New Zealand might explore a future carbon border adjustment mechanism (CBAM) aligned with Australia in case the Australian government decides to introduce such a scheme, climate change minister Simon Watts said at a conference on 5 August.
As part of its upcoming safeguard mechanism review, the Australian government will consider introducing a CBAM that could initially cover imports of cement and clinker and potentially expand to products such as hydrogen, steel and ammonia, as well as derivatives such as urea and ammonium phosphate.
Such commodities face risk of future carbon leakage from imports, which could lead to greenhouse gas (GHG) emissions being relocated from Australia to overseas, according to the findings of the carbon leakage review published in February.
"I would expect that if there was ever any policy change in this area, that would be something that would be in conjunction with Australia," Watts told delegates at the Carbon Forestry 2026 conference in Rotorua on 5 August.
The New Zealand government has been "actively monitoring" policy developments in the area and remains "open-minded", Watts said.
"I think it's probably going to be something that will come later next year, looking where the Australians are," he added.
Watts was responding to a question on whether a CBAM would be a better approach than government support to specific industries, as it did with a recent grant of up to NZ$60mn ($35.2mn) for Golden Bay Cement (GBC) to continue cement manufacturing at its Whangarei plant.
Operator Fletcher Building was considering closure of the GBC clinker facility in Whangarei in favour of switching to a cheaper import-only model, mainly because of emissions costs. The grant would preserve "a strategically significant domestic capability without creating a precedent for wider support or undermining the integrity of the ETS," the government said.
New Zealand emissions unit (NZU) spot prices collapsed in November after the government announced it would decouple the New Zealand Emissions Trading Scheme (ETS) unit volumes and price control settings from the country's nationally determined contributions (NDCs) under the Paris agreement. Prices reached low NZ$30s/t CO2e early this year but have since recovered, closing at NZ$55.70/t CO2e on 5 August.
Apart from Australia, other jurisdictions actively exploring CBAM-style border measures include Canada and the US, the Climate Change Commission (CCC) said in a report in April.
"While New Zealand exporters have limited direct exposure to currently planned CBAMs, this could change as these mechanisms spread to more countries, sectors and products," the CCC said.
