Australia’s final Carbon Leakage Review has recommended the introduction of a carbon border adjustment mechanism (CBAM)-style scheme, with cement and clinker identified among the first sectors for inclusion.
The review, published on 13 February as part of reforms to the country’s Safeguard Mechanism, warns that emissions-intensive trade-exposed industries face rising carbon leakage risk as domestic baselines tighten towards 2030. Cement and clinker were singled out as particularly exposed to import competition from jurisdictions with weaker carbon pricing.
Under the proposed approach, imports would face a carbon liability reflecting the emissions intensity of their production, effectively aligning them with Australia’s domestic carbon costs. The aim is to prevent local decarbonisation efforts being undermined by a shift to higher-emissions imports.
Modelling cited in the review suggests clinker imports could rise significantly by 2030 under a high-risk scenario, with cement also facing elevated leakage exposure. Australia already imports a substantial share of clinker and cement from regional suppliers.
The review proposes a phased implementation, with cement and clinker prioritised due to their relatively homogeneous products and measurable emissions intensity. Other commodities such as steel, lime, hydrogen and ammonia could be considered at a later stage.
The federal government will consider the recommendations as part of its 2026-27 Safeguard Mechanism review before determining next steps. If adopted, the measure would place Australia alongside other jurisdictions moving towards border carbon adjustments for emissions-intensive sectors such as cement.
