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A proposal for a decarbonization tax discount to increase Australian lithium production to meet electric vehicles and net zero global targets

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Abstract

Current commitments with net zero 2050 require that more than two billion electric vehicles (EVs) be produced globally by 2035. Australia produces more than 55% of the global lithium in the world. We argue that Australia's most significant contribution to realizing net zero 2050 could be to increase lithium production 10-20-fold by 2035. A similar case could equally be made for increasing other critical minerals. This would also contribute to securing Australia's energy and national security. To realize these benefits current investment in lithium is much lower than the production of lithium batteries used in EVs requires, reflecting suboptimal tax rates. We conclude by proposing that a decarbonization tax discount for critical minerals is needed.

Suggested Citation

  • Smyth, Russell & Vespignani, Joaquin, 2022. "A proposal for a decarbonization tax discount to increase Australian lithium production to meet electric vehicles and net zero global targets," Working Papers 2022-03, University of Tasmania, Tasmanian School of Business and Economics.
    • Handle: RePEc:tas:wpaper:47521
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    File URL: https://eprints.utas.edu.au/47521/1/2022-03_Smyth_Vespignani.pdf
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    Keywords

    electric vehicles; lithium; net zero 2050; effective taxation rate;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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