Big polluters would have pocketed billions in assistance they did not really need under the Carbon Pollution Reduction Scheme (CPRS), new research by an energy institute found.

The analysis by Grattan Institute is the first to examine the financial reports of major businesses who would have been compensated. It found that only the steel and cement sectors could make a case for taxpayer help, but that all others would remain competitive in the global market, including coal mining and LNG production and coalmining.

The only industry that would have become unprofitable in Australia under the CPRS is aluminium smelting, the report found.

“We find that much of the protection proposed for the major emissions-intensive industries is unnecessary or poorly targeted,” the report says. “It would delay the structural adjustment required to move to a lower carbon economy.”

It adds: “Using industry data, the report finds that many of the recipient companies will be internationally competitive even if they receive no free permits. Many of the industries that would not be competitive would emit less carbon if they moved offshore, which is the purpose of carbon pricing. The proposed free permits will mute the incentives to reduce carbon emissions. They are also very expensive for other Australian taxpayers.”

Some key findings include:

• Most jobs in the trade-exposed sectors would be viable under a carbon price without compensation.
• Some 176,000 jobs have been lost in the power sector due to privatisation and competition reforms. About 9,000 people are employed in electricity generation — the only part of the sector that would be affected by the scheme.
• Free permits per employee in the trade-exposed sector cost taxpayers $65,000; that figure is $160,000 per employee in aluminium smelting.

The analysis assumes a target of cutting emissions 5 percent below 2000 levels by 2020. A more ambitious target in the government’s 5 to 25 percent range would require more countries to take on a carbon price, making the impact on trade-exposed sectors less of a concern.

Click here for a full copy of the report.