The Border Carbon Adjustment Mechanism (BCAM) could be an effective tool for reducing emissions in Australia. Cement and clinker could be the first candidates for the introduction of a "carbon tax."
These recommendations are provided in the Carbon Leakage Review, published on the Australian government's website.
Which goods will be the first to fall under the BCM?
According to the review, it is most appropriate to implement the BCM for goods that have the highest risk of carbon leakage. First and foremost, these are cement and clinker.
The next candidates could potentially be steel and iron, hydrogen, lime, ammonia and its derivatives, as well as glass. However, before applying the CBA to these goods, the review recommends further analysis of possible nuances, as these goods have complex supply chains and are only partially covered by the Safeguard Mechanism (Australia's government policy to reduce industrial emissions).
The analysis does not rule out that the list of goods will gradually expand. This may be influenced by changes in criteria, increased reliability of emissions monitoring, and international trends in carbon adjustment.
In particular, the review recommends reviewing the risks of carbon leakage from aluminum, deep-processed petroleum products, pulp and paper products, and alumina within the Safeguard Mechanism in 2026-2027.
What type of emissions can the mechanism be applied to?
The Australian CBA will be based on the domestic Safeguard Mechanism. Goods whose production emissions exceed its baseline levels will be subject to the "carbon tax." This refers only to direct Scope 1 emissions.
The review also proposes to take into account carbon prices in the country of origin of the goods. If they are lower than Australian prices, the CBAM will also apply to these imports.
Alignment with partners’ mechanisms
Australia cannot implement its own carbon adjustment mechanism without taking international experience into account. Should work on the mechanism be approved, the review recommends consulting with domestic and international stakeholders, especially trade partners.
The review also emphasizes that the new mechanism must be transparent, free from unnecessary administrative burden, and should not undermine principles of competition.
In the European Union, the CBAM became fully effective as of January 1, 2026. As EcoPolitic reported, during the first week alone, 1.7 million t of goods were declared. Ferrous metallurgy accounted for 98% of these.
In December 2025, the European Commission announced plans to expand the list of products subject to declaration, including auto parts, washing machines, and refrigerators.
