Alcoa Gets First Free Carbon Permits From Australian Regulator

Alcoa (AA), the largest U.S. aluminum producer, and Queensland Nitrates are the first to get free carbon permits from Australia through an A$8.6 billion ($8.9 billion) program to help businesses facing global competition.

The companies are getting permits under the Jobs and Competitiveness Program, according to a statement today from Australia’s Clean Energy Regulator. Businesses such as aluminum smelters and steelmakers, which face constraints in their ability to pass through costs in global markets, can apply for free units over three years, according to the regulator.

“These applicants have received around 6.37 million free carbon units which companies can now sell back to the government, transfer, or use to acquit their future liability under the carbon pricing mechanism,” Chloe Munro, chief executive officer of the Clean Energy Regulator, said in the statement.

Australia, the world’s biggest exporter of coal and the nation with the most emissions per capita in the developed world, is charging more than 300 of its largest polluters a fixed price of A$23 a metric ton for their greenhouse gases starting July 1. The rate will rise 2.5 percent a year in real terms until 2015, when a cap-and-trade system is scheduled to begin.

Alcoa of Australia Ltd. will receive about 5.9 million permits for alumina refining, while Queensland Nitrates gets more than 400,000 free units, according to a summary on the Clean Energy Regulator website. The permits are for 2012-13.

Australia said in August it was abandoning its attempt to set a minimum price for carbon permits and agreed to begin linking to the European Union market by mid-2015. Australian businesses can now buy permits from the EU system to comply with domestic restrictions, Climate Minister Greg Combet said Aug. 28.

Tony Abbott, the Australian opposition leader whose Liberal-National coalition leads Prime Minister Julia Gillard in polls ahead of elections that must be held by November 2013, has vowed to repeal the so-called carbon tax should he win power.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net

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