Call for border tariff on carbon imports

A key carbon market adviser to successive governments is calling on Anthony Albanese to move quickly to implement a border tariff on imported carbon-intensive products.

Market Advisory Group founder Raf Wood.

A key carbon market adviser to successive Labor and Coalition governments is calling on Anthony Albanese to move quickly to implement a border tariff on imported carbon-intensive products such as cement and steel to protect local industries and jobs following the recent passage of Labor’s climate reforms into law.

Market Advisory Group founder Raf Wood, a carbon policy adviser since 2010, says Labor must begin work to introduce a carbon border adjustment mechanism to provide heavy-emitting industries with certainty to invest in projects to cut their emissions.

The push comes as major cement producers including Boral urged Labor to “move with pace” in its review of a CBAM to ensure a level playing field for domestic producers, while Manufacturing Australia said the scheme should be implemented to ensure domestic industries are not at a competitive disadvantage.

Mr Wood was an adviser on the safeguard mechanism design, and worked on both the Gillard government’s carbon pricing scheme and the former Coalition government’s Emissions Reductions Fund. “Now is the right time for the government to provide certainty on the timing of a CBAM and a time frame for implementation so that it can be factored into the economic fundamentals of large investment decisions for major upgrades of trade exposed facilities,” he said.

“There is currently momentum for companies to implement decarbonisation strategies but those industries particularly exposed to international trade and workforce considerations, they need certainty as soon as possible.

“Without a CBAM in place, some facilities may face a potential closure with one option within their decarbonisation strategy being to close, with production becoming no longer financially viable. With one in place it is much more likely to keep Australia strong.”

Manufacturing Australia chief executive Ben Eade, who represents some of the country’s largest emitters including BlueScope, Incitec Pivot and Orora, said domestic manufacturers needed to retain a level playing field as they prepare to undertake significant investments to decarbonise.

“From July 1 there will be an impost placed on Australian manufacturers that is not currently placed on import competitors. If a CBAM is going to be part of how we solve that competitive disadvantage, then the sooner we can design and implement one the better,” he said. “Without a CBAM we will see a competitive disadvantage for Australian manufacturers compared with imports that are not required to invest in the same emissions reductions technologies.”

After clinching a deal with the Greens to pass its climate reforms, Energy and Climate Change Minister Chris Bowen said the government would commission a review into the feasibility of a carbon border adjustment mechanism to give local manufacturers certainty.

Australian Industry Group climate and energy policy director Tennant Reed said bolstered protections for hard-to-abate industries, announced last week, would allay concerns in the short term but “quite real” fears remained over domestic industries’ carbon competitiveness.