MSCI ESG Thematic Report - Australian Carbon Tax Impact

Research Paper
July 28, 2011
Preview
On 10 July 2011, the Australian government announced its Clean Energy Future proposal - comprised of a carbon tax to commence in July 2012, transitioning to an emissions trading scheme after three years, and accompanied by a range of industry and household assistance measures. In the lead up to the announcement, one of the most debated issues had been the appropriate level of assistance to emissions-intensive trade-exposed (EITE) industries. Competing in international markets, individual companies have little pricing power and would likely need to absorb any increase in cost caused by the introduction of a carbon price, exposing them to lower competitiveness or potential negative earnings impacts. MSCI ESG Research's Report on the 'Australian Carbon Tax Impact' seeks to identify and estimate industry assistance for a broad set of EITE industries and companies, and the net impacts of the carbon price on company earnings, having taken this assistance into account. Key Report Findings:
  • Assistance likely to reduce the impact of Australia's carbon price
  • EBITDA reductions for aluminum smelters and refiners, negligible on steel
  • Impacts are small at 3.5 per cent of earnings or less
  • Closing the gaps in company information disclosed

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