Carbon Pollution Reduction Scheme 'flawed'

The government’s proposed emissions trading scheme in its current form would create billions of dollars in financial churn while increasing greenhouse gas emissions by motorists, Caltex Australia Limited has told a climate change inquiry.

Caltex’s Manager Government Affairs and Media Frank Topham appeared at the Senate Select Committee on Climate Policy’s inquiry in Sydney to speak on the federal government’s proposed Carbon Pollution Reduction Scheme (CPRS).

He said that while Caltex supported an emissions trading scheme, the proposed CPRS was flawed in relation to its treatment of motorists and emissions-intensive trade-exposed industries, and its timing should be reviewed given the current global economic conditions.

“Caltex would have to purchase permits for its customers’ emissions, estimated to be about 42 million tonnes in the first year of the CPRS, then pass those costs on to motorists,” Topham said.

“However, the government has proposed permanent excise reductions for private motorists and other small consumers, meaning there is absolutely no incentive for motorists to reduce their emissions. In fact, the CPRS would actually increase emissions from petrol for the first three years and several years beyond that time.

“There would be no overall reduction in emissions from petrol until 2025. Over this period, petrol suppliers will have purchased $20 billion in permits and charged the costs back to customers. That’s financial churn for no environmental benefit.”

Instead, Caltex believes motorists and some commercial fuel users should be removed from CPRS coverage, with a focus instead placed on complementary measures. These include voluntary targets for carbon emissions from vehicles, government incentives for consumers to purchase low-emissions vehicles through a cash-back scheme, funding for cleaner vehicle technology together with greater reliance on alternative fuels, and investing further in public transport.

Caltex also believes the competitiveness of emissions-intensive, trade-exposed industries, like oil refining, needs to be fully maintained to ensure their ongoing viability.

“Caltex proposes that activities such as oil refining (where prices are completely aligned with import parity) should receive a free allocation of permits to 100% of emissions until all significant import competitors such as Singapore refineries face equivalent carbon costs,” Topham said.

The Caltex submission recommended that any scheme be delayed to allow for proper design and consideration by Parliament and until economic conditions return to normal.