Australia faces climate pressure with EU carbon tariff threat - study

By Sonali Paul

MELBOURNE, June 11 (Reuters) - Australia's conservative government should give up its outright rejection of carbon tarrifs and instead work to make them fairer and more effective, a think tank said on Friday.

The EU is set to propose a carbon border tariff policy on July 14 which would impose emission costs on imports of goods including steel, cement and electricity, to level the playing field with countries, like Australia, with weaker carbon policies.

The issue is sensitive as Prime Minister Scott Morrison heads to the G7 summit in Britian, which starts on Friday, where climate change and coordinating carbon policy is on the agenda.

Carbon border adjustment mechanisms are "a serious risk for some goods in Australia ", the Australia Institute think tank said in a report on Friday.

The country's A$12 billion ($9 billion) exports of aluminium and alumina would be most at risk as they are heavily reliant on coal- or gas-fired power in their production, the Australia Institute said.

Rather than fighting tariffs, Australia should work with Europe and other major economies to ensure the carbon border adjustments are are fair in how they calculate embodied carbon and how carbon tariff revenue is used.

"Australia should support an approach that...enhances climate finance for developing countries, including those within our own region that are highly vulnerable to climate change," the report said.

Australia, the biggest per capita emitter among the world's richest nations, has refused to match commitments by the United States, United Kingdom and other countries targeting net zero by 2050, or increase its emissions reduction target for 2030.

Morrison has said Australia will beat its Paris climate targets, but will do it through technology innovation, not taxes, which he says would kill jobs.

"That thinking drives our plans to pursue technology partnerships with the U.S., UK, Germany, Japan, the Republic of Korea, and reject carbon tariffs, which is simply trade protectionism by another name," Morrison said in a speech on Wednesday.

($1 = 1.2922 Australian dollars) (Reporting by Sonali Paul; Editing by Toby Chopra)