Caltex calls for handout under emissions trading

An emissions trading scheme is unclear and threatens to "fundamentally" change energy supply and demand, Caltex claims

The Rudd Government’s proposed emissions trading scheme is unclear and threatens to "fundamentally" change energy supply and demand, according to Caltex.

In a speech to the Committee for Economic Development of Australia (CEDA) in Sydney yesterday, Caltex Managing Director and Chief Executive Des King raised the prospect of higher prices and threats to oil refiners’ bottom line under emissions trading.

King called on the Government to renege on its commitment to force oil refiners to pay for their carbon output, saying it is not fair when international companies are exempt.

"What the refining industry needs is a level playing field, not an emission trading scheme that imposes a large carbon cost on Australian refineries while our international competitors bear no carbon costs," he says.

"High costs for carbon emission permits would threaten the viability of the Australian oil refining industry."

While he says oil refineries are equipped to provide liquid fuel to 2050, King believes Australia will be hit hard by the twin factors of emissions trading and demand in the next 20 years.

"Carbon pricing and other regulation to address climate change will fundamentally reshape energy supply and demand," he says.

"In addition, oil demand will most likely outstrip conventional oil supply within 20 years, leading to higher oil prices or even oil price shocks if supply is very tight."

King says other industries will also be severely affected by a carbon reduction scheme, such as trade-exposed industries.

He says the Government’s proposal to hand out 20 percent of permits free is only half of what trade-exposed industries need to have to meet their emission levels.

King also wants the Government to explain how the $10 billion expected to come from introducing emissions trading will be spent.

The Rudd Government plans to introduce its Carbon Pollution Reduction Scheme in 2010. The Opposition wants the scheme pushed back, claiming it is being rushed and it will have a significant impact on the Australian economy and businesses.

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