EU levy could impose carbon price of A$65-140 on Australian exports, with more climate tariffs to come

The European Parliament’s environment committee last week endorsed the proposed Carbon Border Adjustment Mechanism (CBAM), requiring importers of polluting industrial goods to the European Union (EU) to pay a border levy – by no later than 2023 – based on the volume of greenhouse gas (GHG) emissions used in making and shipping their products.

The new regulation would initially apply a carbon cost to products sold into the EU including steel, cement, chemicals and fertilisers – not widely exported by Australia to EU markets – but would eventually extend to all commodities and products covered by the EU’s carbon market.