A Trans-Tasman CBAM? Australia Is Deciding, and New Zealand Just Said It Will Follow
Share
Carbon border adjustment is going Pacific. On 5 August, New Zealand's climate change minister said that if a carbon border mechanism ever comes to New Zealand, it would arrive “in conjunction with Australia”, and that decisions are expected later in 2026. Across the Tasman, Australia's Carbon Leakage Review has already recommended a CBAM starting with cement and clinker, with the formal decision folded into the Safeguard Mechanism review that began in July. For importers, exporters and heavy-industry suppliers on both sides, the question has moved from whether to when, and what shape.1,2
Key takeaways
Australia's independent Carbon Leakage Review, published February 2026, recommends a border carbon adjustment starting with cement and clinker, the simplest case.
Hydrogen, steel, ammonia and ammonia derivatives sit in a second group; aluminium, alumina, refined petroleum and pulp and paper are flagged for future assessment.
The design is Safeguard-native: a charge on Scope 1 emissions above the equivalent Safeguard baseline, with an option to pay a fee rather than surrender carbon units.
Government decides as part of the Safeguard Mechanism review running through FY2026/27. New Zealand has signalled it would move only in alignment with Australia.
Meanwhile the EU's CBAM is live and the UK's starts January 2027, so ANZ exporters already face carbon borders abroad while their governments weigh one at home.
01What did New Zealand actually say?
The signal was deliberate, and deliberately conditional. Speaking at the Carbon Forestry 2026 conference in Rotorua on 5 August, climate change minister Simon Watts was asked whether a carbon border mechanism would be preferable to subsidising industries facing emissions costs. His answer: if there were ever policy change in this area, “that would be in conjunction with Australia”, adding that the government is actively monitoring Australian developments and expects relevant decisions to emerge later in 2026, depending on Australia's direction.1
Read it as sequencing, not reluctance. New Zealand's economy is too small, and too integrated with Australia's, to run a materially different carbon border regime; a unilateral NZ CBAM would invite trade friction with its largest partner for little leakage protection. Alignment turns two thin markets into one credible boundary, and it puts the effective decision clock in Canberra.1
02What did Australia's Carbon Leakage Review recommend?
A CBAM, starting narrow. The review, led by Professor Frank Jotzo and delivered to government with the final report published on 13 February 2026, concluded that carbon leakage risk is real for a defined set of trade-exposed commodities and recommended border carbon adjustments in tiers.2,3,4
| Tier | Commodities | Review's position |
|---|---|---|
| Priority | Cement, clinker (and lime) | Recommendedsimplest implementation, clearest leakage case |
| Second group | Hydrogen, steel, ammonia and derivatives (urea, ammonium phosphate) | Assess for inclusionsubject to further design work |
| Future consideration | Aluminium, alumina, refined petroleum, pulp & paper | Watch listrevisit as evidence and settings develop |
The design is Safeguard-native, not a copy of Brussels. Where the EU charges imports against the EU ETS price via certificates, the review recommends charging imports on Scope 1 emissions above the Safeguard Mechanism baseline that would apply to an equivalent Australian facility, at an explicit carbon price, with importers given the option to pay a fee rather than surrender Australian Carbon Credit Units. The fee option drew broad support in consultation, because forcing importers into the ACCU market would add demand pressure to an already tight supply.2 The effect is symmetry: imports face the same above-baseline carbon cost as domestic Safeguard facilities, no more, no less.
03Where would this land in the global carbon border map?
ANZ would be the third and fourth carbon borders, not the first. The EU's CBAM entered its definitive phase in January 2026, with certificate purchases starting February 2027; the UK's CBAM begins in January 2027 as a tax on the same industrial families minus electricity. An Australian mechanism decided in the 2026/27 review would realistically start later this decade, with New Zealand aligning behind it.5,6
The regimes rhyme but do not match. Any importer or exporter working across more than one of them should expect four different mechanisms with one shared demand: verified, installation-level embedded emissions per tonne of product.
| EU CBAM | UK CBAM | Australia (recommended) | New Zealand (signalled) | |
|---|---|---|---|---|
| Status | Live | LegislatedJan 2027 | Under decisionFY2026/27 | Signal only |
| Mechanism | Certificates priced off EU ETS auctions | Tax, government-set rates per product | Charge on emissions above Safeguard baseline; fee option | To align with Australia |
| First sectors | Cement, iron & steel, aluminium, fertilisers, hydrogen, electricity | Iron & steel, aluminium, cement, fertilisers, hydrogen | Cement, clinker (then hydrogen, steel, ammonia) | Undetermined |
| Reference price | EU ETS | UK carbon price (ETS-derived) | Explicit Australian carbon price / ACCU-linked fee | NZ ETS, presumably |
04Who should be paying attention, and what should they do?
AU / NZ importers of cement, clinker, lime
First in line. If the recommendation is adopted, the compliance mechanics will look familiar to anyone watching Europe: product-level embedded emissions, a baseline comparison, and a payable difference. Importers who start collecting supplier emissions data during the decision window will be pricing contracts correctly a year before their competitors.2,3
Steel, ammonia, fertiliser, hydrogen importers
The second wave, and the review explicitly kept them on the table. The same data infrastructure serves both tiers.
Exporters to the EU and UK
Already living with this: EU CBAM reporting is running now, with certificate costs from February 2027, and the UK regime starts January 2027. For a trans-Tasman manufacturer, the emissions-per-tonne data being assembled for European customers is the same data an Australian mechanism would need, one measurement, four borders.5,6
Safeguard facilities
Watch the review for the other half of the bargain: a border adjustment strengthens the case for tighter baseline decline rates domestically, because the leakage argument against them weakens once imports carry the same cost.4
05Frequently asked questions
Is Australia getting a CBAM?
Not yet, but it is now a live government decision. The independent Carbon Leakage Review, published in February 2026, recommended border carbon adjustments starting with cement and clinker. The government is considering the recommendation as part of the Safeguard Mechanism review running through the 2026/27 financial year.
What did New Zealand announce about a CBAM?
On 5 August 2026, climate change minister Simon Watts said any New Zealand move on carbon border policy would happen “in conjunction with Australia”, that the government is actively monitoring Australian developments, and that relevant decisions are expected later in 2026. No New Zealand mechanism has been proposed or legislated.
Which products would an Australian CBAM cover first?
The Carbon Leakage Review recommends starting with cement and clinker, assessing hydrogen, steel, ammonia and ammonia derivatives (urea, ammonium phosphate) as a second group, and keeping aluminium, alumina, refined petroleum and pulp and paper under future consideration.
How would an Australian CBAM differ from the EU's?
The recommended Australian design charges imports for Scope 1 emissions above the Safeguard Mechanism baseline applying to an equivalent domestic facility, with importers able to pay a fee at an explicit carbon price rather than surrender carbon units. The EU instead requires certificates covering embedded emissions, priced off EU ETS auctions, net of free-allocation and foreign-carbon-price adjustments.
When would an Australian or New Zealand CBAM start?
No start date exists. The Australian decision is expected out of the Safeguard Mechanism review during the 2026/27 financial year, after which design and legislation would follow, making the late 2020s the realistic earliest window. New Zealand has said only that its decisions would follow Australia's, with signals expected later in 2026.
References
- Argus Media, New Zealand eyes Australia-aligned CBAM, 5 August 2026, accessed August 2026.
- Argus Media, Australia should have CBAM on some commodities: Review, 13 February 2026, accessed August 2026.
- Global Cement, Final report on Australian carbon leakage review, accessed August 2026.
- DCCEEW, Australia's Carbon Leakage Review, accessed August 2026.
- European Commission, Taxation and Customs Union, Carbon Border Adjustment Mechanism, accessed August 2026.
- International Carbon Action Partnership, UK outlines details for Carbon Border Adjustment Mechanism introduction from 2027, accessed August 2026.
This guide is general information, not legal or trade advice. The Australian and New Zealand measures discussed are recommendations and ministerial statements, not law; check the primary sources above for the current position.
