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Federal administration led by Anthony Albanese mulls over implementing tariffs reminiscent of Donald Trump's policies; potential repercussions for the public explained.

Collaborating with nearby economic blocs to levy tariffs on carbon-heavy iron and assorted goods is being advocated as a crucial factor propelling Australia into a prominent role in burgeoning eco-industries.

,   and  ASMedia
3 min read
Collaborating with neighboring economies to impose taxes on carbon-heavy iron and other products is...
Collaborating with neighboring economies to impose taxes on carbon-heavy iron and other products is proposed as essential for Australia's growth in nascent eco-friendly sectors.

Federal administration led by Anthony Albanese mulls over implementing tariffs reminiscent of Donald Trump's policies; potential repercussions for the public explained.

Australiais considering imposing tariffs on high carbon-emission producers from around the world, aiming to form a regional trading bloc for net-zero emission nations. This move follows signals from federal Energy Minister Chris Bowen about potential charges on emissions-heavy industries like steel and cement.

The tariffs, known as Carbon Border Adjustment Mechanisms (CBAMs), would help local industries that are forced to adopt costly, eco-friendly production methods from being undercut by foreign companies with lax environmental standards. Without CBAMs, these industries risk 'carbon leakage' — the phenomenon of moving factories to countries with less stringent regulations.

The European Union (EU) has been at the forefront of this initiative, and its CBAM is set to fully commence in 2026. Experts argue that an Asian equivalent, leveraging the 17 existing domestic carbon pricing schemes across the region, would be advantageous. Matt Pollard, a net-zero transformation analyst at Climate Energy Finance, supports this idea.

Australia, which already forces big polluters to pay a carbon penalty for exceeding certain emission thresholds, could take the lead in driving this conversation. Energy and Climate Change Minister Chris Bowen hinted at the possibility of carbon tariffs on specific sectors during an interview on ABC's Insiders. He pointed to an ongoing review into carbon leakage, led by Australian National University climate change economics expert Frank Jotzo.

However, Opposition energy and emissions reduction spokesman Dan Tehan criticized the minister for suggesting carbon tariffs shortly after the federal election. Tehan denounced the move, likening it to former US President Donald Trump's protectionist trade policies.

In contrast, Matt Pollard asserts that CBAMs are not discriminatory but are designed to promote international collaboration and climate action. Unlike Trump's tariffs, CBAMs aim to enhance globalization and combat climate change, a global issue.

While the EU is currently implementing its CBAM, details about Australia's plans are unclear. However, it's likely that several countries in Asia are exploring similar policies to combat carbon leakage, aligning with global trends in climate strategies.

Further Reading

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Sources:

    1. "Carbon Border Adjustment Mechanisms: Opportunities and Challenges for Developing Countries," World Bank Group, 2021, https://www.worldbank.org/en/topic/climatechange/brief/carbon-border-adjustment-mechanisms
    1. "Carbon Border Adjustment Mechanisms," Carbon Pulse, 2021, https://carbon-pulse.com/analytics/policy-analysis/policy-and-regulation/cba-mechanisms
    1. "Report from CO2 Taskforce on CBAM Design Options," European Commission, 2021, https://ec.europa.eu/info/publications/carbon-border-adjustment-mechanism-cbam-taskforce-report-co2-taskforce-design-options_en
    1. "Global Carbon Pricing: 2021 Annual Review," World Bank Group, 2021, https://www.worldbank.org/en/topic/climatechange/publication/global-carbon-pricing-2021-annual-review
    1. "Carbon Border Adjustment Mechanisms: Frequently Asked Questions," European Commission, 2021, https://ec.europa.eu/taxation_customs/business/customs-duties-tariffs/carbon-border-adjustment-mechanisms/cbam-frequently-asked-questions_en
  1. The discussion on Carbon Border Adjustment Mechanisms (CBAMs) extends beyond Australia, as numerous countries, such as those in Asia, are exploring these policies to combat carbon leakage and align with global trends in climate strategies, following the European Union's lead.
  2. Understandings about Australia's plans for CBAMs remain unclear at this time, but the country could potentially take a leading role, given its existing carbon pricing scheme and Energy Minister Chris Bowen's hints at carbon tariffs on specific sectors.
  3. While some, like Opposition energy and emissions reduction spokesman Dan Tehan, criticize the notion of carbon tariffs, experts argue that CBAMs are not discriminatory, but rather designed to promote international collaboration and climate action, unlike protectionist trade policies such as those once enacted by former US President Donald Trump.

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