Thursday, September 16, 2010

BHP cooks up some climate change policy

There are some things in politics you can expect to happen, but having Bob Brown come out suggesting he and BHP were as one on climate change policy is not one of them. 

This occurred today because the CEO of BHP, Marius Kloppers, on Wednesday at an Australian British Chamber of Commerce luncheon said he thought a carbon tax (as opposed to an ETS) was the way to go on tackling climate change, and that we need not wait for the rest of the world:

MARIUS KLOPPERS: A combination of a tax, regulations, land use actions and perhaps a limited trading system, as opposed to economically elegant but difficult-to-implement over arching system, trading system.993082-bhp-climate-change

In spite of believing that this will all start with local initiatives, we do believe that such a global initiative will eventually come and we do believe that when it does come Australia will have needed to act ahead of it coming in order to maintain its competitiveness.

The decisions that we are taking now on power production will still be with us when we get a global carbon price way down the road.

With about 90 per cent of the carbon emissions from our electricity sector coming from coal fired power stations Australia will need to look beyond just coal towards the full spectrum of available energy solutions.

This had Brown pretty excited and seemingly ready to get all cosy with the might pollutant:

BOB BROWN: It sounds very much like the Greens policy going to the election where we advocated a carbon tax, which is a simple market mechanism but with the ability to build in a carbon trading scheme if the rest of the world, if the US, China, the rest of the world goes in that direction.

While looking at the ability to use the money raised through that scheme to help re-jig the economy and re-green it, direct it towards renewable energy.

It's a very mature way to be going. The former ETS was far too weak; it didn't meet the challenge of climate change. We're now in a post election period and this follows the very strong vote for the Greens, have a mechanism for getting everybody together who wants a carbon price to get the best outcome for Australia.

And Mr Kloppers' very timely statement yesterday which is based on pure commonsense will give strength to this committee as it deliberates on the best way forward to a carbon price for Australia to turn back the threat of climate change.

Of course BHP is in no way joining the Greens hand in hand, but I don’t blame Brown for making the most of Kloppers’ statement (and he’s been around far too long to think BHP have gone green). What is more interesting is why Kloppers said it. After all, as Bernard Keane in Crikey today pointed out, in 2008 and 2009 BHP were more than happy to talk about how the ETS would ruin investment and cost jobs.

So why the about-face?

Well first off it is not one at all.

All it is is BHP smelling the breeze and realising what’s cooking in the kitchen is a price on carbon. Kloppers would have seen the comments by Windsor and his comfort with a price on carbon, he would have seen the climate change committee being proposed, he would have looked at the Greens holding the balance of power in the Senate next year and he obviously decided if there is going to be change in climate change policy then BHP had better help do some of the changing.

It’s purely a case of making sure that anything that gets done is done to your liking.

Does it mean a carbon tax is more likely now? Well no. After all the mining industry wanted a tax of profits, and we know how nicely they reacted when the Government did introduce the RSPT. For BHP it’s never a case of too many cooks spoiling the broth, because if it is spoilt they’ll be ok, and if it’s not, then at least they helped make sure it tasted they way they like it.

BHP coming out like this ensures that should the Government bring out anything not to its liking then it can take the stance of “look at us – we were in favour of a carbon tax; we’re really caring about the environment, our opposition is purely altruistic”. It would also be signalling to the ALP that it hopes the ALP will work with it to avoid the RSPT type shermozzle,. But therein lies the rub – Bob Brown may be loving BHP today, but I doubt he’ll love all the compensation BHP will be demanding.

The reaction by the ALP and the Libs was also interesting.

Julia Gillard played a softly softly response saying:

“Let's just be a little bit sensible here,” she said.

“I've just said we will have the committee to work through options. The government's policy was outlined at the election. We've always said we would need to have a price on carbon. We've always said that we would take a very clear, a very clear view about then impact on our economy and we would work through, we would work through to build community consensus.”

She’s going slow, careful she doesn't scare the horses (too careful for mine). We’ll know she is serious when she utters the same point that Kloppers made:

Carbon emissions will need to have a cost impact in order to change consumer behaviour, in order to favour low carbon alternatives. Now we all recognise that this is a politically charged subject.

No government relishes telling consumers that things need to cost more through higher and more expensive standards, double and triple glazing, and through higher fuel and energy costs, but in this case there really is no easy answer.

All of us who care about this issue need to recognise that making a difference comes at a price and it cannot be glossed over.

This is the big statement needed. A price on carbon will make products that are made through the emission of carbon more expensive. It’s the whole point. It’s why when I wrote my Julia Gillard wish-speech on climate change I had her say:

I say this to you knowing that what I am to tell you is the most obvious thing in the world, but which has for too long been avoided by all in Government: avoided out of fear.

Ladies and gentlemen, I say to you that if we put a price on carbon the cost of electricity, the cost of energy, in short the daily cost of life will increase.

The prices of all things will rise. This is unavoidable.

Why do I tell you this? I tell you it because the Australian people are not fools and I will not treat you as such.

It is supply and demand – the same economic laws which have brought the western world prosperity unparalleled throughout human history.

I hope Julia does not fall into the Rudd trap of trying to convince people that a price on carbon can be done without prices rising. And if she is coming up with a carbon tax where prices do not rise then she is proposing a dog of a policy, and she should realise this is the case.

But that is for the future; her statement today at least did affirm the desire for a price on carbon.

The reaction by Tony Abbott was as predictable as an editorial in The Australian criticising Laura Tingle: he opposed it outright:

"This idea that we here in Australia should put a big tax on our businesses and on our consumers in the absence of similar action from other countries would just put our exports at a terrible competitive disadvantage," Mr Abbott said.

"It's really up to the Government now to confirm post-election what it said pre-election, that they completely reject a carbon tax."

So Abbott would have Gillard reject outright an idea which the CEO of the world’s biggest mining company says we should be undertaking. Seriously.

There are essentially two ways to go about being an opposition leader – the Rudd way and the Abbott way. Were Rudd in Abbott’s current position he would be meeting with Kloppers, discussing issues, coming up with some sort of understanding, in fact doing everything he could to make it look like he was the sensible, consensus maker.

The other way is Abbott’s – oppose everything, always.

Abbott did try the Rudd way a bit during the election, when he had discussions with Nauru. But it was still just opposing the ALP; the Rudd way would have been to get on the blower to East Timor and see if there was anything he could do to help.

It’s the same with the NBN – Abbott has sent Turnbull out to destroy it, whereas he would be better off co-opting it and taking such carriage of it that the Government would begin to look foolish not to accept some of Turnbull’s “tweaks” – tweaks which would in actual fact completely change it and make it the Liberal’s policy. Anything Turnbull suggests now about the NBN will be viewed through the prism of his wanting to destroy it – even any policy they come up with will be viewed as an opposing policy rather than a “here let us do it, we’ll do it better” policy.

And I know you might suggest that Abbott did very well with his strategy, and yes you would be right.  The thing is: Abbott got a 2.45% swing and didn’t win Government; Rudd got a 5.44% swing and won by 18 seats. The Rudd strategy can’t be all bad…

The carbon tax issue still has a lot of traps for the opposition, especially now Malcolm Turnbull is back in the fold. To show just how much trouble a climate change policy could be for Liberal Party unity here’s a tweet by Turnbull this morning in reaction to Kloppers’ speech:

Very thoughtful speech by Marius Kloppers, BHP CEO, on climate change policy

In contrast, here is a tweet by Greg Hunt in response to Gillard’s pretty soft response to the speech:

About to do a doorstop on Gillard walking away from her pre-election promise not to impose a carbon tax

Not exactly as one.


chrispydog said...

And who'd have thought, just a few weeks back, that Abbott was about to be wedged on a carbon price by the CEO of BHP?

Delicious irony, or what?

lyn said...

Hi Grog

Thankyou for a fantastic piece Grog, we can't manage without you,
writing for us.

'Anything Turnbull suggests now about the NBN will be viewed through the prism of his wanting to destroy it "–

I agree see, Abbott can't hold his tongue, punch, punch, say no to anything, watch him get into trouble with the NBN and the price on carbon.

Cheers Lyn

Nicholas Gruen said...

I get the same feeling about this policy that i had about the Henry tax review. progress needs to be made so that a carbon price can be introduced and then gotten over by the next election. so if Julia wants to retain the appearance of that consensus building well and good, but some kind of carbon price needs to be introduced so that it can all be done and dusted - and, to change the metaphor - digested before the next election. That mens it has to come in preferable a year or so before the next election.

Anonymous said...

One suggestion: Don't under-estimate the wisdom of people who work in mining companies. Many are scientists (and engineers) with an economic driver. They get climate change and they get business.

BHP Billiton embraces efforts to minimise carbon emissions (look at their sustainability policies). Comments today are not out of the blue. However, don't forget that they also mine another energy commodity. A carbon tax will enhance the profitability and feasibility of full exploitation of this country's reserves of that commodity.

Taking off the cynical hat: Marius Klopper is a smart man. He isn't talking emotionally. He is talking logically. Unfortunately there is way too much emotion in the climate change discussions in parliament and through the media. It is like it is spiritual thing yet it is serious like the ozone hole that people believed in!

Greg Jericho said...

I agree Nicholas, if this is still being fought at the next election there will also be the view by many that the ALP just never does anything - they can't go to the next one promising to do something... again.

Anon - I am sure Kloppers is smart, and am sure lots of people working for mining companies get climate change. My cynicism is based on the way mining companies - and BHP was at the forefront - did all they could to bring down the ALP.

Anyone who doesn't view comments made by the CEO of BHP on any issue first through the prism of his wanting to do the best for his stockholders is just being naive.

He may very well want a carbon tax - in fact I am sure he does - and he'll want it at the price that is best for BHP's profit. Afterall, that is his job.

longfulan said...

Is the Coalition becoming increasingly irrelevant?

PeterH said...

I agree that any climate change legislation – carbon tax or ETS –  needs to be ready for approval very early in the life of the new senate, otherwise it won't be bedded down before the next scheduled election. The 'great big new tax' line needs to be neutralised, at least in the short term.

I think Kloppers is not only talking to the government with this – he is also suggesting to his shareholders that the golden goose of coal mining will not be around forever. Perhaps BHP Billiton will be broadening its range of interests.

Thanks Grog for another great piece.

Alistair Baillieu-McEwan said...

Perhaps I'm too cynical nowadays but I'll just point out that the big miners have now got their very own "Minister for the Mining Companies" (Gary Grey from W.A whose nominal role is Minister of State).

Andrew Elder said...

Why aren't the Liberals demanding tax cuts to offset these price rises? That would make the big tax bogey a potent weapon without quibbling about AGW.

Sam said...

The anger that is being expresses over Kloppers raising the carbon tax topic at a time when it wa below the horizon is revealling. The journalists from Foxnews are apoplectic.
The ALP is caught on the hop, the Coalition is dumbfounded.
For their own reasons, no one wants to go there.
Maybe this is why this topic is back on the agenda.

the bogan whisperer said...

these kloppers comments are just another communist conspiracy between the uninons in the alp and the hippies in bhp. poor tony, he is a victim of a conspiracy.