To achieve greenhouse gas emissions reductions aligned with Nationally Determined Contributions, a range of carbon pricing schemes are being considered, developed and implemented by some of Australia’s trading partners.

Carbon Border Adjustment Mechanisms (CBAMs) aim to stop ‘carbon leakage’, whereby businesses that import products or house components of supply chains overseas, to avoid more onerous domestic carbon emissions reduction policies (including taxes). With approximately 70% of the value of agricultural production exported, the Australian farm sector must be up to date on any direct and indirect impacts from trading partners’ use of CBAMs or related emissions policies.

Australia has also joined the group of 120-plus countries signed up to the Global Methane Pledge, which includes New Zealand, the USA, Brazil, Canada, and countries across Europe. With a high reliance on export markets combined with low levels of government support for the agricultural sector, Australian agriculture is unique compared to other signatories.

A tax on agricultural emissions could have serious impacts on the sector, dependent on how such a tax might be structured, whether there are corresponding tax offsets and whether a tax would mean access to premium markets and higher prices.

In addition, competition for land use in a low carbon economy is a wickedly complex issue which intersects with carbon pricing policies.

What do these policies mean for the competitiveness of Australian agriculture?

This project aims to consider and build on the report ‘Carbon tax at border – implications for Australian agriculture’ prepared by Deloitte in 2023. Recent developments in the carbon pricing landscape, such as discussions on developing an international carbon floor price, necessitate a deeper dive into the current and future implications for Australian agriculture.