Government plans $225,000 per job annual subsidy at Aluminium smelter

Protecting Rio Tinto’s Tiwai Point aluminium smelter from the full impacts of the emissions trading scheme will cost New Zealand $225,000 a year for every job at the smelter.

The country’s only specialist carbon market information service, Carbon News (www.carbonnews.co.nz), reports Kent Duston of Wellington-based Autonomic Consulting as saying the subsidy will cost $209 million a year.

“It would be cheaper for the New Zealand taxpayer to pay every single Tiwai Point worker and contractor $200,000 per annum for the rest of their lives to simply stay home," Duston says.

Duston bases his calculation on the $14.13m a year worth of free carbon credits Rio Tinto will get a year under proposed changes to the emissions trading scheme, plus the opportunity cost of using the Manapouri hydro power scheme to power the smelter instead of using it to replace the Huntly coal-fired power station.

He told Carbon News that he did the numbers after hearing Climate Change Issues Minister Nick Smith say during his road-show to set New Zealand’s 2020 emissions reduction target that subsidies were need to protect New Zealand jobs.

Duston said: “Anybody with access to the internet and a pocket calculator could have performed the same calculation, and I’m astounded that nobody has. We keep hearing that it’s jobs, jobs, jobs, but nobody is asking the questions about the cost of those jobs.”

In his submission, Duston says that based on a formula of 1.9 tonnes of carbon dioxide for every tonne of the 330 kilotonnes of finished aluminium the smelter produces each year, the plant has an emissions profile of 627,000 tonnes per annum.

“At the proposed capped price of NZ$25 per tonne, these emissions represent a liability to the smelters’ owners of $15.675 million per annum.

“Under the proposed changes to the ETS, 90 per cent of the emissions units would be given to the smelter free of charge, subsidising its operations by $14.13 mil¬lion per annum courtesy of the New Zealand taxpayer.”

Dustan says that the smelter’s emissions level is artificially low because it gets subsidised electricity from the Manapouri hydro power scheme.

“However, if this electricity were to be diverted to the national grid, the 850MW produced by Manapouri would be sufficient to decommission the coal-burning Huntly power station, which produces up to 15 per cent of New Zealand’s electricity.”

Replacing the emissions-intensive Huntly with Manapouri would result in a net decrease in liabilities to taxpay¬ers of $209 million per annum, made up of the non-payment of the Rio Tinto subsidy ($14 million) and the non-payment of the Huntly subsidy ($195 million),” he said.

“There are 800 staff and 130 contractors employed at Tiwai Point. The Government argues that subsidisation of the carbon emissions for export industries is necessary to protect jobs. However it is obvious that the cost of retaining these jobs is exceptionally high – a stunning $225,000 per job per annum.”

ENDS

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