With momentum building in the European Union for tariffs on global carbon free riders, the Morrison government is left with few options except to rail impotently against what it calls, with Trump-level deceit, “protectionism”.
Last week the European Parliament backed a motion proposing the adoption of a Carbon Border Adjustment Mechanism (CBAM) that would impose tariffs on products from countries with lower emissions reductions targets than Australia. The goal is to prevent “carbon leakage” — whereby economic activity is shifted to other countries with high emissions intensity than Europe.
Scandal-plagued Morrison government minister Angus Taylor says Australia is “dead against” carbon tariffs, as if that mattered to European politicians and the European industries that have to compete with Australian products. The government says it will use the World Trade Organisation to oppose the tariffs “we want a trade liberalization approach, not a protectionist approach,” says Trade minister Dan Tehan.
In fact it is the Europeans who are the free traders here: by refusing to take any meaningful climate action, and promoting the expansion of fossil fuels like gas, the Australian government is free riding on international emissions abatement efforts and subsidising Australian exports which should cost more, reflecting a proper carbon price.
European industries required to comply with realistic carbon abatement goals reflecting the Paris Agreement — nearly twice as ambitious as the useless Tony Abbott era ones Australia has — face an unfair playing field against Australian exports.
In making the carbon leakage argument, the EU can look for support to none other than Mathias Cormann, head of the OECD, who last night defended his role in the destruction of one of the world’s most effective and efficient carbon abatement schemes — the Gillard government’s carbon pricing system — by saying “it was not desirable to shift economic activity and emissions into other parts of the world where for the same level of economic output emissions would be higher and that remains an issue that the world needs to grapple with today”.
Cormann thereby neatly encapsulated exactly why the EU is justified in imposing tariffs on carbon free riders like Australia.
The OECD head made another reference in his quest to draw a line under his long climate denialist actions as a senior member of the Coalition, repeatedly noting “the absence of an appropriately comprehensive global agreement on carbon pricing”.
With one of the world’s biggest trading blocs embracing carbon tariffs, a lot of very large corporations may suddenly decide that a comprehensive carbon pricing agreement is a good thing. A European oil major is now calling for an international carbon price. And the American Petroleum Institute — one of the most powerful fossil fuel lobbying groups in Washington — has recently endorsed carbon pricing, saying “API supports economy-wide carbon pricing as the primary government climate policy instrument to reduce CO2 emissions.”
Corporations prefer carbon pricing over mandates and regulatory intervention. And now that the Democrats have the White House and Congress, mandates are a real possibility. Hence the sudden push for pricing.
In Australian politics, carbon pricing is supposedly completely dead. Which would leave us in a peculiar position if other major economies started implementing it.
And any move toward a comprehensive global pricing agreement would leave Australia badly exposed. How do we know? None other than the OECD showed in 2018 that Australia is at the very bottom of all developed countries in terms of the amount of carbon emissions that are properly priced. No wonder the Europeans want our free riding to end.
Lucky we have Mathias Cormann to speak for us from the OECD. Or, perhaps, the world might start to look different to Cormann the longer he spends the OECD’s Paris headquarters. And not just because Passy has such great restaurants.
Cormann now has a potential conflict between what the members of OECD want and the denialist policies of our gov’t which financed the campaign and twisted arms/called in favours to get him his new job.
Where was Mr Cormann stopped on his road to Damascus? Sorry, he was never on the road so to speak, he was always in a private jet or limousine paid for by Australian taxpayers.
If he is to fulfill the lofty hopes of his Australian father figure, ScrotMo – to advance Australia’s interest above all others – we are all in for a very bumpy ride. The current Australian Government remains sequestered in its rosy, Trumpian cheer leader back room. Platitudes to maybe do something/anything meaningfull on climate change before the end of this century are a sober reminder that the LNP has taken the Nation into a parallel universe on course for the nearest black hole.
As with all else, the apple never falls far from the tree. I hope that the OECD has a robust ICAC regime in place. Their new chief executive is bound to test its elasticity in ways they might have never encountered previously.
CBAM was an obvious way forward clear from when Abbott and the LNP destroyed Australia’s clean energy initiatives. It is unbelievable that it was not a major consideration in policy making – or that if it was, that it was completely swept under the carpet.
Mathias is a good political prostitute. He will perform whatever tricks you want. Ignore past political positions. He will change as required. You pay, he play!
Problem is S, we all know which global industry has the biggest “hard on” and the deepest pocket when it comes to influencing fat cats’ and pollies’ decisions re crippling carbon emmissions reduction strategies in both the OECD and Canberra. There is no way Cormann was gifted his new lobbying role without support from pro oil industry influencers in the US, EU and UK legislatures.
Morrison is about to discover what Turnbull learned three years ago – Cormann can’t be trusted. He’s got a new constituency and is no longer beholden to a party colleague for his job. Unless, of course, Morrison wants to go walking with Matty every morning, like Dutton did, in order to get into his mind.
Mind? I thought it was a steel trap of seething economic wonders. Of course, ScrotMo probably said that and to anyone with his grip on reality it was an obvious conclusion?