Australia urged to spearhead regional carbon | Australian Markets

Teaming up with different regional economies to impose tariffs on carbon-intensive iron and different items has been pitched as key to Australia’s future as a main participant in rising inexperienced industries.

The case for Asian carbon border tariffs has been made by suppose tank Climate Energy Finance days after the federal vitality minister signalled openness to expenses on the border on emissions-heavy metal and cement.

Carbon border adjustment mechanisms, often known as CBAMs, can degree the taking part in discipline for heavy industries subject to home carbon pricing.

Without them, steelmakers and different producers could select to transfer factories offshore to nations with much less stringent rules on air pollution, a drawback often known as “carbon leakage”.

The European Union has been main the charge and its carbon border adjustment mechanism is scheduled to come into full drive in 2026.

There was a sturdy case for an Asian equal building on the 17 home carbon pricing schemes already throughout the area, Climate Energy Finance net-zero transformation analyst and report creator Matt Pollard mentioned.

This consists of Australia, which forces huge polluters to pay a carbon penalty if their emissions are above a sure threshold by way of the safeguard mechanism.

China, South Korea, Japan and Singapore even have carbon pricing in some form or type.

With most emissions-intensive items produced in Asia for export traded within the Asia Pacific, a regional border mechanism would successfully operate as a price on carbon in worldwide trade.

“As a result, lower-emission products can more effectively compete against higher-emissions products in a global market,” Mr Pollard defined.

The suppose tank desires Australia to spearhead the dialog as half of its bid to co-host the COP31 climate summit alongside Pacific nations.

Climate Change and Energy Minister Chris Bowen wouldn’t rule out the chance of carbon tariffs on particular sectors, comparable to metal and cement, during an interview on ABC’s Insiders on Sunday

He cited an ongoing review into carbon leakage headed by Australian National University climate change economics skilled Frank Jotzo.

“We want to ensure Australian industry is best placed to compete in a decarbonising world,” he mentioned on Sunday.

Opposition vitality and emissions discount spokesman Dan Tehan criticised the minister for floating the thought instantly after successful the federal election.

“He’s put electricity prices up, he’s put gas prices up, and he’s put emissions up, and now he wants to follow Donald Trump’s lead and put in place tariffs,” Mr Tehan mentioned on social media platform X on Sunday.

Mr Pollard rejected the comparability to the US president’s “erratically applied, economically and industrially destructive and investment-deterring” tariff agenda.

“Carbon border adjustment mechanisms are not discriminatory, and enhance globalisation, international collaboration and climate action – which is intrinsically a global problem,” he mentioned.

While they’re tariffs by nature, carbon border adjustment mechanisms have the alternative aims of the Trump administration’s trade insurance policies which might be designed to “enhance protectionism and isolationism”.

The push for regional Asian carbon tariffs was welcomed by teams like clean vitality industry physique Smart Energy Council and financial suppose tank The Superpower Institute.