Imported steel and cement into Australia could face tariffs in a bid to “level the playing field” between countries with different net zero targets, says Climate Change Minister Chris Bowen.
The measures would follow those implemented by the European Union and are aimed at protecting Australian manufacturing businesses competing against corporations with less onerous emissions reduction goals.
“The decarbonisation task is most acute for large industrial facilities, frequently in hard-to-abate sectors and subject to competition in international markets,” Mr. Bowen told the Australian Business Economists forum in Sydney on Aug. 15.
He said now that Australia had a framework for businesses to cut emissions, it was time to examine how to prevent “international carbon leakage risks.”
“We know of the potential for production to shift from countries with more ambitious emissions reduction policies to those with lower emission reduction policies, and potentially resulting in increased global emissions,” he said.
“Carbon leakage undermines national and international climate action and has long been a key consideration in the development of climate policy across the world.”
Following the EU
Mr. Bowen pointed to the European Union’s decision to impose a “carbon border adjustment mechanism” from 2026 that will compel importers to purchase “certificates equivalent to the carbon price of their emissions trading scheme.”The EU’s system targets cement, iron and steel, aluminium, fertiliser, and electricity.
The climate minister said his department would work with academics to assess the current carbon leak situation, develop policy, and assess the feasibility of an “Australian Carbon Border Adjustment Mechanism” on steel and cement.
The move was panned by opposition climate spokesman Ted O'Brien who said it would make Australian industry uncompetitive.
“By forcing up the price of cheaper imported products, Labor will continue to put upward pressure on inflation and interest rates and it will be everyday Australians who pay the price,” Mr. O'Brien said, in comments obtained by AAP.
Business Group Backs Tariffs
Yet the move has received support from the national employer association, the Australian Industry Group.“The global transition to net zero is clearly underway, but different economies are moving at different paces and using varied mixes of sticks and carrots to get there. Every nation is keen to ensure that emissions and industry don’t simply leak from one region to another based on uneven policies rather than economic advantage.”
Political and business leaders have been criticised for simply “outsourcing” their emissions to other countries, while proclaiming their own progress towards net-zero.
“Manufacturing in the U.S. has also hollowed out while over the last decade, while the EU has become a net importer of emissions-intensive steel,” he added. “Does this mean that the UK, the U.S., and EU economies have stopped using emissions-intensive goods? Not at all.”
