Victoria's Biggest Polluter paid Billions to pollute and they want more!

http://www.theage.com.au/environment/climate-change/revealed-polluters-f...

Revealed: polluters' fear tactics on climate
MARIAN WILKINSON AND FLINT DUXFIELD
November 6, 2009

"Older, well-capitalised and deeply entrenched industries" are dominating the debate on climate climate change, the report has found. Photo: Peter Braig

BIG greenhouse polluting companies around the world, employing thousands of lobbyists, are exerting heavy pressure on governments to weaken climate change laws at home and slow progress on an international climate agreement in Copenhagen, a global investigation reveals.

In Australia, 20 companies who have already won the most concessions from the Rudd Government's emissions trading scheme employ 28 lobbying firms with well over 100 staff, many of them former politicians, political advisers or government officials.

In the US there are more than 2800 climate lobbyists, five for every member of Congress, an increase of more than 400 per cent over the past six years. From Washington to Canberra and New Delhi to Brussels, companies and their lobbyists are often raising the same widespread fears about jobs, power blackouts and economic losses unless governments weaken commitments to combat climate change.

The report by the International Consortium of Investigative Journalists examined the climate lobby in eight countries including the US, Canada, Australia, India, Japan, China, Belgium and Brazil. It relied on more than 200 interviews, lobbying registers and political donation records. The Herald collaborated in the investigation for Australia.

The findings come as hopes are fading that a binding climate change agreement will be reached at Copenhagen next month.

This week African nations staged a day-long boycott of UN climate talks in the lead-up to the summit, demanding that rich countries make more ambitious pledges to cut emissions. And the President of the European Commission, Jose Manuel Barroso, bluntly told reporters: ''We are not going to have a full-fledged binding treaty - Kyoto type - by Copenhagen''. Instead, a political agreement is being flagged with a treaty not being concluded until at least next year.

The consortium's investigation found big greenhouse-polluting industries in all countries, developed and developing, are pushing back against ambitious targets to cut national emissions.

In China, the Government's plans to boost renewable energy has not been embraced by many of the nation's power companies which rely on coal. Only one of the top power companies, all state-owned, will meet the Government's goal to get 3 per cent of their power from renewable energy by 2010.

In the US, chief executives of coal and power companies have hosted a public campaign against climate legislation which is being blocked in the Senate. The millionaire coal chief Don Blankenship appeared at a ''Friends of America'' rally with country music stars and prominent Fox TV host Sean Hannity. The rally was designed to warn Americans ''how environmental extremists and corporate America are both trying to destroy your jobs".

In Europe, ambitious targets to cut greenhouse emissions were significantly reduced after lobbying by heavy industries protesting they would face unfair competition from the developing world.

Industry lobby groups have also carved out a permanent role at the UN talks as representatives of the so-called BINGOS - Business and Industry Non-Government Organisations.

While lobbyists for the renewable energy industry, the carbon traders and environmental groups are also becoming more prominent, the report finds that their voices ''can barely be heard above the clamour of the older, well-capitalised and deeply entrenched industries that have been lobbying on climate change for more than 20 years''.

http://www.theage.com.au/business/browning-down-australia-20091106-i2ay....

Browning down Australia
MARIAN WILKINSON, BEN CUBBY AND FLINT DUXFIELD
November 7, 2009
NOT long after Oleg Deripaska was named Russia's richest man for 2008, his company's Australian chairman wrote to the Department of Climate Change in Canberra with a dire warning: the oligarch's considerable investment in Australia was being threatened by the plan being advanced by the Rudd Government to tackle global warming.

Deripaska had built his fortune - estimated then at more than $US28 billion - by becoming the major shareholder in RUSAL, an aluminium empire that reaches around the globe from Siberia to Australia. With mining giant Rio Tinto, Deripaska owns the Queensland alumina refinery in Gladstone, a plant that employs 1050 workers and each year churns out about 4 million tonnes of alumina - a white grainy substance, like fine table salt, that is the essential ingredient in aluminium. Like aluminium, alumina is made by using vast quantities of electricity. And in Gladstone, electricity comes cheaply - from burning black coal that spews greenhouse gas into the atmosphere.

In his climb to the top, Deripaska has survived a stand-off with the Russian mafia, developed a close friendship with Russian Prime Minister Vladimir Putin and fought the US State Department when it revoked his visa. Characteristically, he also managed to hire as RUSAL's local chairman one of Australia's cannier lobbyists.

A decade ago, John Hannagan shielded the Australian Aluminium Council from climate change laws. By last year, his extensive industry experience was at work for Deripaska's refinery, warning the Government that its plans to cut Australia's greenhouse gas emissions would be ''destructive for jobs, destructive for existing and new investment, and destructive in terms of global energy efficiency''.

It is a pattern being played out around the world. Governments rich and poor are coming under pressure from an increasingly vocal, globally organised industry lobby, united by the message that cheap energy and other carbon-intensive activities, such as deforestation, fuel economic success.

Ministers looking to forge a Copenhagen climate change agreement next month are confronting a global backlash built on a consistent message: be afraid that a cherished way of life may be lost, that living standards won't again improve.

In Australia, Hannagan is one of scores of influential lobbyists, business executives and union leaders who have fought over the past year to weaken or ''brown down'' Australia's first comprehensive plan to cut greenhouse gas emissions - the carbon pollution reduction scheme. Having failed to pass the Senate in August, the plan is set to return to the upper house this month - and lobbying has resumed in earnest. The centrepiece is an emissions trading scheme that would put a price on carbon emissions in Australia for the first time.

As the hottest and driest inhabited continent, Australia is particularly vulnerable to the effects of climate change. Without a global effort to rein in greenhouse gases, the CSIRO warns that more variable rainfall and extended drought could slash food production by almost half in the Murray-Darling Basin, Australia's bread basket.

But not all Australians are gripped by the urgency for change.

Australia's heavy reliance on cheap, coal-fired electricity makes it per capita the world's highest greenhouse gas emitter. Yet cheap power underpins our enviable national wealth. Australia is the world's largest coal exporter, a trade valued at $55 billion last year. As the nation grapples with the question of who should bear the cost of cutting emissions, some of the biggest polluters are arguing it should not fall too heavily on them.

An Age analysis of government registers of lobbyists reveals that about 120 companies potentially affected by climate change laws employ firms with a total of more than 300 lobbyists. The top 20 companies expected to receive the most government assistance under the proposed emissions trading scheme between them employ 28 lobbying firms. Nearly half the lobbyists working for these firms are former politicians, senior government bureaucrats or political advisors.

They include: John Dawkins, a former federal treasurer, now a director of lobbying firm Government Relations Australia, which represents global oil company BP and US coal company Peabody Resources. Rio Tinto's executives have also joined the fight against the Rudd Government's plans, along with senior figures from the world's wealthy coal, gas, aluminium and power companies.

Government assistance to the 20 biggest greenhouse polluters affected by the scheme will be about $11.7 billion, according to a study by RiskMetrics for the Australian Conservation Foundation. It estimates that over the first five years of the scheme, Rio Tinto will get $2.7 billion and US giant Alcoa $1.7 billion. Other top 20 recipients include Shell, Chevron, Woodside, BHP Billiton and Caltex.

''I think the aluminium sector has done particularly well,'' says Paul Toni, a climate campaigner for environmental group WWF. ''I think it was excessive.''

The aluminium companies make much of the 13,800 jobs the industry supports. This is the kind of concession-making - as the emissions trading scheme bill goes back to the Senate - that has Government supporters in the environmental movement on the verge of walking away.

Bearing the brunt of much of the industry lobbying is Climate Change Minister Penny Wong. A lawyer who worked with the forestry and construction union before becoming a senator, Wong argued forcefully with many corporate chief executives in initial negotiations over the climate bill. The scheme, she said, had to be credible and financially responsible. The more concessions that went to one industry, the less compensation there would be for households and other businesses.

But the pressure intensified last year when the global financial crisis brought job losses. Paul Howes, the Australian Workers Union federal secretary representing aluminium, steel and gas workers, echoed industry arguments that jobs would be lost without the planet being saved. ''The global financial crisis was my greatest ally,'' he told colleagues.

The emissions trading scheme bill needs Opposition support in the Senate, with Opposition Leader Malcolm Turnbull under intense pressure from within to insist on more concessions for business, although at the same time promising to cut greenhouse gas emissions.

An emissions trading scheme is built on the premise that companies pay to pollute, buying a permit - expected to cost about $25 after July 2012 - for every tonne of carbon dioxide they release into the atmosphere. Companies such as Rio Tinto and Alcoa say they will be disadvantaged because overseas rivals won't pay for emissions, even though both have American and Canadian aluminium plants. They say the Chinese are their greatest threat.

In response, Australia has offered aluminium smelters and other big polluters nearly 95 per cent of their permits free for the first five years to ease adjustment and to save jobs.

Department of Climate Change secretary Martin Parkinson, says companies such as aluminium producers would pay just $2 a tonne in 2012. Compare this to the price of aluminium: $US3300 a tonne on the London Metal Exchange before the global financial crisis, and still trading at about $US1900 ($A2090).

Wong has tried to hold the support of environmental groups by promising that the Government will gradually reduce the concession. The Government also made a qualified offer to put a tougher limit on Australian greenhouse emissions for 2020. If the United Nations climate talks in Copenhagen next month agree to cut global emissions, Australia undertakes to cut emissions to a level 25 per cent less than that of the year 2000. Without an agreement, Australia's promise is for a 5 per cent reduction.

But critics say most of the cuts will not be made by companies within Australia. The Rudd Government's emissions scheme would permit business and government to buy unlimited carbon permits on the world market. Australians are most likely to be paying people in countries such as India and Indonesia to cut greenhouse emissions for them.

Wong denies that Australia's cuts will mostly be bought overseas. But her argument relies on measuring the proposed 2020 cuts against a big theoretical increase in Australian emissions: that is, the assumption that nothing is done to reduce emissions before 2020.

Some environmentalists argue that rich countries must set an example by making their cuts at home. ''You have got to walk the talk,'' says WWF's Paul Toni. ''We can't credibly go overseas and say that we

will reduce emissions but in fact we outsource the whole lot to other countries.''

Coal-fired power stations - big emitters of carbon dioxide, particularly in Victoria, where 90 per cent of electricity comes from brown coal - are expected to stay in business in Australia well beyond 2020. Their owners say the trading scheme will penalise them. They want more than the $3.5 billion compensation offered by government. Leading this argument are foreign owners of Victorian generators.

CLP Group, formerly China Light and Power, is chaired by Hong Kong's fourth-wealthiest man, billionaire Sir Michael Kadoorie. The company's Australian arm, TRUenergy, operates Yallourn, one of the heavy power-station polluters. TRUenergy chief executive Richard McIndoe kicked off the campaign by writing to Victorian Premier John Brumby and Prime Minister Kevin Rudd, warning of ''supply failures'' if power companies don't get more help.

Most of the $3.5 billion on offer would go to foreign-owned generators. The giant UK-based International Power - operator of Hazelwood, Australia's biggest greenhouse polluting generator - would get about $1.15 billion. Yet, International Power's Australian chief, Tony Concannon, has asked Rudd to triple the assistance and suggested the Government buy Hazelwood.

Generators burning the more polluting brown coal complain their asset values will fall. Combined with big debts, banks are wary of refinancing them without more free permits, they say. Indeed, the credit squeeze could force closures. In June, the National Generators Forum wrote to all MPs painting a bleak picture of the ''systemic failure of the electricity market''. Without $10 billion more compensation, some generators would be left ''technically insolvent'', the letter said.

Rudd has dismissed the claims of threats to energy security. But wide media coverage of the generators' warning persuaded him to set up a taskforce chaired by Terry Moran, head of the Department of Prime Minister and Cabinet. It hired Morgan Stanley to examine the financial records of several generators and report back on their claims of insolvency.

The merchant banker's appointment delighted generators. As one director put it: ''The guys at Morgan Stanley who did that report have bought and sold more power stations in the country than anyone.'' Despite Wong's insistence that the generators' compensation was ''appropriate and well targeted'', media leaks suggest the review backs arguments for more compensation.

Generators' profits for the first six months of the year, meanwhile, went relatively unnoticed. Earnings from CLP's Australian coal-fired generators were up 77 per cent to $29 million, while International Power's Australian profits jumped 71 per cent to $212 million.

In August, executives from the world's largest coal companies met behind closed doors. After weeks of debate, America's Peabody Resources, British-South African giant Anglo-American, Swiss-based Xstrata, Australian-British BHP-Billiton and Rio Tinto and other companies unanimously agreed to fund a multimillion-dollar attack on the Rudd Government's proposed emissions trading scheme treatment of coal.

Under the banner ''Let's cut emissions, not jobs'', the Australian Coal Association is churning out big coal's message on local television and radio and in newspapers. It warns workers the scheme will close mines and ''cut thousands of jobs'', slashing property values and causing families to abandon coal towns. A website directs workers to email local MPs to protest at the scheme.

The campaign is running in coal-mining towns in Queensland and NSW, although Ralph Hillman, head of the Australian Coal Association, denies the industry is deliberately targeting Labor marginal seats. ''It so happens one of my advisers noted that half of the seats may be marginal, but we are not targeting marginal seats. We are not targeting Labor seats.''

The industry's complaint is with the Government's plan to include methane released by coal mining in the proposed trading scheme. Methane is one of the most potent greenhouse gases, and it makes up a significant 5 per cent of Australia's total emissions. Under the scheme, the owners of methane-emitting - or ''gassy'' - mines will be forced to buy permits for these emissions if they want to continue mining.

The Government has promised the coal industry $750 million in compensation for the most gassy mines. But Wong's assistant minister, Greg Combet, a former trade union leader and an engineer and economist by training, says most coal companies won't be significantly affected by the proposed legislation. Half the industry, he says, will pay 80 cents or less per tonne of coal for their emissions. ''Given that coal is currently selling for between around $70 and $150 per tonne in exports markets, it is simply misleading to suggest, as some have done, that carbon costs of this magnitude will lead to decisions to close mines.''

Hillman rejects that argument, saying one company has told him it will be forced to pay up to $7 per tonne. The coal companies want the same level of free permits granted to the gas industry, which under the plan will get about 65 per cent of its emissions covered.

Australia's leading environmental groups, meanwhile, warn Rudd they will withdraw support for the trading scheme if the coal and power industries get more compensation. ''It's not effective or responsible to give windfall gains to booming coal miners or to give billions extra to businesses who bought brown coal-fired generators knowing a carbon price was coming,'' says the Climate Institute's John Connor. If companies keep avoiding actions that reduce pollution, he says, the nation will face a much higher cost of doing so in future.

All this leaves Wong with an increasingly tough choice: deliver more compensation or persuade the Opposition to back its carbon pollution reduction scheme, and soon. ''The chance for us to avoid any climate change at all is gone - it is lost to us,'' she told senators in August. ''What we do have is a window to lessen its impact. We have a window to reduce the risk, and this is a window of opportunity which is closing.''

Marian Wilkinson, Ben Cubby and Flint Duxfield are Fairfax writers.

This story is part of The Global Climate Change Lobby. Fairfax Media, owner of The Age, collaborated with reporters from eight countries in the report for the International Consortium of Investigative Journalists. See the full investigation at www.icij.org, and full lobby register details at theage.com.au.

Starting in July 2009, the International Consortium of Investigative Journalists fielded an eight-country team of reporters to uncover the special interests attempting to influence negotiations on a global climate change treaty. Relying on more than 200 interviews, lobbying and campaign contribution records in a half-dozen countries, and on-the-ground reporting from Beijing to Brussels, our team pieced together the story of a far-reaching, multinational backlash by fossil fuel industries and other heavy carbon emitters aimed at slowing progress on control of greenhouse gas emissions. Employing thousands of lobbyists, millions in political contributions, and widespread fear tactics, entrenched interests worldwide are thwarting the steps that scientists say are needed to stave off a looming environmental calamity, the investigation found.

http://www.publicintegrity.org/investigations/global_climate_change_lobby/