Greenhouse mafia

The greenhouse mafia is the self-description adopted by a group of executives of big mining and heavy industry companies and industry associations lobbying th Australian government on climate change policy. During the reign of former Prime Minister John Howard (1996-2007), their close relationships with federal ministers were exposed by Guy Pearse, a former speechwriter to former federal liberal Minister for the Environment, Robert Hill. Their influence over federal climate policy at that time was so strong that they boasted that in some instances they have vetted and drafted cabinet submissions and ministerial briefings.

Since the election of Kevin Rudd in November 2007, the influence of the greenhouse mafia does not appear to have waned much. They still actively lobby the federal government on climate policy and frequently appear in the media, in vocal opposition to initiatives aimed at reducing the carbon emissions caused by the Australian business sector.

The Greenhouse mafia networks
The five companies who have been most vocal in their opposition to the Rudd government's proposed Carbon Pollution Reduction Scheme are:

Alcoa of Australia
"We, like other trade exposed companies, are asking for some assistance." -- Alan Cransberg, Managing Director, Alcoa of Australia Limited

Alcoa is a multinational corporation, the world’s largest producer of aluminum with operations in 34 countries. Its profit in 2007 was $US 2.57 billion.

Despite world leaders flagging the introduction of a carbon price since the late 1990s, Alcoa appears to have made little effort to shift its aluminum production away from a reliance on coal-fired power. According to their website, apart from a few hydroelectric projects, Alcoa currently has no operating smelters powered by renewable energy.

Worldwide, Alcoa produced 31.1 million tonnes of carbon dioxide equivalent in 2007 -- more than the entire greenhouse gas emissions of South Australia. In Australia alone it produced 11kt. .

Now that the Rudd government's proposed Carbon Pollution Reduction Scheme will for the first time put a price on the greenhouse pollution that companies like Alcoa create, Australian Managing Director Alan Cransberg is demanding that Alcoa receive free permits to continue emitting carbon emissions. Even before the announcement of scheme, Cransberg was threatening that Alcoa Australia would be forced to move offshore if the government didn't provide compensation for the introduction of the scheme.

There is a need to ensure that genuinely trade-exposed industries are not disadvantaged in the world markets after the introduction of the carbon pollution reduction scheme. However, a border tax adjustment is a better way to do this than for the government to hand out free permits, which sends the message that big business is exempt from emissions reduction measures and will not be held responsible for the pollution they create.

In fact, aluminum smelters can easily be powered by renewable sources instead of coal. Alcoa Australia could lead the way in the introduction of this practice in Australia.

Woodside Petroleum
"We have booked a lot of plane tickets to Canberra." -- CEO Don Voelte, on Woodside's plans to lobby the government for free permits under the Carbon Pollution Reduction Scheme.

Woodside Petroleum is Australia’s largest energy company, dealing in oil and gas exploration and production.

For the first half of 2008, Woodside announced a record six-month profit of $1.02 billion. Around the same time, CEO Don Voelte declared in the media that Woodside can't afford a carbon pollution reduction scheme.

The reason is that under the current design, the scheme would compensate coal-fired power generators but not the liquefied natural gas industry. According to Don Voelte, the scheme could therefore increase the world’s carbon emissions, by shutting down Australian LNG projects and forcing overseas investment in coal power.

Rather than lobbying for free permits, Woodside could lobby against the proposed compensation to coal-fired power stations, which would provide a loophole for the heaviest greenhouse polluters to avoid paying the full carbon price. Instead they have launched a public attack against the scheme, claiming it is 'unfair'.

Xstrata Plc
"Electricity prices could quadruple on the east coast of Australia." -- Peter Freyberg, CEO, Xstrata Coal

Xstrata is a multinational mining group with a reported profit of $5.54 billion in 2007. Xstrata Coal is headquartered in Sydney and is the world’s largest exporter of energy coal. According to its website it has no renewable energy investments.

Xstrata is publicly lobbying the federal government for exemption under an emissions trading scheme. It is arguing that the government shouldn’t include carbon emissions from open-cut coal mining in its carbon pollution reduction scheme because they can’t be accurately calculated.

They are also spreading the message that the carbon pollution reduction scheme will be bad for the Australian economy and the public. The Chairman of Xstrata Australia, Peter Coates, warns that the scheme doesn’t do enough to “protect industry”, while Xstrata Coal CEO Peter Freyberg has played into the fear of rising energy costs by suggesting that the scheme will contribute to a quadrupling of electricity prices -- ten times the increase the government’s Ross Garnaut has predicted.

Peter Coates was a member of John Howard’s industry-heavy Emissions Trading Taskforce of 2007. He is an ex-Chairman of the powerful lobby group the Australian Coal Association, and sits on the Board of another, the Minerals Council of Australia. He is also a non-executive director of the oil and gas exploration company Santos. Freyberg, Coates’ recent replacement as CEO of Xstrata Coal, is the Director of the Australian Coal Association, which argues that carbon capture and storage is the solution to climate change but is lobbying for government to fund it.

Rio Tinto
“Business does not have adequate time to understand or prepare for an emissions trading system.” -- Stephen Creese, Managing Director, Rio Tinto.

Business has known about the likelihood of an emissions trading scheme since the late nineties, when the world acknowledged the necessity of carbon constraint with the 1997 Kyoto Protocol agreement. The Australian government developed a series of discussion papers on emissions trading in the following years.

Despite this, mining corporation Rio Tinto has publicly stated that business is "unprepared" for the carbon pollution reduction scheme.

In 2007, Rio Tinto produced 28.3 million tonnes of greenhouse gas emissions worldwide. This is the same amount as all of South Australia’s greenhouse pollution. To date, corporations like Rio Tinto have not paid anything for the cost of their greenhouse polluting operations and profit from them instead. In 2007, Rio Tinto made $US7.4 billion profit worldwide.

Nonetheless, Australian Managing Director Stephen Creese joined 7 other industry executives in aggressively lobbying Climate Change Minister Penny Wong prior to the release of the Carbon Pollution Reduction Scheme proposal in July 2008. The stated purpose of the meeting was to oppose government support for renewable energy policies.

ExxonMobil
“ExxonMobil does not believe climate change has been conclusively scientifically proven.” -- ExxonMobil Australia Chairman Mark Nolan, 2006.

ExxonMobil is a very large multinational -- the world’s largest oil and gas company and the largest refiner and marketer of petroleum products. In 2007 it reported a profit of $US40.6 billion.

It is also the world's largest funder of climate sceptic groups. A 2007 report by the Union of Concerned Scientists reveals that the company paid $US16 million over seven years to 43 allegedly independent groups that promote climate scepticism.

ExxonMobil produces more greenhouse pollution than the entire state of Victoria.

Despite their profits, ExxonMobil Australia’s Chairman, Mark Nolan, has publicly threatened the closure of the petrol-refining industry if the carbon pollution reduction scheme goes ahead. He claims it will no longer be globally competitive and there will be an investment freeze.

There is a need to ensure that genuinely trade-exposed industries are not disadvantaged in the world markets after the introduction of the carbon pollution reduction scheme. However, a border tax adjustment is a better way to do this than for the government to provide industry with free permits, which send the message that big business is exempt from carbon reduction policies.

Related SourceWatch articles

 * Australia and coal
 * Australia and Post-Kyoto Protocol negotiations on greenhouse gas emissions

External articles

 * Janine Cohen, "The Greenhouse Mafia", ABC TV, Four Corners, Monday 13 February, 2006.