Australia To Consider Tariffs On Carbon-Intensive Imports

Australia will launch a review into whether to impose tariffs on carbon-intensive imports such as cement, steel, and aluminum, under a plan for a carbon border adjustment mechanism similar to the one the EU prepares to launch in the middle of this decade.  

Australia’s federal government will launch a review of whether a carbon border adjustment mechanism (CBAM), or other carbon leakage policy options, are right for Australia, Chris Bowen, Australia’s Minister for Climate Change and Energy, said in a speech to Australian Business Economists on Tuesday.    

“Making Australia a renewable energy superpower and leader in areas such as critical minerals will require essential industrial inputs – like steel, cement and aluminium,” Bowen said.

Loss of domestic sovereign capacity in cement, iron and steel, aluminum, or fertilizers “creates broader economic risks for the Australian economy and clean energy transition,” the minister added. He emphasized that “Domestic capacity reduces Australia’s vulnerability to international supply chain shocks.”

The EU will have its own CBAM as of 2026, to put a fair price on the carbon emitted during the production of carbon-intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries, the bloc says. From 2026, key importers into the European Union will have to purchase certificates equivalent to the carbon price of their emissions trading scheme. 

The Australian review of a similar measure will include an assessment of the carbon leakage risks, development of policy options to address carbon leakage, and an assessment of the feasibility of an Australian Carbon Border Adjustment Mechanism, particularly in relation to steel and cement, Bowen said today.

Australia’s government has recently allocated $1.33 billion (AUS$2 billion) in the 2023- 24 budget to accelerate large-scale renewable hydrogen projects, aiming to become a world leader in green hydrogen production. Australia is also a major producer of lithium, the key mineral in the current leading battery technology globally.

By Tsvetana Paraskova for Oilprice.com

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