Sheds – What happens with Carbon Tax or the ETS implementation?

Posted on : March 5, 2011

The home or domestic garage or shed has become an icon in the Australian backyard. Whether it is a normal 6 X 6 double door garage or a 3 x 9 storage shed – this industry will be affected by every single company involved in the manufacture of all the components of this iconic “SHED”.

So who are these companies that need to charge you more as a result of the Carbon Tax? They happen to be the biggest emitters of CO2 in Australia because we mine minerals (including coal etc) to manufacture simple things such as steel, aluminium, glass, cement, paint, timber (YES – these guys do emit CO2 to cut timber), carpet, plastic downpipes, electrical wiring, and the list is endless. All of these companies will have to increase prices in order to pay for the Carbon tax – and the answer is that you & I will pay. There is no alternative or secret formula in the production of steel for example – the operational side of steel producers are at the apex in efficiency in the world as far as CO2 emissions are concerned. Australian giant BlueScope and One Steel have the most efficient steel making plants in the World – so what happens when a Tax is added to the industry? The basic recipe for steel making is complex – yet simple in the chemical conversion – Iron Ore is represented by Fe the symbol the same as C represents Carbon – Oxygen is represented by the symbol O – and the process of steel making (Plus energy – coal furnaces) is as follows:

Iron Ore is represented by the symbol – FeO – (One atom of Iron plus one atom of Oxygen) and Carbon Monoxide is represented by CO – (one atom of carbon plus one atom of Oxygen) – this is chemistry and the conversion is represented by the following formula.

FeO + CO = Fe +  CO2 – all the numbers on both sides add up – but it is the heat required by burning coal or fuel to complete this process that the Carbon Tax will be implemented on. Because it takes 2 tonne of CO2 to make 1** Tonne of steel – the price will increase by exactly the Carbon Tax per tonne at the source. But – it doesn’t stop there – it needs to be rollformed, transported and erected. Don’t expect any change out of 16% to 30% per tonne at the end site and this is a conservative figure. Science currently does not have the answers to improve the process to reduce the CO2 emissions greatly – and the BlueScope website has plenty of information on exactly what has been discussed above. The end result is that it will be cheaper to import steel (finished product) along with all other building materials like Aluminium, cement, glass etc from countries (like China) that have no Carbon Tax.

This tax directly on manufacturing industries will be a major setback for the shed industry if they cannot afford to pay this tax – by either adaption or economically – to compete with imports. The result will be no more Australian Made – developed and innovated by Aussie industry – last but not least – a very sorry and diminished Shed Industry.

So if your shed is approximately 12 tonne of steel, concrete, plastic, glass, etc (the average weight of a 6 x 6 garage shed) – then why can’t you get a credit against this tax if you grow plants or store timber over the next five years (or whatever is deemed acceptable) to offset the emissions of the 29 to 40 tonnes of CO2 that has been released to the atmosphere to manufacture this shed.  For example a gum tree that has a height of 30 meters and a diameter of 800 millimetres and is three years old will have stored nearly 5.885 tonnes of CO2. In this case your shed would be paid for in carbon tax in 8 years approximately. It is the environment we are talking about – not CO2.

 

**Steel making requires a high heat – the furnace – they need CO for the conversion to molten Iron (the CO comes from the coal or furnace fuel) so less than one tonne is used in the conversion and the other plus tonne is used in the heat  = 2 tonnes. The price of carbon dioxide (not carbon) to make one tonne of steel – hence the carbon tax

Share

3 Responses to “Sheds – What happens with Carbon Tax or the ETS implementation?”

  1. Mags 118 said...

    Hi,
    A well written article.

    For anyone that would like to sign the petition for No Carbon Tax, here is the link:-

    http://www.stopgillardscarbontax.com/

    Also if you look on the right hand sign of the petition you will see the different rallies that are organized for Capitol Cities around OZ.

  2. peter w said...

    So can you guys tell me how much ..(at $25 a tonne ) will the carbon tax price add to a a tonne of steel (in dollars and as a percentage increase) and also to the price of any old shed..you choose.
    cheers

  3. The Roofer said...

    Still so many factors are unknown but here’s a short workout.
    ALL BASED ON ONE TONNE STEEL
    Coal basic CO2 Tax +
    Iron Ore basic CO2 Tax +
    Transport raw materials to One Steel or BlueScope CO2 Tax +
    Coking Coal for furnace approx 2 tonne CO2 per 1 tonne of steel CO2 Tax +
    Transport of Coil to rollformers CO2 Tax +
    Electricity for rollforming CO2 Tax +

    As you can see there are many variables in the mining, manufacturing and logistics chains – with a minimum of at least 3 tonne of CO2 produced so absolute minimum maybe close to $75 (and does this CO2 Tax come before or after GST???) So based on an average of $1,600 per tonne plus – you’re looking at about 5% increase without any markups or administration costings. This has not allowed for the steel compensation package – but prices will increase.
    Also allow for extra increase for coloured sheets as the transport will increase going to & from the colour coating lines.

    Shed costs may end up closer to between 8 and 11% increases with all the supply lines involved.

Leave a Reply

*