Europe moves to carbon tax Australian goods

For many years, as Australia agonised over its climate change transition and carbon price, forward-looking economists warned that it would not be long before it was imposed by other countries anyway. That day has come in the European Parliament:

To raise global climate ambition and prevent ‘carbon leakage’, the EU must place a carbon price on imports from less climate-ambitious countries, say Environment MEPs.

On Friday, the Committee on Environment, Public Health and Food Safety adopted a resolution on a WTO-compatible EU carbon border adjustment mechanism (CBAM) with 58 votes for, 8 against and 10 abstentions.

The resolution underlines that the EU’s increased ambition on climate change must not lead to ‘carbon leakage’ as global climate efforts will not benefit if EU production is just moved to non-EU countries that have less ambitious emissions rules.

MEPs therefore support the introduction of a WTO-compatible CBAM to place a carbon price on imports of certain goods from outside the EU, if these countries are not ambitious enough about climate change. This would create an incentive for EU and non-EU trade industries to decarbonize in line with the Paris Agreement objectives.

MEPs underline that it should be designed with the sole aim of pursuing climate objectives and a global level playing field, and not be misused as a tool to enhance protectionism.

CBAM must be linked to a reformed EU Emissions Trading System (ETS)

The CBAM should be part of a broader EU industrial strategy and cover all imports of products and commodities under the EU ETS. MEPs add that by 2023, and following an impact assessment, it should cover the power sector and energy-intensive industrial sectors like cement, steel, aluminium, oil refinery, paper, glass, chemicals and fertilisers, which continue to receive substantial free allocations, and still represent 94 % of EU industrial emissions.

To prevent carbon leakage, carbon pricing under the CBAM should be linked to the price of EU allowances under the EU ETS, they add.

Plenary is set to vote on the resolution in its session 8-11 March 2021. The Commission is expected to present a proposal in the second quarter of 2021.

German Greens, who have serious clout, are also proposing a new carbon tax alliance with the US, to punish all imports with no carbon pricing. That seems an unlikely outcome given the US no carbon price and only 11 state carbon prices. But who knows?

Eight days ago, China activated its trial rules for the world’s largest and most urgently needed carbon pricing scheme.

Australia led all of this and would now be miles ahead of the game had it sustained its carbon pricing regime. Moreover, the Gillard carbon price taxed only the polluters while compensating households with tax cuts. Instead, now, they will still pay the tax via fewer tradeable jobs.

But, hey, we stopped the boats.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


  1. nope, all scummo will do is use our taxes to support these leaches to the amount that this international law impacts them.

  2. I’m an avid capitalist.

    However, one of the problems I have with the status quo’s notions of capitalism is that it resists pricing the lifecycle of all inputs and outputs (as much as reasonably possible). But, this is essential for proper capitalism, else goods and services are mispriced, affecting people and the stability of capitalism as a system.

    One of the things I like about a carbon tax is that it effectively puts a price on all pollution and emissions, not just carbon emissions. This has been lacking.

    Even if you don’t believe in anthropogenic climate change, putting a price on such outputs is realistic and fantastic.

    Sometimes the lifecycle cost of some inputs and outputs are hard to price well – but governments can help with taxes (etc) like these, applied in an iterative fashion.

    Good for capitalism, and good for the environment.

    My 2c

    • +100…
      I looked at cheap crap that is available from the likes of Kmart of Bunnings and it’s produced in factories in China no doubt where no environmental regulation is in place and as a result who knows how much damage is done when it’s made, let alone when it goes in the bin or kerbside waste. Of which there is so much. Just look at what your neighbours are turfing each time hard waste goes out. It’s nuts.

      1 thing I have not enjoyed about having a baby is that people buy lots of stuff for you, that includes plastic toys etc.. all of which will eventually end up in landfill somewhere. I keep thinking it’s a shame, as I am at my heart a minimalist and hate clutter. Yet the house is full of stuff now.

      We need to better price in the costs of an item from it’s raw form and manufacture to it’s eventual disposal. If people had to pay for an item to be properly recycled at it’s end of use I’m sure many more items would be made to be easily recycled.

    • Re anthropomorphic climate change aka global warming this is now openly stated as included in and addressed by Schwabs Great Reset, and BuildBack Better. Yet Covid, lockdowns, massive reduction in public flights, vehicle usage and business shutdown made negligible difference in emissions. Gates has always wanted massive population reduction but the deaths have not been statically enough to pull back world population in 2020.
      A few 50,000 ft blasts from Indonesian and other volcanoes nicely added to atmospheric gases and particles.

    • BW,
      While I agree with your view point, if we lived in the capitalist utopia you’ve described we’d also be free from QE and money printing distortions and the weak would actually be allowed to fail. All that creative destruction and stuff is for old-school capitalists. Not for today’s hip, woke central bankers.

      • I don’t think it’s actually fair to call what I said a capitalist utopia.

        The utopian aspect might be if private entities fully priced the lifecycle inputs and outputs accordingly. But I’m not saying that.

        I’m actually advocating that iterative pollution taxes, such as a carbon tax (regardless of whether one believes in AGW), is a great and efficient market regulatory mechanism: ‘Let us modestly price that for you’, and then put it into regulated trading markets. I think it’s great.

        Inputs and outputs more (but not necessarily) fully costed without the significant expertise and costs required to privately setup such costing.

        Capitalistically and sustainably efficient. Bravo.

  3. This puts the spot light on National party leader Michael McCormick’s latest brain fart about quarrantining agriculture from emission reduction legislation.
    His idea came as an almighty surprise to the Farming community which have , of their own volition, developed strategies for reducing their emissions, which they see as essential to their enterprses.
    The National Farmers Federation set a zero emissions by 2050 target,The red meat sector in 2017 set a zero target for 2030, Grain Growers has endorsed the NFF’s plans and committed to develop a grain specific target for 2030, and the Pork industry aims to go beyond carbon neutral by 2025.
    Even if McCormick doesn’t realise what is happening in the wider world, the farmers certainly do.
    Next step is electing politicians that do represent the best interests of the rural community.
    Nats, need not apply.

  4. meh.

    One crisp winter morning in Sweden, a cute little girl named Greta woke up to a perfect world, one where there were no petroleum products ruining the earth. She tossed aside her cotton sheet and wool blanket and stepped out onto a dirt floor covered with willow bark that had been pulverized with rocks. “What’s this?” she asked.

    “Pulverized willow bark,” replied her fairy godmother.

    “What happened to the carpet?” she asked.

    “The carpet was nylon, which is made from butadiene and hydrogen cyanide, both made from petroleum,” came the response.

    Greta smiled, acknowledging that adjustments are necessary to save the planet, and moved to the sink to brush her teeth where instead of a toothbrush, she found a willow, mangled on one end to expose wood fibre bristles.

    “Your old toothbrush?” noted her godmother, “Also nylon.”

    “Where’s the water?” asked Greta.

    “Down the road in the canal,” replied her godmother, ‘Just make sure you avoid water with cholera in it”

    “Why’s there no running water?” Greta asked, becoming a little peevish.

    “Well,” said her godmother, who happened to teach engineering at MIT, “Where do we begin?” There followed a long monologue about how sink valves need elastomer seats and how copper pipes contain copper, which has to be mined and how it’s impossible to make all-electric earth-moving equipment with no gear lubrication or tires and how ore has to be smelted to a make metal, and that’s tough to do with only electricity as a source of heat, and even if you use only electricity, the wires need insulation, which is petroleum-based, and though most of Sweden’s energy is produced in an environmentally friendly way because of hydro and nuclear, if you do a mass and energy balance around the whole system, you still need lots of petroleum products like lubricants and nylon and rubber for tires and asphalt for filling potholes and wax and iPhone plastic and elastic to hold your underwear up while operating a copper smelting furnace and . . .

    “What’s for breakfast?” interjected Greta, whose head was hurting.

    “Fresh, range-fed chicken eggs,” replied her godmother. “Raw.”

    “How so, raw?” inquired Greta.

    “Well, . . .” And once again, Greta was told about the need for petroleum products like transformer oil and scores of petroleum products essential for producing metals for frying pans and in the end was educated about how you can’t have a petroleum-free world and then cook eggs. Unless you rip your front fence up and start a fire and carefully cook your egg in an orange peel like you do in Boy Scouts. Not that you can find oranges in Sweden anymore.

    “But I want poached eggs like my Aunt Tilda makes,” lamented Greta.

    “Tilda died this morning,” the godmother explained. “Bacterial pneumonia.”

    “What?!” interjected Greta. “No one dies of bacterial pneumonia! We have penicillin.”

    “Not anymore,” explained godmother “The production of penicillin requires chemical extraction using isobutyl acetate, which, if you know your organic chemistry, is petroleum-based. Lots of people are dying, which is problematic because there’s not any easy way of disposing of the bodies since backhoes need hydraulic oil and crematoriums can’t really burn many bodies using as fuel Swedish fences and furniture, which are rapidly disappearing – being used on the black market for roasting eggs and staying warm.”

    This represents only a fraction of Greta’s day, a day without microphones to exclaim into and a day without much food, and a day without carbon-fibre boats to sail in, but a day that will save the planet.

    Tune in tomorrow when Greta needs a root canal and learns how Novocain is synthesized.

    • Petroleum is a very , very useful substance,
      it is the burning of it that is criminally dumb.

    • TheLambKingMEMBER

      The post above, while mildly amusing, is misinformation.
      The aim of being carbon neutral is not stop all use of hydrocarbons and petrochemicals.

      • So what are the actual costs of reaching carbon neutral? What needs to be given up?
        If it was nothing we would be there already.

        • What is the cost of not doing anything? Why only consider the costs on one side? Everything costs – even inaction.

      • Bullshlt LambKing. Sometimes the truth about mankind’s ridiculous quests hurt those who embark on such quests without the scientific or engineering competence to understand all that is involved to bring it to fruition.

        pledges to be zero net carbon by 2030, 2040 or 2050 are made by accountants, marketing professionals and school girls.

    • Bendy, your post showcases the ingenuity that has been utilised for over a century, don’t you think the same ingenuity will now bring a low/zero carbon economy into being………..

      • Don’t confuse low carbon future with a zero carbon future. One is possible, yet one is the wet dream of bean-counters and school girls in Sweden

        • Bendy, I’m an engineer, explain to me why a zero carbon future i.e. carbon steady state ( carbon produced = capacity of carbon sinks) is not possible.

          • Jumping jack flash

            It depends on the results of the baseline study to determine whether we are net producing or net reducing carbon in the atmosphere.

            Assuming we are producing excess carbon into the atmosphere, what does this baseline study determine is the net shortfall of sinks to achieve neutrality?

            How much time and energy will be required to produce those sinks to achieve net carbon zero? Do we even know what those sinks are?

            Would the solution have to achieve less than zero though? Would we be expected to counter natural sources of carbon?
            Unless of course this baseline study was able to separate the amount of “manmade” carbon from natural carbon, and we would all be happy with simply negating the “manmade” part.

            I think as an engineer there is still a lot of decisions required to be made about the scope of the effort, but I’m not in the loop, so maybe these questions have been answered and the decisions already made?

        • TheLambKingMEMBER

          zero carbon future

          But no one is talking about zero carbon! That is just FUD talk. The aim is NET zero carbon. Big difference. No one is talking about a low energy future or a sustainable living future. It is just carbon neutral. So the CO2 emissions are offset by CO2 sequestrations – in 30 years! The iphone is 10 years old. We already know how to de-carbonise our electricity generation (to allow MORE consumption of power) and transport (planes still needs some work.) We can produce steel without carbon. We know how to sequest carbon by planting trees – but we will find ways.

          We didn’t know how to land a man on the moon, but without a goal they would not have tried or put resources into trying.

      • A low/zero carbon economy comes with tradeoffs. The above post exaggerates them, but this is what the cost will be like, and why we aren’t there already.

        • The reason we aren’t there is due to ideology plus the big Australian scare factor of……….we…..might…………..less…….rich. Horror!

          • If it was cheaper, ie. it wouldn’t lower living standards then it would be the norm.
            Electric cars are more expensive and offer inferior performance. Hence a lower standard of living from their adoption.
            But it’s all a conspiracy to keep the green tech down…

          • TheLambKingMEMBER

            If it was cheaper, ie. it wouldn’t lower living standards then it would be the norm.
            Electric cars are more expensive and offer inferior performance. Hence a lower standard of living from their adoption.

            Because all that money spent on natural disasters being made more frequent from climate change is so cheap! How much will it cost when the sea rises and 30% of the population has to move?

            Electric cars prices are coming down with battery prices. They will be the same some time between 2025-2030 and will continue to become cheaper than ICEs. Same goes for solar and wind – they are already cheaper for new-builds.

          • The reason a shortcut is called “a shortcut” and not “the way” implies an element of risk.

            We don’t know, but there is a risk that living standards are lower with net zero. Not for everyone mind you!

        • The above post exaggerates them, but this is what the cost will be like, and why we aren’t there already.

          This is like asking “why didn’t we have planes and computers ten thousand years ago?”.

          • No it isn’t. None of the green tech is NEW. It has all been around my entire lifetime. Windmills have existed for millennia, solar cells were around in the 80’s, electric cars and batteries in the 90’s(the 1890’s).
            Why are all these things not dominant? Because they still aren’t as effective as currently used alternatives.

          • No it isn’t.

            Yes it is. We had all the materials required. What we lacked was knowledge.

            None of the green tech is NEW. It has all been around my entire lifetime. Windmills have existed for millennia, solar cells were around in the 80’s, electric cars and batteries in the 90’s(the 1890’s).

            Not as they exist today, which is the point.

            Why are all these things not dominant? Because they still aren’t as effective as currently used alternatives.

            So your argument is actually that we have reached the end of technological advancement ?

          • “Not as they exist today, which is the point.”
            Yes as they exist today, or near enough anyway.
            The reason they are starting to see use is regulatory as much as anything, not superior performance or cost.

          • EVs are drop-in replacements for the majority of use cases today.

            Pricing will be competitive up-front within the decade, and better over the vehicle’s lifetime.

            These outcomes are the results of improving technology and economies of scale.

            Your argument is circular – “if it could ever, then it would have already”.

    • Jumping jack flash


      I grew up without electricity of any kind but we had water attached to the house to give us a total of 2, maybe 3 cold water taps, no hot water of course, that was boiled on the wood stove as necessary. Fortunately we had flush toilets plus a septic system.

      Supplementary water fetched from the creek for gardens. No pumps.
      Every so often we would kill a chicken. They were white leghorn layers, so the meat was as tough as a handbag.

      It was immensely hard, but I earned a lifetime of carbon credits I guess. My parents were of course insane.

      I don’t really think the advocates for all this sustainable living really know what it will mean to go back to subsistence and hunting/gathering. When 80% of your energy is used to find food to give you enough energy to find food the next day, it is a very poor use of time and effort. This is the whole reason we invented farming.

      Needless to say my parents didn’t work. How could they work when all their effort was used to obtain and maintain the resources we needed to survive?

  5. This is nothing less than we deserve. Us having a modest carbon tax was always going to be good high altitude training for a Australian businesses to set them up for the 2020s and beyond. What a missed opportunity.

  6. Instead of carbon tax, an emissions tax on toxic substances, concern about stream, sea pollution and landfill would be to the point. The toxic unfortunate building materials are an extension of the lack of concern.

    Re carbon dioxide emissions tree planting would solve that and likely ameliorate local climate, disrupting wind and due to high water content and some reduction in temperature extremes. Clearly the carbon tax stuff and carbon dioxide screams are not rational for the objectives stated

  7. Jumping jack flash

    I don’t mind the idea of a carbon-backed currency. A good currency must be backed by something, and gold clearly doesn’t cut it.

    Placing carbon taxes/tariffs on items was always going to happen. The interesting part will be to see how effective they actually are.

  8. David WilsonMEMBER

    An EU carbon tax on all imports is just an excuse for running a protection racket for inefficient farming and manufacturing sectors.
    Hey but let’s face it the Keats news tells us ….. NOAA recently reported every year since 2016 has been cooler than that year so no , no climate emergency just political clap trap.

    • That is just so stupid.

      None of us are dumb enough to fall for your clap trap.

      The EU have been subsidising its farmers for decades.

      Well before carbon pricing you intellectual invertebrate.

    • bolstroodMEMBER

      Hi David could you please post a link for your assertion that according to NOAA every year from 2016 onward has been a cooler year.?

      • TheLambKingMEMBER

        No, he is technically correct!

        The warmest years globally have all occurred since 2005, with the top ten being 2016, 2020, 2019, 2015, 2017, 2018, 2014, 2010, 2013 and 2005 (tied), respectively.

        So 2016 is the hottest and all the years after that have been cooler than it – BUT they are all warmer than every year since the industrialisation of earth. But, this is classic Denier misleading & cherry picking – he is using the same tactic used after the massive El Nino spike in the late 90’s to state that there had been no warming. That 2020, in a La Nina year is the 2nd hottest on record (to 2016) is not showing any sign of global warming slowing down!!

        • Wait a minute here!

          To project the data of chosen years and annualise them on a 100 year scale is approved method for warming predictions.
          Why can’t we do the same for the last 5yr of data?