Paying the polluters

The idea that polluting businesses should be given compensation based on their historic pollution is a curious one. Well, curious is a generous word for it.

The Australian Conservation Foundation released a report this week which showed that, based on the model outlined in the federal Government’s Greenpaper on emissions trading, Australia’s biggest polluters would receive handouts in the order of several billion dollars in the first year alone.

According to the report, the Aluminium sector alone could qualify for around $1billion in the first year, and if the black coal industry qualifies, they could be recipients of over $1.5billion. Australia’s coal power stations (including some of the dirtiest in the world) are due to receive around $900 million in cash handouts in 2010 if the rules don’t change.

When you look at it at a company level it gets even more absurd. Rio Tinto stands to gain $489 Million in the first year and BHP $340 Million if black coal is included in the scheme. To put this in context, BHP made a whopping $17.8 billion profit in 2007/08 and, according to an article in yesterday’s Age, the 10 companies qualifying for the most compensation reap a combined $115 billion in operating profits a year.

Isn’t the whole point of an emissions trading scheme supposed to be to penalise polluting industries in order to help re-level the playing field in favour of cleaner technologies and processes? And if the justification for providing handouts to the big polluters is to stop them going to the wall, surely even a cursory examination of their capacity to pay would reveal that emissions trading is not going to make that much of a dent in their profits, let alone their viability.

Rather than giving handouts based on historical emission levels, if we take a moral viewpoint, the companies that have been polluting the most should actually have to pay more, not less, to help repair the environmental damage that they have been allowed to cause for all of these years. Given that they should reasonably have predicted the introduction of a price on carbon as early as 1990 (when the first IPCC report was released), surely they have been planning for the transition and putting some of their profits aside?

The issue of international competitiveness should be dealt with using some kind of border adjustment tax rather than corporate welfare. Given the urgency and the scale of the climate crisis, combined with the current economic instability, we simply can’t afford even more handouts for the big polluters on top of the $7.8 billion in annual subsidies to fossil fuels that the Federal Government already hand out each year in the budget.

Instead we should be using the money raised from auctioning permits to fund an urgent green jobs programme to replace coal power stations with renewable energy – and provide structural adjustment programmes for affected workers and communities.