The process for Australia about receiving a carbon price is shaping up to be much more economically damaging than it could have been.
The best way to tackle the “negative externality” that carbon emission does to our environment, believed by economists, is to include that price among production costs.
Although Australia stopped trying to price carbon emissions, other countries didn’t. Today, a large proportion of our major trading partners have such policies in place to price their emissions.
To ensure net zero emissions by 2050, these countries are now threatening to impose “carbon tariffs” on goods imported from countries (being Australia) without similar commitments or mechanisms in place.
A decade ago, the same problem confronted architects of Australia’s proposed carbon pricing mechanisms. Meaning, the schemes were designed to ensure “emission-intense, trade-exposed” sectors were sheltered from such competition through free kicks and a prolonged transition to the new scheme.
Prime Minister Scott Morrison argues that carbon tariffs are a form of protectionism economists prefer not to see.
Morrison says, “the European Union has been wanting to do this for years, but there has been no point in them doing it on their own. But now Biden’s platform commits the United States to carbon tariffs on imports from countries that don’t have a carbon price or aren’t doing anything.”
If tariffs are imposed, Australia will either have to pay tariffs, come up with a carbon price quickly or the consumers of our products in foreign countries will pay the tariffs if they choose to keep buying our stuff, hurting domestic producers.
