As negotiations between the Government and the Opposition come down to how much compensation the biggest polluters will receive, some of Australia’s biggest polluters continue to say one thing in public about the CPRS and tell their shareholders another.
In June the Australian Conservation Foundation and the Australian Climate Justice Program wrote to the ACCC with a long list of example of claims made by Australia’s biggest polluters about the dire impact of the CPRS on their balance sheets and even their continued existence, none of which featured in statements to shareholders and investors.
The letter prompted an extraordinary attack in The Australian suggesting it bordered on defamation.
Undeterred, the ACF and the ACJP have continued to monitor what companies like Rio Tinto, Woodside and Boral have been saying in public and to investors.
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The good news is that, following the ACCC complaint, Boral and Bluescope Steel have improved their market disclosures. Boral made more detailed statements in its annual report and at its AGM, particularly in relation to the impact of the CPRS on its subsidiary Blue Circle Southern Cement. Bluescope made more detailed statements in its annual report and ASX releases.
Caltex, despite public expressing concerns about the impact of the CPRS on its profitability, has not discussed the issue in any market releases.
And in the last three months, Rio Tinto and Woodside have continued to publicly claim that the CPRS will inflict significant damage on them, without any similar advice to shareholders.
In October, Rio Tinto claimed the CPRS would cost it $3b over ten years and cost the coal industry $14b over the same period, such that its Hunter Valley coal operations would no longer be competitive. But its statements to investors in June and August refer only vaguely to the impact of cost increases:
Increasing regulation of greenhouse gas emissions, including the progressive introduction of carbon emissions trading mechanisms and tighter emission reduction targets, in numerous jurisdictions in the Group operates is likely to raise energy costs and costs of production to a material degree over the next decade.
The statement went on to say that the White Paper version of the CPRS, which has since been significantly modified in favour of big polluters, “is likely to give rise to material costs for affected installations and the Group is undertaking a comprehensive programme of works to prepare for the scheme.”
Nothing about shutting coal mines or billions of dollars in costs.
Like Rio Tinto, Woodside has claimed it would suffer “billions of dollars” in extra costs from the CPRS, telling a Senate Committee in July “because of the CPRS, natural gas exports are likely to be half relative to the potential by 2030.”
With a massive 50% slashing of export potential, presumably Woodside would have warned investors about the impact of the CPRS? Woodside has made no statements to investors since June about the CPRS, not even a fortnight ago when it raised US$700m from American investors.
With agriculture — responsible for around 15% of Australia’s greenhouse emissions — now certain to be excluded from the CPRS, Penny Wong and Ian Macfarlane are negotiating over the far more difficult issue of additional compensation for big polluters — including the Coalition’s demand that “fugitive emissions” be excluded from the scheme, which would directly benefit Rio Tinto.
The fate of negotiations remains unclear; despite optimistic noises in the weekend press, moderate Coalition sources are genuinely unsure about whether the Government will move far enough on additional compensation to satisfy Coalition holdouts.
Based on their advice to investors, big polluters will enjoy a windfall even on the current CPRS model.