A bid to protect Australian heavy industries from cheaper, dirtier imports is an important move, leading industry groups say.
Europe already has a green tariff, known as a carbon border adjustment mechanism (CBAM), which puts a price on the carbon content of goods.
Minerals Council of Australia CEO Tania Constable said on Wednesday the resources industry supported the government looking into whether a CBAM is right for Australia.
"CBAM is about dealing with the risk of carbon leakage, which is very real as different countries have different climate policy programs," she told AAP.
Steelmakers in particular have been vocal about so-called carbon leakage, where jobs are lost to countries with less onerous climate regimes.
Climate Minister Chris Bowen is considering tariffs on steel and cement imports, which would make it less worthwhile for companies to simply move operations offshore as a way to reduce carbon emissions.
But there are calls to extend the idea to other industries to further level the playing field for Australian businesses.
Consultancy EY Oceania chief sustainability officer Mat Nelson said the federal government's move was further evidence border adjustment mechanisms were gaining traction around the world.
"As countries ramp up domestic action, these types of instruments are likely to be considered as a way to support a proxy global ‘carbon price’ without the need for globally consistent regulation – which we know is very difficult to achieve," he told AAP.
The proposal announced is to keep the initial CBAM relatively narrow.
"It is also likely to stay relatively narrow as they are more relevant for managing competition against ‘imports’ rather than competition on global markets for ‘exports’," Mr Nelson said.
"However, the more that other countries introduce them, the more it levels the playing field for global commodities."
Carbon Market Institute CEO John Connor said border tariffs would be an "important complement" to Australia's revamped safeguard mechanism that recently took effect.
Carbon leakage was a threat to the global effort to mitigate the impacts of climate change, if businesses seek to avoid the inevitable shift toward effective carbon pricing and climate regulation, he said.
Instead of avoidance, Australia could learn from markets such as the European Union to drive economic and industrial transformation.
Mr Connor said a phased approach to help those most exposed industries - cement, iron, steel, aluminium and fertilisers - followed by other high polluting sectors such as agriculture.
The proposed border tariffs add to steps being taken to keep leading industries competitive and regions in work while decarbonising the economy.
An initial $600 million from the $1.9 billion Powering the Regions Fund will go to trade-exposed facilities covered by the safeguard mechanism to compensate them for the cost of change.
The safeguard mechanism requires Australia's top 215 industrial plants to cut emissions by five per cent every year for the rest of this decade for the country to get to net-zero by 2050.
