The federal government has opened public consultation on options to help address the risk of carbon leakage and protect the future of Australia’s heavy industries.
Carbon leakage occurs when industries move from countries with more ambitious emissions reduction policies to countries with weaker policies.
“We want to see Australia’s heavy industry decarbonise, while continuing to manufacture the steel, cement, aluminium and other products needed for the energy transformation,” Minister for Climate Change and Energy Chris Bowen said.
Countries around the world are implementing policies to prevent leakage as the world decarbonises.
“By continuing to address carbon leakage risk, we will protect Australia’s reputation as a reliable and secure trading partner, promote our ambition to become a renewable energy superpower and secure a future home for green industrial goods like green steel.
“Highly skilled manufacturing jobs and industry will form the bedrock of the world’s decarbonisation and this review will help them have a long-term presence in Australia,” Bowen said.
This review will assess the need for an Australian carbon border adjustment mechanism, emissions product standards, further funding for decarbonisation, and multilateral initiatives. This is the first of two consultation rounds to inform the review.
“We welcome submissions from industry, business, environmental groups, researchers, trade partners and the broader community about how best we can assess and address the risks of carbon leakage,” Bowen said.
The review is being undertaken by the Department of Climate Change, Energy, the Environment and Water, steered by Professor Frank Jotzo, an expert in the economics of climate change.
A second round of consultation will be held in mid-2024 and will seek input on the feasibility of detailed policy options to address any identified leakage risks.
Final advice from the review will be provided to the Government by 30 September 2024.
Detailed design of any agreed policy options would take place after the review and would be taken into account in the Government’s Net Zero 2050 Plan.
Consultation is open until 12 December 2023.