Full exposure to a carbon cost without appropriate transitional measures could jeopardise Australia's pulp and paper industry with many facilities either closing down or becoming unprofitable if the carbon cost reaches AU$50 per tonne, according to the Australian plantation products and paper industry council (A3P).
A3P has commissioned an independent report to quantify and illustrate the status of the pulp and paper industry as an emissions-intensive trade-exposed industry as well as conducting a survey of the possible impact on facilities.
Under the Australian Government's proposed Carbon Pollution Reduction Scheme (CPRS), transitional measures will be put in place for industries that are deemed to be emissions-intensive trade-exposed in order to smooth the transition to a low-carbon economy and prevent carbon leakage to countries where there are no constraints on emissions, the A3p says.
Key conclusions from the A3P report are that without transitional measures:
- A carbon cost of $30 per tonne of CO2 equivalent would lead to the closure of 15 per cent of Australia's pulp and paper manufacturing facilities.
- A carbon cost of $50 per tonne of CO2 equivalent would increase the level of closures to more than 30 per cent of Australia's pulp & paper facilities.
- A carbon cost of $30 per tonne of CO2 equivalent wipes out the likely future investment that would have been expected in 25 per cent of Australia's pulp and paper facilities.
- A carbon cost of $50 per tonne of CO2 equivalent means that less than 30 per cent of Australia's current pulp and paper facilities are profitable and could be expected to keep operating in the medium term.
Richard Stanton, CEO of A3P called on the Government to review its proposed treatment of emissions-intense, trade-exposed to ensure that investment in the pulp and paper industry does not leak to other countries.
