MPs lobby Coalition to exempt aluminium from Renewable energy target

Nearly half of the Coalition's backbenchers in the lower house have called on the Abbott government to grant the aluminium industry a full exemption from the renewable energy target (RET).

The letter – understood to have been signed by 25 Coalition lower house MPs – argued the government could exempt aluminium smelting and still achieve a “true” 20% renewable energy usage target by 2020.

This correspondence to the environment minister, Greg Hunt, and the industry minister, Ian Macfarlane, said the target could be met without increasing RET costs to other electricity users or "grandfathering" existing renewable energy investments.

The call comes as the government awaits the findings of a review of the RET headed by the businessman and self-professed climate sceptic Dick Warburton.

It follows a declaration by Clive Palmer last week that his Palmer United party (PUP) would not support any changes to the RET before the 2016 election because the government had promised there would not be any.

The PUP senator elect Jacqui Lambie said on Monday she supported her party's position, despite an earlier report that she would seek exemptions from the RET for her state of Tasmania.

Dan Tehan, the Liberal MP for Wannan in Victoria, is among Coalition backbenchers calling for the exemption for aluminium smelters from 1 January next year.

He said he had a particular interest in the issue because an aluminium smelter in his electorate employed 725 people. In an interview with the ABC, Tehan argued aluminium smelting was “very important” for the stability of the electricity grid.

“For instance, the smelter in Tasmania uses 25% of the electricity in Tasmania. In Victoria, it’s roughly 10%. So we need them for the stability of the electricity grid as well,” Tehan said.

The joint letter from Coalition backbenchers, including Liberals and Nationals, said aluminium smelting was unique among Australian industries for the intensity of its electricity usage during production.

"Put simply, aluminium smelting has a greater exposure to the RET than any other industry," the letter to Hunt and Macfarlane said. "The sector forecasts it will be paying up to $80m a year in RET costs by 2017, with individual smelters paying between $10m and $25m a year. As you would both be aware, these costs will occur even though there is an existing partial exemption for the sector from the RET, which was negotiated during the previous review due in large part to your support.

"These costs reduce the international competitiveness of Australian smelters at a time when the smelter viability is finely balanced – one smelter having closed recently and another closing this year. It is crucial we must be doing everything we can to ensure the long-term viability of this industry, which directly employs approximately 5,000 people and earns Australia export earnings estimated at $3bn per annum."

The chief executive of the Climate Institute, John Connor, said the aluminum industry had been in trouble “but for its own reasons”.

“Many of these plants are decades old; there hasn’t been the investment to upgrade them or certainly to be aware of the challenges they faced,” Connor told the ABC.

“Aluminium is an industry which is a very heavy electricity user. Some call aluminium congealed electricity. Industries have been on notice about the need to clean up their act now for at least two decades, so I think if they keep coming back and saying ‘can we please have some more’ then we are in big trouble in this country.”

Connor said the aluminium industry already had “significant subsidies” under the RET and the Climate Institute was not opposed to assistance for “genuinely trade-exposed”.

“But we’ve got now a fresh outbreak of rent-seeking it would appear across the board,” he said, arguing the RET was a key part of what may remain of the government’s climate policy.

The Greens leader, Christine Milne, said an exemption for the biggest polluting industries would "totally undermine" the RET.

"The point of the renewable energy target is to see the whole economy move away from this unsustainable and unhealthy use of polluting fossil fuels," she said.

"Aluminium companies are already heavily subsidised and have been profiting off the backs of the community for years. How much harder will the Abbott government let them lean?"

The opposition leader, Bill Shorten, said the letter was an example of division within the government. Lambie said, in line with PUP policy, she would not support any changes to the RET before 2016.

But Lambie said she would “continue to fearlessly fight for a special economic zone, which will drastically reduce all government taxes, regulations and charges for all Tasmanian business”.

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