Ammonia trade and embedded emissions pricing


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Emissions (carbon) pricing has been theoretically and empirically proven to be the most efficient means of correcting the market failure caused by greenhouse emissions externalities. None-the-less, political constraints have prevented emissions pricing from forming a stable component of Australian climate and energy policy. For export-facing industries such as ammonia, however, emissions pricing in export markets is likely to matter more than Australian policy. In particular, the European Commission is set to propose a carbon-border adjustment mechanism in July 2021. The US is also considering ways of ensuring their industries are not disadvantaged as a result of its substantially ramped up climate goals under the Biden Administration. This presentation will consider the implications for Australian ammonia producers of carbon border adjustment mechanisms in major markets, as well as how Australian Government policy can help producers minimize negative consequences and capture benefits from low-emissions production.