Landfills set to pocket millions from carbon tax repeal

Windfall: Landfill operators stand to profit from levies already collected. Photo: James Boddington
Windfall: Landfill operators stand to profit from levies already collected. Photo: James Boddington


There’s money in rubbish, big money – $200 million that won’t have to be paid because of the repeal of the carbon tax.

A backroom negotiation is playing out between industry and the federal government over the windfalls that private landfill companies and some councils are set to reap if the carbon tax is axed.

The key industry association for tip operators has put a proposal to the government to spend a fraction of the windfall – $10 million to $20 million – on international carbon credits and pocket most of the remainder.

Environment Minister Greg Hunt, who intends to replace the carbon tax with his Direct Action climate policy, would rather the money was spent on domestic climate action or returned to consumers – in this case ratepayers, and customers of major supermarkets such as Woolworths and Coles.

But Mr Hunt is understood to be considering the proposal. If it is agreed to it would mean a retreat from the government’s policy not to allow the purchase of foreign carbon credits to contribute towards Australia’s promised 5 per cent cut to emissions on 2000 levels by 2020.

The Australian Landfill Owners Association says Mr Hunt is urging it to offer a higher price of five times the amount of international credits it has put forward. That would gift the government about a quarter of its 5 per cent emissions reduction target. 

Mr Hunt confirmed the government was speaking with the landfill industry about the potential options.

‘‘Our priority is that monies which have been collected are refunded. However, we recognise that may not be possible in all cases and we need to find a solution,’’ he said.

‘‘In such cases our priority is to reduce Australia’s domestic emissions to achieve our minus 5 per cent target.’’

The issue of international permits is likely to emerge as the government negotiates with senators to pass Direct Action, with crucial Independent Nick Xenophon having previously said there should be some scope for their use. It is believed Mr Hunt favours foreign permits, but the Prime Minister’s office is opposed. 

The dispute between landfills and the government has emerged because of the likely repeal of the carbon tax after the new senate convenes on July 1. The landfill association has set a deadline of Thursday to reach a deal or is threatening to walk away.

Association secretary Max Spedding said the industry intended to “keep quiet” and pocket the windfall if a deal could not be reached with government.

Because greenhouse gases are released from rubbish in landfills over a long period, the carbon tax legislation makes operators pay for emissions each year, for 100 years or longer.

But to ensure they can cover their costs they have been collecting an upfront levy to pay for the entire 100 years of emissions when customers bring their rubbish to the tip.

If the carbon tax is repealed most of the collected levy will no longer be needed, leaving industry with an estimated $200 million windfall.

In some cases the money could be returned to customers, where a contract guaranteeing repayment has been entered into. But most would be kept by the landfills unless the government pursues legislation allowing for the over-surrender of carbon credits.

The landfill owners association is offering to buy 20 million tonnes in carbon emission reductions on the international market to cover its carbon tax liability for 2012-13 and 2013-14.

The Australian Local Government Association, which represents about 40 affected councils, wants to keep the money to buy technologies to reduce local emissions.

The head of a taskforce advising Mr Hunt on the design of Direct Action, Frontier Economics managing director Danny Price, urged the government to consider the use of international permits.

‘‘For the longevity of the scheme, and to broaden its appeal, the government should look at ways to include international permits,’’ Mr Price said.

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This story Landfills set to pocket millions from carbon tax repeal first appeared on The Sydney Morning Herald.