Sydney (July 12, 2007)- Australian Prime Minister John Howard promised in June to release targets for cuts in greenhouse emissions by 2008 and impose a carbon-trading program by 2012. The move is likely to increase the cost of coal-fired electricity, which will impact the carbon intensive companies that process and export Australia’s natural resources.
Deutsche Bank predicts that a carbon trading scheme could decrease the Australian stock market’s capitalization by six to seven percent, and that a carbon tax of 40 Australian dollars (US$34.31) per metric ton, if applied this year, could cut some firms’ earnings by nearly 50 percent.
Aluminum producers, steelmakers, coal-fired electricity generators, transport companies and building-material stocks, all emissions heavy industries, are likely to be hurt by a carbon-trading program. “We compete with steel companies in Asia and if there is no carbon pricing in Asia, it is yet another cost differential that we have to bear to be able to compete,” said Mark Gell, a spokesman for OneSteel, Australia’s second largest steelmaker.
Uranium miners and companies that produce power from renewable sources should benefit. “Companies with exposure to clean energy will see the value of their assets increase relative to those emitting high amounts of carbon,” said Credit Suisse analyst Adnan Kucukalic.
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