Australia Stands to Lose Under ‘Protectionist’ UK Carbon Tariffs

February 15, 2021 Updated: February 17, 2021

Australian exports may soon suffer from “protectionist” levies as the United Kingdom plans to use the G7 summit to push for climate tariffs, amid a renewed push for environmentalism after U.S. President Joe Biden’s election.

British Prime Minister Boris Johnson, who invited Australian Prime Minister Scott Morrison to attend as a guest, has indicated that the issue would be a key priority at the meeting of the world’s biggest economies.

Prime Minister Johnson is preparing to use the G7 summit to lead the discussion to establish carbon border levies, putting penalties on goods produced in countries with less stringent environmental laws, such as Australia.

This would significantly impact Australia, where the trade industry creates one in five jobs in the economy. It may also undermine current negotiations for the UK-Australia Free Trade Agreement, which the UK government aims to use “to champion free trade, fight protectionism and remove barriers at every opportunity.”

Trade and Tourism Minister Dan Tehan said the government was committing to fighting back against “unnecessary” climate tariffs that the government saw as a “protectionist ploy”.

“When we have free trade agreements that’s about liberalising trade and creating jobs,” Tehan told 2GB radio. “It’s so important to keep pursuing trade liberalisation… because that’s how we generate jobs in this country.”

“The last thing we want is a key ally and friend such as the UK, looking to put barriers in that in the form of tariffs,” he said.

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Australian Prime Minister Scott Morrison speaks with Minister for Education Dan Tehan during Question Time in the House of Representatives on February 03, 2021 in Canberra, Australia. (Sam Mooy/Getty Images)

Energy minister Angus Taylor also disagreed with the UK government’s approach of lowering emissions through putting up trade barriers.

“[This government] is dead against tariffs,” he told Sky News. “We believe in the role of trade driving prosperity.”

In December 2020, Johnson announced the government’s commitment to cut emissions by 68% by 2030 from 1990, the biggest cut in the G20 nations.

Meanwhile, Australia has pledged to reduce greenhouse gas emissions by 26 to 28 percent below 2005 levels by 2030, which has remained unchanged since 2015.

The unchanging target has been met with criticism. The EU ambassador told The Guardian he hoped EU trading partners would “become a bit more ambitious and emboldened when it comes to climate change objectives.”

The Biden administration has the same stance, stating they would engage with leaders of major carbon-emitting nations to persuade them into “making more ambitious national pledges, above and beyond the commitments they have already made.”

Associate Professor Salvatore Babones from the University of Sydney believes Australia would be at the “top of the list” of countries for Biden to push for more significant greenhouse emission targets.

“Having the U.S. president pushing an energy transition away from coal can only hurt the world’s largest coal exporter… Australia has more to lose than just about any other developed country.” Babones wrote. “Biden’s potential climate policies do not represent a diplomatic threat to Australia, but they do represent an economic one,” he said.

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Large coal stocks await loading for export at Port Waratah Coal Services in Newcastle, Australia, on April 12, 2007. (Corey Davis/Getty Images)

However, trade expert Alan Oxley, told Sydney Morning Herald, he did not believe carbon tariffs would become a mainstream part of international trade and development.

“It just shows you [Johnson] does not have a proper grasp of what the proper frameworks are in trade policy,” he said. “Trade agreements are underpinned by legally bound principles and measures and for a new country to succeed in an arrangement… they’ve still got to be within the legal structure.”

Australia’s latest emissions projections show that despite a recent government (pdf) finding that emissions had reached their lowest level since 1998, the country is currently on track to exceed its 2030 emissions reduction target.

“Our goal is to reach net zero emissions as soon as possible, and preferably by 2050,” Morrison said.

The Morrison government has not committed to a target.