Economic public policy expert and former ACCC Chair Rod Sims has repeated calls for a carbon tax on Australia’s fossil fuel sites.

Professor Sims currently chairs the Superpower Institute which he established along with economist Ross Garnaut to help Australia benefit from the economic opportunities of a post-carbon world.

Professor Sims and Professor Garnaut first outlined their plan for a ‘carbon solution levy’ based on the European Union’s carbon price (around $90 per tonne of emissions) at the National Press Club last month.

The pair believe the levy, which would be in place by 2030-31, would raise over $100 billion a year.

During a panel discussion at a renewable energy conference in Sydney last Thursday, Professor Sims repeated the call to action.

He said Australia could help reduce global emissions by anywhere between six and nine per cent by producing green products in Australia that are currently produced oversees using fossil fuels.

“There is zero doubt in my mind  that if the objective is (to make an impact on global reductions)… you’ve got to focus on the 6-9 per cent, and I would argue at the moment in Australia we’re not, and we have to change.”

Huge opportunity

Professor Sims said Australia has what’s likely the best combination of solar, wind and biomass resources in the world.

“We are about five per cent of the worlds land mass so when you’re talking about using renewable energy to make things. we should be contributing a hell of a lot to the world in doing that,” he said.

“We are in a very fortunate position, and we should take advantage of it for the benefit of ourselves and the benefit of the world.”

He said Australia currently exports iron ore, coal, minerals and energy.

Under his proposal, green metals would be made in Australia, using locally produced green hydrogen and exported to the international market.

We have one hell of an opportunity we should be taking advantage of.

Professor Rod Sims

“It makes sense to make things where the source of the renewable energy is, where you make the hydrogen, and that‘s in Australia,” he said.

“Some of those major norteast Asian countries don’t have enough renewable energy to electrify their own systems, much less make any intensive products. The only way they’ll decarbonise is if they get those products elsewhere. They are looking to Australia to do just that.

“If your goal is reducing emissions to turn climate change crisis from a burden to an opportunity this is our major way to reduce world emissions. We have one hell of an opportunity we should be taking advantage of.”

Funded by fossil fuel levy

But Professor Sims said the production of green metal will require investment in innovation and renewable energy infrastructure, which is where a carbon tax comes in.

“We have mentioned that Australia needs a carbon solution levy which would be levied from the European carbon price on all emissions from fossil fuel extraction sites, about 105 of them in Australia,” he said.

“We would levy that not just on their emissions in Australia but emissions worldwide.”

Professor Sims says a levy would not only fund the production of green metal in Australia, but it would also set a price signal for Australian decarbonisation.

From 2026 the EU will introduce a Carbon Border Adjustment Mechanism, which will impose a price on any emissions embedded in a poduct, he said.

“On our calculations, green metals will be cheaper in the EU than iron metal made from fossil fuels. That’s a fantastic option … so we need to get into that market.”