BlueScope Steel has called on the Federal Government to provide more incentives to encourage investment in major greenhouse gas abatement projects

BlueScope Steel has called on the Federal Government to provide more incentives to encourage investment in major greenhouse gas abatement projects such as its proposed cogeneration plant as final negotiations on the emissions trading scheme continue.

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The Port Kembla-based firm yesterday joined coal and cement industry representatives at an Australian Industry Group conference in Wollongong in making a final plea for more business-friendly alterations to the scheme.

BlueScope, which recently convinced the Government to allow its hot rolling processes to receive the free carbon credit allocation available to the rest of the steel production process, is now focusing its attention on gaining financial support for the construction of a cogeneration plant at Port Kembla.

The $1 billion cogeneration plant, which would save a million tonnes of greenhouse gases per year, was taken off the company’s immediate agenda during the financial crisis and has been labelled as unaffordable under the proposed emissions trading scheme.

The plant would take combustible gases and, instead of flaring them into the atmosphere, use them to make electricity, BlueScope Steel chief executive Australian and New Zealand steel manufacturing businesses Noel Cornish said.

Mr Cornish said most direct incentives for abatement expenditure were not targeted to big businesses and called on the Government to offer tax incentives or partial funding for private major abatement projects.

“Although the CPRS would provide some incentive once the cogeneration plant was operational, the challenge for BlueScope and many other companies is that these types of large abatement opportunities require significant up-front investment,” he said.

“Even under an amended CPRS, business will be taking on a significant degree of risk and uncertainty.

“Eighty per cent of our Australian CO2 emissions are generated as an unavoidable by-product of the chemical reduction process of producing iron in blast furnaces (and) … cannot be abated given current and foreseeable alternative technology available anywhere today.”

Australian Coal Association executive director Ralph Hillman renewed his industry’s campaign against the scheme in its present form, claiming each tonne of coal would cost $4 more to mine, putting at risk 1600 Illawarra jobs. These claims have been challenged by the CFMEU and Government.

Cement Industry Federation chief executive Robyn Bain also warned that hundreds of Illawarra workers in that industry would be keenly watching to see how much of the cement-making process received emission-intensive trade exposed protection.

Ai Group chief executive Heather Ridout said views from the conference would be conveyed to the Government and the Opposition.

“A key element discussed today was the importance of businesses carefully thinking through their operations to work out how to reduce their energy use, and how to lessen their exposure to the rising cost of inputs such as steel, coal and heavy metals,” she said.

“While business is dealing with a degree of uncertainty around this issue, we need first to get the legislation right.”