The Carbon Market Institute (CMI) supports yesterday’s announcement from the Minister for Climate Change and Energy that the government will explore policy options to address carbon leakage, saying that it would be a significant yet essential step in ensuring the global competitiveness of Australian industry, as well as supporting greater international action on climate change. 

In the context of a carbon-constrained global economy and with a growing number of markets adopting similar policies, CMI CEO John Connor said that addressing carbon leakage was vital in ensuring a level playing field for Australian businesses, and was an important complement to the Safeguard Mechanism in supporting sectors that are most trade-exposed: 

“Carbon leakage is not only a threat to global economies, but also a threat to the global effort to mitigate the impacts of climate change, where businesses seek to avoid the inevitable shift toward effective carbon pricing and climate regulation.” 

“Border tariffs present an opportunity to address carbon leakage risks as an important complement to carbon pricing mechanisms, so that climate policy effectively drives the desired outcome towards economic and industrial transformation. Australia has the benefit of leveraging international best practice experience from markets, such as the EU, to ensure we get these settings right.” 

“Nonetheless, there is still significant complexity in implementing this piece of reform, and while it’s important Australia doesn’t fall behind on this front, a phased approach may be appropriate to firstly prioritise the most exposed industries, such as cement, iron, steel, aluminium and fertilisers, followed by others,” he concluded. 


About the Carbon Market Institute  

The Carbon Market Institute (CMI) is a member-based institute accelerating the transition towards a negative emissions, nature positive world. It champions best practice in carbon markets and climate policy, and its over 150 members include primary producers, carbon project developers, Indigenous organisations, legal, technology and advisory services, insurers, banks, investors, corporate entities and emission intensive industries. The positions put forward constitute CMI’s independent view and do not purport to represent any CMI individual, member company, or industry sector.

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