The EU’s plan to introduce additional costs based on the carbon content of imported goods does not affect Australia.
Report (pdfAustralia’s largest industry group, the Ai Group, said Australia’s significant exports of iron ore and coal will not be affected by the EU’s new Carbon Border Adjustment Mechanism (CBAM) for the foreseeable future. Said.
“According to a study by the Australian Industrial Group, carbon border coordination is not an imminent threat to Australia and can be an important opportunity to be on the front lines,” said Ines Willox, CEO of Ai Group. Says.
The new CBAM requires foreign companies shipping aluminum, cement, electricity, fertilizer, or steel to the EU to purchase “allowables” of emissions.
However, the report outlines that only 5% of Australia’s steel exports go to the EU and other products are affected by a very small amount of carbon tax.
“Australia seems to have little fear in the medium term from the actual feasible border adjustments by the EU or anyone else,” said Innes Willox, CEO of the Ai Group. “This is because only 0.25 percent of trade with Europe is affected by the current proposal.”
Meanwhile, countries that are more likely to be affected by CBAM include China, the world’s largest exporter of steel and aluminum.
Ai Group after former UN Secretary-General Ban Ki-moon accused Australia of lacking a net-zero target and accused the federal government of lagging behind its emissions efforts compared to US states and international partners The study will be conducted one week later.
“Ethically, the inaction sacrifice to the climate is immeasurable,” Van said. “Australia’s current goals … and the lack of a country’s zero emissions target are out of step with Australia’s states, trading partners, and other equivalents.”
Van urged Australia to follow suit and step up its emission reduction efforts or impose high tariffs on the export industry.
“Australia risks finding itself on the other side of carbon border tariffs as other countries move forward and seize opportunities in the zero-carbon era,” Van said.
This is where Willox acknowledges that the Australian industry needs to consider.
He said carbon sales tax could spread around the world and similar schemes could be implemented in the US, Japan, or other economies, affecting far more of Australia’s trade. He said he had sex.
CBAM will be tentatively introduced in 2023, but the possibility of expanding it to the list of target industries will be considered in 2025-26.
While the current proposal had minimal impact on Australia, Willox said that future amendments to the EU proposal, or new carbon borders implemented by other jurisdictions, would allow Australian industry to overhaul low-emission technology. He said it meant that we needed to work towards.
“Our patchwork world is heading towards net-zero emissions at varying speeds,” Willox said. “In the long run, the industry is uncompetitive unless it reaches low, zero, or negative emissions.”
Carbon border trouble
Scott Hamilton, a researcher at the University of Melbourne and former Executive Secretary of the Victoria State Government’s Renewable Energy, said the requirement for non-EU companies to pay quotas defies the country’s ability to develop low-emission technologies. Explained that it can interfere with attention.
Hamilton strongly believes in the need for rapid emission reductions, and EU CBAM’s intentions are EU companies aiming to reduce emissions and overseas companies that manufacture products using cheaper fossil fuels. He explained that it is to secure a fair competition with the EU.
“Places like Germany,” we are investing heavily in green hydrogen to make green steel, but countries like Australia export us steel made from fossil fuels. I don’t want to weaken it. ” Hamilton told the Epoch Times.
Today, the system has already been applied to companies in the EU, such as those that generate electricity and other energy-intensive industries, and is only allowed to generate emissions based on the emissions they own. ..
One permissible unit allows the emission of 1 ton of carbon dioxide, and these permissibles can be purchased and traded through the EU Emissions Trading System (ETS). The total number of allowances issued will gradually decrease over time, after which total emissions will decrease.
The new CBAM extends this requirement to countries that export goods to the EU, putting additional costs on producers using fossil fuel technology.
However, Hamilton points out that forcing the EU to pay emissions credits to countries such as Australia means the transfer of wealth from countries that may have been used to strengthen research and development of low-emission technologies. Did.
“Europe will get that money, they will invest more in the decarbonization of their technology and their systems, and Australia will not,” Hamilton said.
Instead, Hamilton suggested that Australia should implement its own carbon tax to accelerate the development of technologies such as “green” steel made exclusively from renewable energy.
“What I mean is that we need to set the price of carbon here, actually take that money and reinvest in those new technologies,” Hamilton said.
However, Prime Minister Scott Morrison has previously reiterated that the federal government will not impose a carbon tax and will instead invest $ 20 billion in taxpayer funds for low-emission technologies as part of its technology investment roadmap. ..