SACOME backs push for Carbon Border Adjustment Mechanism

The lobby group behind some of SA’s biggest polluters has backed a push for an EU-style carbon tariff, warning jobs and local production are at risk.

The lobby group behind some of the state’s biggest polluters has backed a push for an EU-style carbon tariff on industrial imports, warning jobs and production will move offshore unless a level playing field is created for local manufacturers and their overseas competitors.

In a submission to the federal government’s proposed reforms to the ‘Safeguard Mechanism’ -a decarbonisation scheme designed to encourage the country’s biggest polluters to reduce their emissions – the SA Chamber of Mines & Energy (SACOME) argues a $600m assistance package will not be enough to prevent local manufacturers from offshoring their production if the changes proceed.

It says the additional costs required to transition industrial facilities in Australia will make them uncompetitive when compared with imports from countries with lax environmental standards.

SACOME chief executive Rebecca Knol said it was difficult to curb carbon emissions in cement, steel and metal manufacturing, leaving companies in those industries most at risk.

Santos’s Moomba gas plant is one of the state’s largest carbon emitters. Picture: Kelly Barnes

“SACOME’s view is that the Carbon Border Adjustment Mechanism (CBAM) needs to be prioritised, with a decision needed expeditiously to provide certainty for facilities, particularly in the steel and cement industries that will be most affected by the proposed reforms,” she said.

“Insufficient financial assistance may lead to manufacturers offshoring parts of production, with all the attendant consequences for sovereign capability, Australian jobs, and carbon leakage to jurisdictions where emissions are not measured.”

SACOME represents the state’s cement, steel, and metals producers, and major polluters in the mining and oil and gas sectors including BHP and Santos.

Ms Knol’s comments follow warnings from one of Australia’s biggest cement and concrete producers, Adbri, that its Birkenhead cement production plant could face closure unless a carbon tariff similar to the EU’s CBAM is introduced.

The Birkenhead plant employs 300 workers and makes about 1.5 million tonnes of cement product each year.

It is among 215 captured by the Safeguard Mechanism, which applies to industrial facilities that release 100,000 tonnes or more of Scope 1 carbon emissions annually.

SACOME chief executive Rebecca Knol

Other SA operations facing more stringent environmental standards include GFG Alliance’s Whyalla steelworks, Santos’s Moomba gas plant, BHP’s Olympic Dam mine, Nyrstar’s lead smelter in Port Pirie and Orora’s glass bottle facility in Gawler.

GFG Alliance threw its weight behind the push for a carbon tariff, with a spokesman saying a scheme similar to the EU’s would “reduce the risk of carbon leakage and ensure a level playing field for Australian manufacturing”.

BHP and Orora both declined to comment, pending the outcome of a consultation process currently being run between the federal government and industries affected by the proposed reforms, while Santos was unavailable to comment.

Meanwhile, most of the lead and other metals produced at the Port Pirie smelter are exported to South-East Asia, meaning a carbon tariff would have little impact on the company’s local operations.

The EU will introduce the first phase of its CBAM later this year.

It is designed to level the playing field between domestic manufacturers and their overseas competitors by imposing a carbon levy on imports equivalent to the carbon price payable under the EU’s own emissions trading system.

It will initially target carbon-intensive industries including steel, aluminium, cement, fertilisers, hydrogen and electricity.

Energy and Climate Change Minister Chris Bowen has said the government was open to the idea of introducing carbon tariffs for importers operating in countries with lax climate policies.