But he hasn't been given the opportunity, apparently. In a little-noticed exchange with Coalition frontbencher Scott Morrison, at hearings of the House Economics Committee on Friday, Morrison asked the Reserve Bank governor if the government had consulted the RBA on theETS.
Stevens: "As far as I know, there was no formal consultation with uson how to design this scheme orany other measures to address climate change."
So there you have it. From the point of view of the BCA doubters, just another hole, rather than brick, inthe ETS wall.
Apologies to Pink Floyd.