Update reveals 80% of the value of Australia’s major exports will be entering jurisdictions with carbon pricing mechanisms implemented or in development
In its latest Carbon Markets Update*, the Carbon Market Institute (CMI) highlights implications for Australia of surging but uneven climate policy trajectories.
New data analysis in the Update shows that 80% ($288bn) of the value of Australia’s exports to our top 10 markets enters jurisdictions with carbon pricing mechanisms implemented or in development**.
The Update also states 70% of the global economy is expected to be on a net-zero path by the end of 2021, and 76% of Australia’s coal exports is burned in countries which now have net-zero targets (Japan, China and South Korea).
“While net-zero announcements are often lagged by associated policy implications, immediate diplomacy and trade impacts will be felt in Australia and elsewhere. It’s becoming increasingly clear that net-zero strategies are necessary for remaining competitive in the global economy,” said John Connor, CEO.
The Update highlights that US President Biden has committed to increasing pressure on his international counterparts, while the EU’s proposed Border Carbon Adjustment Mechanism (BCAM) would become a more direct penalisation of emissions intensive goods entering the region.
Such developments could mean that for businesses and governments alike, following business-as-usual or weak emissions reduction trajectories could become akin to economic self-alienation.
“The divergence between the governments and organisations targeting paths to net-zero and those who are not, became increasingly pronounced in late 2020 and have surged in 2021. I know which team I’d prefer to be on,” added Mr Connor.
Thus far 24 countries have announced new emissions reduction commitments, and at least 71 parties to the Paris Agreement have now submitted updated Nationally Determined Contributions. The remaining countries now have less than a year to update their targets prior to COP26 in November 2021.
China just last week launched the world’s largest emissions trading scheme and set a target of 40% renewable energy consumption by 2030; New Zealand is working to include its high-emitting agricultural sector in its emissions trading scheme by 2025; and Japan will close 100 of its 144 coal plants by 2030.
According to CMI’s Update, we have seen four consecutive years of growth in the value of compliance carbon markets (increasing 19% to roughly AUD$359bn in 2020), not to mention record carbon prices in the European market, NZ market, and voluntary market in Australia.
“CMI advocates for robust climate policy and economic decarbonisation mechanisms, through voluntary and compliance carbon markets backed by appropriate transition management. This is fundamental if Australian emissions-intensive and trade-exposed businesses are to remain competitive in the emerging international landscape,” concluded Mr Connor.
The Carbon Market Institute is the independent industry association for business leading the transition to net-zero emissions. CMI has more than 90 corporate members. To interview CEO John Connor contact Clare Price 0490 252 743 firstname.lastname@example.org
* CMI’s International Climate Policy and Market Developments Updates are exclusively provided to CMI members, contact email@example.com for membership info.
** This analysis was based on Government Composition of Trade data for 2018-19 (https://www.dfat.gov.au/sites/default/files/cot-2018-19.pdf)