Orica backs Europe’s carbon tariffs, says Australia needs some

Orica chief executive Sanjeev Gandhi has backed carbon border tariffs similar to Europe’s as the best means to protect the explosives manufacturer and other Australian industries against unfair competition from other countries’ carbon-intensive imports.

Orica, which supplies explosives, blasting systems and other services to mining, quarrying and construction firms around the globe, says a levy on high-emissions imports will level the playing field for Australia against unfair global competition.

The European Union will introduce a tariff in October on some emissions-intensive imports such as iron, steel, cement, fertilisers, aluminium, electricity, hydrogen and chemicals as a signal to other countries and corporations selling goods into the EU who aren’t reducing their emissions fast enough.

If those countries don’t act to reduce or price in their carbon emissions, in effect the EU will do it for them.

Consulting firm EY estimates the EU’s carbon border adjustment mechanism will hit just 0.9 per cent of Australian and New Zealand exports, but Gandhi said Australia needed a similar standard to protect manufacturers from other countries with poor carbon pricing regimes.

“A carbon border adjustment mechanism will ensure a level playing field so that Australian industry is not unfairly competing against imported products from countries with less mature carbon pricing regimes and reduce the risk of carbon leakage out of Australia,” Gandhi said in a speech at the Melbourne Mining Club on Thursday.

The Albanese government successfully legislated the safeguard mechanism earlier this year to impose emissions limits – known as baselines – on the nation’s top 215 industrial fossil fuel polluters.

Federal Climate Change and Energy Minister Chris Bowen has since said he was investigating a range of policy options including cross-border carbon tariffs to ensure a level playing field for local producers of steel, cement and concrete, among others, when they compete against imports produced in jurisdictions without mandatory emissions targets.