Reuters reported that Australia's government played down the impact of a carbon price on steel and aluminum producers saying its planned carbon tax would add only a fraction to the cost of their goods.

Australia's two largest steel makers BlueScope and OneSteel Limited are among the country's top carbon emitters and BlueScope has warned that Australian manufacturers would shed thousands of jobs under the carbon tax. Less than 1,000 companies that are the largest polluters in the country will have to buy a permit for every tonne of pollution they emit.

Mr Greg Combet climate change minister of Australia said that once industry assistance was taken into account, AUD 20 per tonne carbon price would add only AUD 2.60 per tonne of steel, currently worth around AUD 800 and AUD 18.70 per tonne of aluminum currently worth around AUD 2,500.

He said that in other words, the carbon cost relating to the core pollution activity for steel would be one third of one percent of the value of a tonne of steel and three quarters of one percent of the value of a tonne of aluminum. The government wants a fixed price carbon tax to start in July 2012 ahead of an emissions trading scheme 3 to 5 years later under its key policy to curb carbon emissions and fight global warming.

Mr Combet said that the multiparty climate committee was considering the issue and was in discussions with experts on how the scheme will operate. We are considering issues such as that. Australia's opposition is running a strong political campaign against the tax and has warned it would push up prices. Opinion polls show the public remains concerned about the tax.

He said that more than half of the revenue from the tax will be spent on compensation for low and middle income earners. We expect that millions of households will be better off under the carbon price arrangements and the assistance will be permanent.

Mr Ross Garnaut analysts and the government's top climate adviser have suggested a starting price for carbon emissions of between AUD 20 and AUD 30 per tonne. But the government has yet to announce a price what sectors will be included and how much households or industry will be compensated for the new impost.

Mr Garnaut has proposed the government allow limited trading during the fixed price period with 5% to 10% of undated permits available for trade to help establish a forward price for carbon and to help set up the carbon market.

(Sourced from Reuters)