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

Russell Smyth and Joaquin Vespignani

No 2022-03, Working Papers from University of Tasmania, Tasmanian School of Business and Economics

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.

Keywords: electric vehicles; lithium; net zero 2050; effective taxation rate (search for similar items in EconPapers)
JEL-codes: E20 E60 Q20 Q28 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2022
New Economics Papers: this item is included in nep-ene, nep-env and nep-tre
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Published by the University of Tasmania. Discussion paper 2022-03

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https://eprints.utas.edu.au/47521/1/2022-03_Smyth_Vespignani.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:tas:wpaper:47521

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