Australia considers its own CBAM and what global fragmentation means for companies

CBAM becomes part of the global trade architecture

With the publication of the final "Carbon Leakage Review" in February 2026, Australia has taken a concrete step toward its own border adjustment mechanism. The report, led by Professor Frank Jotzo, arrives at a clear recommendation: Australia should introduce a CBAM, starting with cement and clinker, with possible expansion to hydrogen, steel, ammonia and their derivatives. The final political decision is to be made as part of the Safeguard Mechanism Review 2026 to 2027.

What makes this development interesting is less the announcement itself than the timing and the context. The EU has just entered the regulatory phase. The United Kingdom has confirmed its CBAM for 2027. Canada is working on its own mechanism for 2027 to 2029. Australia now joins them, but not as an imitator, rather with its own design approach that differs clearly from the European model.

For companies that are currently setting up EU CBAM processes, this raises a strategic question: To what extent should these structures already be designed today for multiple jurisdictions?

Scope 1, explicit prices, national baselines and why Australia's design is different

The Australian proposal is closely aligned with the existing Safeguard Mechanism, a baseline and credit system for large emitters. This has consequences for the architecture of the planned CBAM. The focus is exclusively on Scope 1 emissions, and only those that are above the national baselines. Explicit CO₂ prices are to be credited, not implicit costs from regulation or standards.

That sounds technical, but it is strategically significant. Because it shows that the global CBAM landscape is not developing toward harmonization, but will be fragmented. The core idea, protection against carbon leakage, is the same, but with different system logics, different emissions boundaries and different crediting rules.

For European exporters to Australia, the immediate impact may initially be limited as long as the mechanism starts with cement and clinker. But the possible expansion to glass, steel and ammonia affects exactly the sectors in which European companies are currently collecting emissions data from the supply chain on a massive scale. The question of whether and how European CO₂ pricing would be recognized under an Australian CBAM is still completely open.

While Europe argues over exemptions, Australia moves ahead

It is also interesting how Australia's positioning relates to the current discussion in Europe. While Brussels is debating exemption clauses and the stability of the CBAM framework, Australia is signaling something else. There, CBAM is seen as a useful instrument and they want to introduce it themselves. That is a remarkable contrast.

At the same time, the Australian review shows that the question of interoperability is recognized there as well. The report explicitly recommends seeking international cooperation and supporting the development of compatible systems. Australia is thus positioning itself as a potential partner for a rules based international carbon border system and the development of a so called climate club.

For European industry, this could become relevant in the medium term. If several major trading partners establish their own CBAM systems, pressure increases to manage crediting rules in order to avoid double burdens. The question of which CO₂ prices are recognized where will then no longer be only an internal EU topic, but part of bilateral and multilateral trade negotiations.

Anyone who builds EU only today builds twice tomorrow

Operationally, this development means that globally positioned companies in particular should not treat their current EU CBAM implementations as an isolated compliance project. The likelihood is high that additional jurisdictions with their own requirements will be added in the coming years. One only needs to think of the United Kingdom in 2027. Anyone who sets up processes today that are too closely tailored to the EU system risks having to start from scratch with every new jurisdiction.

The strategically smarter option is to build emissions data collection, documentation and supplier communication in a way that can scale across different regulatory requirements. That means clean data models that do not only store values, but also make methodology and evidence traceable. Supplier processes that can map different data requirements without being reinvented each time. Reporting structures that can translate the same data set into different output formats.

Outlook

Australia's review is another signal that CO₂ pricing in international trade is becoming a permanent part of the rules. The more systems emerge, the more urgent the questions become that still seem abstract so far: Which national CO₂ prices are recognized where? How can double burdens be avoided when a product crosses several borders? And how can companies prove that they have already paid in one jurisdiction what another requires?

These questions will not only be negotiated on the regulatory side, but increasingly also in trade relationships. Anyone who builds a resilient data infrastructure early will be better positioned in these negotiations than customers or competitors who follow later and will have to do so.

Support

If you would like to assess whether your current EU CBAM setup can already scale across multiple jurisdictions, or how you can further develop it accordingly, feel free to write to me at helge@kolum.earth. We support you in building your CBAM structures in a way that they also work in a fragmented global landscape.