Australia’s carbon tariff 2030 discussions are intensifying as the government weighs bold measures to align with its climate targets while staying competitive in global markets.

In short: 

Energy Minister Chris Bowen says Australia is “by and large” on track to hit its 2030 emissions goal but concedes the need to “do more”, leaving the door open to a carbon tariff on cement and other products pending an expert review.

Mr Bowen said the newly approved North West Shelf expansion would not jeopardise emissions goals because the site was covered by the safeguard mechanism and legally required to ratchet down its own emissions toward net zero.

What’s next?

The government will soon decide its 2035 target, subject to the advice of the independent Climate Change Authority, and is bidding to host the next global climate conference. 

A “carbon tariff” on dirty cement or steel made elsewhere could be considered in the Albanese government’s second term, as Energy Minister Chris Bowen concedes Australia must “do more” to achieve its climate targets.

Mr Bowen said Australia was “by and large on track” to meet its legislated target of reducing emissions by 43 per cent by 2030, despite new figures this week showing flatlining progress in 2024.

“We’ve never suggested it’s a linear line … But with the right approach from government, yes, we can continue to be on track [despite] facing headwinds and challenges from time to time,” he told the ABC’s Insiders.

Labor approved a 40-year expanded licence to Australia’s largest oil and gas project, Western Australia’s North West Shelf, in a move criticised by environmental groups.

Mr Bowen said the decision by Environment Minister Murray Watt was made according to the “very strict criteria of the environmental approvals legislation”, which does not allow consideration of emissions impacts and which Labor has so far failed to reform. 

But he insisted the move would not jeopardise Australia’s emissions efforts because the North West Shelf would be governed by Labor’s safeguard mechanism, which forces large emitters to reach net zero emissions, including by purchasing offsets if they cannot avoid emissions “onsite”.

“It’s already obliged to be reducing emissions today and it is,” he said.

“The whole idea of the safeguard mechanism is to send the message to the boards to say, ‘Hey, you know, you should start investing in onsite emissions abatement here, because we’re going to require you to buy offsets if you don’t.’”

The government will this year be required to set a 2035 emissions target, which it will consider pending advice from the independent Climate Change Authority.

Mr Bowen said he was willing to consider new policies if required, including the use of tariffs to ensure that companies do not shift emitting activities offshore to evade the intent of Australia’s targets.

That practice, known as carbon “leakage”, is already subject to a government review led by ANU Professor Frank Jotzo, whose preliminary papers identified clinker, cement and lime as particularly high leakage risks, and ammonia, steel and glass as moderate risk.

Mr Bowen said he would be guided by the Jotzo review, which was contemplating a “carbon border adjustment mechanism” that would impose an extra cost on imports made in countries without carbon prices.

“We have been clear that we want to ensure Australian industry is best placed to compete in a decarbonising world,” he said.

“What could be the case is … we look at particular sectors first around cement and lime, [which] are places that we looked at in particular, but I’m not going to get in front of the process … We’ll have more to say during the course of this term.”

The Coalition’s new energy spokesperson Dan Tehan criticised Mr Bowen’s failure to “rule out” carbon tariffs.

“Before the election, Chris Bowen, this arrogant minister, said nothing about carbon tariffs. Yet here he is immediately after the election talking about putting them in place,” he said.

The US this week increased its global tariffs on steel, drawing fresh criticism from the Australian government.

Mr Bowen said he did not believe the Trump administration’s abandonment of climate goals would derail Australian or global action.

“The United States is around 12 per cent of emissions globally. That’s a lot, but it doesn’t mean that the rest of the 88 per cent of us stop doing things.”

He reiterated Australia’s enthusiasm to host the next global climate conference in Adelaide.

“A conference that knocks it out of the park is our intention for Australia to showcase ourselves, to highlight the job opportunities for a traditional fossil fuel country like ours, that we can and will embrace the transition.”

Learn more: 

• FuelEU Maritime: New Climate Regulation
• Path to Net Zero: IMO Climate Goals
• Hydrogen Projects in Australia
• Decarbonizing Maritime & Trade

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