The debate about whether the closure of the Norsk Hydro Kurri Kurri aluminium smelter is because of the carbon price is one of the more ludicrous try-ons by the opposition. But more importantly, it misses the point about where the aluminium smelting industry, which only employs about 5000 people but generates -- at least in normal years -- $5 billion in exports, is headed.
First to the carbon price. In 2010, the Grattan Institute looked at the level of compensation for several industries under a carbon price. Its conclusion was that an uncompensated carbon price and the winding-up of current electricity contracts would see most most of the domestic smelting industry closed and production moved, in the medium term, to more efficient and less carbon-intensive production offshore. Kurri Kurri, in particular, would become a very high-cost producer. That is, doing what a carbon price is supposed to.