Verdict on Preventing Carbon Leakage and Saving Jobs in Australia
Australia’s review suggests a carbon border adjustment to protect jobs and industries from international competition
Australia, Carbon Leakage, Jobs, Climate Policy, Frank Jotzo
Canberra: So, there’s been some interesting talk about how Australia can tackle carbon leakage while keeping jobs safe. Frank Jotzo, who led a review on this, says it’s all about making our exports more competitive.
He pointed out that “carbon leakage” isn’t the best term. It sounds like something’s leaking from a pipe, right? Instead, he prefers “carbon competitiveness.” Makes sense, doesn’t it?
Jotzo’s review looked into how we can keep jobs here instead of losing them to countries with looser climate rules. He’s suggesting a carbon border adjustment mechanism for certain products. This could help level the playing field.
For nearly ten years, Australia has been using a safeguard mechanism to push industries to cut emissions. But Jotzo thinks we need more than just that. He believes we should also consider subsidies for green investments, though they’re not a complete fix.
With the UK and EU putting carbon levies on imports, it’s got folks in Australia thinking we might need something similar. Jotzo thinks that even if Europe’s plan doesn’t directly affect us, it opens the door for other countries to think about their own versions.
Climate Change Minister Chris Bowen asked Jotzo to look into this because some Aussie industries produce a lot of emissions. The OECD has warned that even a little carbon leakage can mess with our economic and trade policies.
Interestingly, the OECD found that international trade is offsetting some of our domestic emission cuts in industries like aluminium and steel. So, it’s a bit of a balancing act.
Jotzo highlighted that heavy industries like cement and steel are the main focus. Australia makes these products, but we also import them from countries without strict emissions rules. That creates an unfair situation.
There are already some rules in place for these industries, but Jotzo thinks we need a more straightforward solution for the long haul. It’s a tricky situation, and Labor seems hesitant to jump on these recommendations.
As we head toward the 2025 election, it looks like the coalition hasn’t made up its mind either. It’s a bit of a waiting game right now.