Countries who go it alone by refusing to take meaningful steps on emissions reduction could soon be forced to pay in other ways.
As the 2030 deadline for the Paris Climate Agreement targets creeps closer, countries who are meeting more ambitious targets are thinking about other ways to motivate those who aren't.
One measure that is starting to gain traction, particularly in Europe, is the creation of a so-called "Carbon Club".
The carbon club idea is simple: countries who are meeting their climate targets as set out under the 2030 Paris Agreement will form a coalition, and impose border tax adjustments on those who aren’t.
Currently, the plans would involve several EU countries.
The notion of a carbon club likely offends President Donald Trump's isolationist worldview, but it appears Democratic hopeful Joe Biden could be open to the idea.
Democratic presidential candidate and former Vice President Joe Biden speaks about climate change and wildfires affecting western states. Source: AP
The push for a Climate Club
The United Nations Special envoy on Climate Action and Finance, Mark Carney, recently told the Smart Energy Council conference that it was inevitable a carbon club in some form would be implemented eventually.
“This is an instrument that’s coming in, and if you look from a European perspective, the ambition has ramped up another level in terms of their intentions and their goals… The question is, where is everybody else?”
While the precise details on how such a club would work are unclear, Mark Howden, Director of the Climate Change Institute at the Australian National University, has said that it would focus on border tax adjustments.
Border tax adjustments occur when countries who are decarbonising put a tariff on imports from countries who aren't.
This happens because the countries who are decarbonising will have higher costs of production than those who aren't, so will be disadvantaged in international trading.
Mr Howden has warned that these border tax adjustments will target countries such as Australia.
“The talk there is that the EU is targeting countries like Australia where there’s at least the perception from the EU that we’re not taking effective climate action.”
Australia’s use of carryover credits from the Kyoto Protocol is largely viewed in the international community as cheating on its climate targets, which spells bad news for Australia if a carbon club was to be implemented.
“The EU essentially sees Australia as cheating and they’re taking a fairly hard line of saying that Australia would be one of those countries that we would target with a border tax adjustment.”
A grim outcome for Australia
China's decision to have put other countries on notice. Xi Jinping recently attended a virtual summit with EU leaders about climate change and was quick to commit to decarbonisation after the meeting.
Mr Xi vowed that the world's largest greenhouse gas polluter will peak emissions in 2030 and go carbon neutral by 2060, in what climate activists hailed as a major step forward.
Joe Biden’s campaign has also repeatedly stressed its desire to tackle climate change as a pressing issue.
“He will lead an effort to get every major country to ramp up the ambition of their domestic climate targets," a campaign spokesman said recently.
"He will make sure those commitments are transparent and enforceable, and stop countries from cheating.”
This puts Australia increasingly at odds with others, and increasingly in danger of being targeted by carbon club arrangements.
Dr Robert MacNeil from the University of Sydney has questioned whether the US would ever commit to a carbon club.
"It’s honestly extremely hard to imagine the US imposing border tax adjustments on other countries, even if the Democrats were to regain the presidency and Senate in November."
However, Dr MacNeil warned that the consequences could be grim for Australia, especially if the United States does back such a measure.
"The US only takes in about 3 per cent of our exports, so that alone isn’t all that threatening, but obviously the bigger issue would be that the US could build a big coalition on this sort of thing if it wanted to, and that could draw in some of our major export markets.
"Australia’s climate reputation on the world stage is about as bad as it gets."
