Tiwai point owners say closure and job losses likely under ETS

The owners of Southland's Tiwai Point aluminium smelter near Bluff are threatening possible closure with hundreds of job losses if the Government presses ahead with its emissions trading scheme (ETS).

As heavy carbon emitters use their weight to try to force change to the legislation bringing in the ETS, other businesspeople agree the Government needs to introduce an ETS.

A new survey found that 60 percent of businesspeople believed there should be an emissions trading scheme and 71 percent felt that large emitters should pay.

Yesterday, Parliament's finance and select committee heard from Rio Tinto Alcan, which owns the Tiwai Point smelter.

Rio Tinto said the proposed ETS was likely to make its operation unviable and could force the closure of its smelter.

The move would be a blow to the Southland economy as it directly employed more than 900 staff and contractors, while sustaining 2600 jobs and 20 percent of the region's economy, it said.

The multinational flew in its regional president Xiaoling Liu to warn the select committee considering the climate change legislation that it could close the operation down.

"Rio Tinto, as an international business, will continue to support the New Zealand operation for as long as it is a cost competitive location," Ms Xiaoling said.

"Frankly, you need to be aware it may not remain the case if this bill is passed in its current form."

The general manager of the New Zealand operation Paul Hemburrow said changes it wanted to the bill were "crucial for the nearly 1000 people that we employ remaining in Southland and New Zealand".

"If the smelter were to close, we would seek to redeploy the most skilled of those people across our global network, but their skills would be lost to New Zealand."

The smelter's owners said aluminium prices were set in an international market and they could not raise them to cover costs.

Unless international aluminium smelters faced the same cost, the New Zealand operation would become uncompetitive.

"The bill, as currently drafted, would most likely put us on a path to closure," Mr Hemburrow said.

The Government has proposed giving industries and exporters like Rio Tinto free carbon credits to offset the pain of the ETS.

These will be phased out over time and last week the endpoint was extended by five years to 2030.

One of the changes Rio Tinto wanted was for the free allocation of credits not to be phased out until similar costs were in place in other countries.

Climate Change Minister David Parker said the Government had already moved to address concerns over the ETS legislation with the delay to the phase out of the free carbon credits.

It was also proposing two five-yearly reviews of the planned allocation phase-out before then.

Rio Tinto and other major emitters wanted to minimise their emissions costs and let the taxpayer pay for it all, Mr Parker said.

The Tiwai Point smelter uses 15 percent of New Zealand's power supply and recently renegotiated a long-term contract with Meridian Energy.

The select committee yesterday was also presented with a survey, commissioned by the New Zealand Business Council for Sustainable Development, that said six out of 10 business people agreed with the Government's policy to introduce an emissions trading scheme.

Respondents agreed businesses needed emissions credits until their overseas competitors also faced a price of carbon.

However, only two percent backed the Government's new assistance policy, announced last week, which extended the phase-out of emission credits assistance from 2025 to 2030.

The survey involved 2404 respondents and 639 business decision makers.

The survey found 77 percent of decision makers thought climate change had to be dealt with now or urgently, the same as all New Zealanders surveyed.

Sixty percent believed there should be an emissions trading scheme (compared to 58 percent of the general population) and 71 percent that large emitters should pay (compared to 70 percent generally).

Sixty-nine percent of business respondents said emitters should be given credits until overseas competitors were also penalised for carbon.

One in five said no assistance should be given to large emitters.