The Australian Greens on Tuesday warned that Australia must adopt a price on carbon, if not, the nation will face greater costs as more countries introduce tariffs linked to pollution and climate change.
Greens senator Christine Milne said countries that were taking strong climate action, particularly in Europe, would almost certainly also introduce sanctions on nations that do not put a price on carbon.
"I think it is inevitable that the European Union (EU) will take similar retaliatory action," Senator Milne told Australia Associated Press on Tuesday, urging Australia, as part of the global environment, must take similar steps.
"There is already discussion in the European Union about aviation ... as to whether international carriers that land and take off from the European Union have to be part of the emissions trading scheme in the EU or have some other calculation on their ticket prices."
The comments came after Trade Minister Craig Emerson on Sunday said carbon tariffs were simply "old protectionism", and that Australia would not be going down the same path.
India has already introduced a tax on coal, which came into force on July 1.
Senator Milne said the uncertainty around whether Australia would introduce a price on carbon has been driving up cost-of- living pressures for consumers.
The uncertainty had resulted in the failure of state governments and electricity generators to invest in upgrading their generation and transmission capacity, she said.
"The uncertainty in the market at the moment about whether there'll be a carbon price, what it is that people should be investing in for the future - it means that we are seeing increased prices."
Senator Milne also said the government needed help to restore confidence in energy efficiency measures following "the debacle that occurred as a result of home insulation and green loans".