The EU tariff plan is good news for Australia’s place in the World

Jul 21, 2021

The steady deterioration in Australia’s environment and the ineffective revision of the EPBC Act suggests that we need help from other developed nations to solve our problem. This help may come from proposals on trade from the EU and the USA.

The G7 Communiqué in June said that biodiversity loss is an intrinsically linked, mutually reinforcing, and equally important existential threat to our planet and our people alongside climate change.

A separate Communiqué from the G7 Climate and Environment Ministers on May 21st brought together the G7 commitments on biodiversity, climate change and the environment in general which recognise the crisis we face and the urgency for action. The understanding and intent of this document is impressive and its fate in Australia will reside with Ministers Ley, Taylor and Pitt.

The recent statements from the EU and the USA on trade are good news for Australia for they may lead to environmental reform.

The EU’s Fit-for-55 plan aims to further reduce carbon emissions by a further 31% by 2030 to achieve the net zero target by 2050, its current emissions reduction being 24%.

Thirty per cent of the EU budget will be devoted to the Plan which will profoundly affect the life of every EU citizen.  Its main thrusts are well summarised by Politico, the most contentious but far-reaching, being the carbon border tariff or Carbon Border Adjustment Plan (CBAM) which may precipitate carbon pricing.

At the same time the US $3.5 trillion budget plan is likely to include a tax on imports from countries with inadequate climate change policies.

The question is how do the EU and USA plans not only address climate change but also help the environmental crisis by interlocking with the needs defined in the Report “Biodiversity, Natural Capital and the Economy: A Policy Guide for Finance, Economic and Environment Ministers, prepared by the OECD and presented at the G7 and in the May 21 Communiqué from these Ministers.

Since climate change is an important driver of biodiversity loss, the EU and USA measures are welcome. Whilst the initial tariffs will be directed at cement, iron and steel, aluminium, fertiliser and electricity, these are not exported by us to the US or EU but they do go into a supply chains of other exporting countries which will pay tariffs because of inadequate climate policies.

In the future, the greatest reprieve for biodiversity would be for tariffs on coal and gas mining products which damage land directly and utilise and disrupt water sources so essential for the environment.
The desperate need is for tariffs on exports from countries which damage the environment but unlike climate change, loss of biodiversity cannot be neatly quantified. As noted in the Dasgupta report “Natural capital accounting is essential for integrating biodiversity considerations into measures of national performance and policy appraisal.”

Progress within the recommendations of the G7 report Biodiversity, Natural Capital and the Economy is delegated to each national government. However Australian government progress on environmental accounting under the System of Environmental-Economic Accounting (SEEA) is poor and we have not yet reached base camp in the life saving climb to the summit of a stabilised biodiversity.

Mr Morrison, the G7 Summit and the report “Biodiversity, Natural Capital and the Economy”

One option is to establish a Natural Capital Bank which might be equivalent to the UK Office of Environmental Protection as a focus for institutional reform. Currently, the Australian Government has rejected any consideration of an Environmental Protection Authority because any degree of independence might impede government current plunder of the environment for economic growth.

The Bank would be modelled on some central banks and could involve supervising and coordinating existing institutions charged with environmental protection. This would help manage the natural capital of the nation and ensure its environmental stability on behalf of society, as a central bank helps manage the economy, ensures financial stability and sets the rules for capital adequacy.

A National Capital Bank should be established under the commitment Australia has made to SEEA but it will take years to deliver and the environmental crisis must be addressed by more urgent measures by applying tariffs on a wider range of exports which will affect Australia more directly.

The international community can judge Australia’s performance on climate change from data emanating from government, industry and scientific sources. Similarly, the international community has scientific information about the demise of our natural capital sufficient to impose tariffs for example data available from the ANU’s Environmental Explorer Report. The 2019 Report reveals the worst environmental conditions in many decades, perhaps centuries, and confirms the devastating damage global warming and mismanagement are wreaking on our natural resources.  The seven indicators used in the ANU report are high temperatures, river flows, wetlands, soil health, vegetation condition, growth conditions and tree cover.

This and other Australian scientific reports could provide a simple index based on the evidence available now to the international community and could be the basis for action. Reliable data on land clearing is available from national records and satellite imaging. Clearing in Australia is prodigious and impacts biodiversity, water sources and soils as well as reducing carbon storage.

A referee is vital for such scientific assessments, for example, an equivalent to the World Heritage Committee which is likely to declare the Great Barrier Reef in danger on the basis of scientific assessments over 22 years, a process which the Australian government is attempting to counter by lobbying for support from fossil fuel friends.

At the G7 meeting, Australia joined The High Ambition Coalition (HAC) for Nature and People which is an intergovernmental group championing a science-driven global deal for nature and people that can halt the accelerating loss of species, and protect vital ecosystems that are the source of our economic security. As one example for the way forward, the HAC could form an IPCC-type group of scientists to assess land clearing and define those countries which should have tariffs imposed on their exports.

Some of these land clearing countries would be poor and but in their case payment of tariffs could be accompanied by funding to enable them to maintain forest cover. This could be delivered through an expanded UN Green Climate Fund.


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