Industry mobilises in carbon tax battle

Some of the nation's biggest industry organisations is preparing to spend millions of dollars on a campaign to destroy the Gillard government's plans to put a price on carbon.

The group, which has called itself the Australian Trade and Industry Alliance, is prepared to spend at least $10 million on its campaign, which will mimic that which was run against the mining tax a year ago.

The alliance's strategy document, seen by the Herald, lists its key objective as to ''build public opposition to the carbon tax so that it is either substantially modified or fails to pass the Parliament''.

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A campaign involving television, radio, print, the internet and social media would begin within seven days of the government announcing the final details of its scheme and ''would run until the likely parliamentary consideration of the legislation in late 2011''.

The organisations involved include the Australian Chamber of Commerce and Industry, the Minerals Council of Australia, the Australian Food and Grocery Council, the Australian Coal Association, the Plastics and Chemical Industries Association and the Australian Logistics Council, which is a loose collection of freight and transport companies.

A source said even though the details of the carbon price scheme were still unknown, the campaign was in a stage of ''advanced development.

With Intergen's Millmerran and all four major Latrobe Valley power stations facing refinancing negotiations with bankers by the end of next year, Resources Minister Martin Ferguson yesterday called on the banks to back power generators under a carbon price.

"Once we resolve a carbon price, we all - including investors and financiers - have a role to play in delivering energy security and making the significant investments required to transition our energy sector over time," Mr Ferguson said.

Mr Ferguson said the banks had, for some years, vocally encouraged governments to introduce a carbon price and had received significant support during the global financial crisis.

"Given the support the Australian community has shown the banks, I hope that the banks reciprocate this by participating in financing investment in necessary infrastructure once the carbon price is resolved, and by supporting the transition as existing loans are refinanced."

Mr Ferguson said that in terms of investment, if the government was able to facilitate retirement of a major coal-fired power station, it could try to encourage new investment on existing brown coal sites, "which is easier from a regulatory environmental point of view".

There is between $4.5bn and $6.5bn in refinancing due by the end of 2012.

Treasurer Wayne Swan, addressing the Economic and Social Outlook Conference, said Treasury modelling would show that the transition from a carbon price would be "at a very modest cost". He said the mining sector would experience strong growth and increase as a proportion of the economy regardless of a price on carbon. The manufacturing sector would have broadly similar prospects under a carbon tax, according to the modelling, although there would be a changes in its composition towards lower emissions activities. The services sector would also be broadly unaffected.

But Mr Swan said the electricity sector would undergo a dramatic transition. Instead of emissions increasing by 60 per cent by 2050 under business as usual, emissions would fall by 60 per cent below current levels by 2050.