The Cement Industry Federation (CIF) in Australia claims that the government’s unwillingness to impose a carbon border tax on imported cement products is undermining the sector’s attempts to decarbonise and is putting up to 1400 local jobs at risk. The CIF, which represents Australia’s AUD2.7bn (US$1.7bn) cement industry, said the absence of a carbon levy on imports from countries with less robust climate commitments paved the way for the offshoring of local manufacturing – a process known as “carbon leakage.”
Under the government’s safeguard mechanism, large industrial emitters must reduce their baseline emissions by 4.9 per cent annually. Businesses that do not meet the baseline targets can buy carbon offsets to meet the targets, reports the Australian Financial Review.
In addition to being emissions-intensive, Australian cement manufacture is exposed to clinker imports that make up more than 40 per cent of domestic consumption. The government has temporarily granted trade-exposed industries slightly less rigorous emissions-reduction requirements under the safeguard mechanism.
However, in a pre-budget submission, the CIF, which represents Australian producers Adbri, Boral and Cement Australia, said leakage risks remained. It called on the government to put an EU-style tax on cement, lime and clinker imports from countries with more lax decarbonisation rules. “This needs to be one of the highest climate policy priorities of the federal government in 2025,” the CIF submission said.
“Not addressing the issue of carbon leakage in a timely manner will be detrimental to Australian cement and lime manufacturing and could lead to the unnecessary loss of key Australian cement and lime facilities.”
Cement, clinker and lime imports are sourced predominantly from southeast and north Asian countries, including Thailand, Malaysia, Indonesia, Vietnam and Japan. As a signatory to the Paris climate agreement, Australia has committed to reaching net-zero carbon emissions by 2050. The safeguard mechanism is a key plank of its legislated commitment to reduce emissions by 43 per cent on 2005 levels by the end of the decade.
In March 2023 the government appointed energy expert Frank Jotzo to assess the feasibility of an Australian Carbon Border Adjustment Mechanism (CBAM), particularly for steel and cement. As part of the review, wide consultations were held with the industry and a final recommendation was expected to be delivered in 2024. However, in November, an interim report was delivered instead, opening a new round of consultation. The final advice is now due to be released after the election.
