AUSTRALIA is pitching to reward countries and commodities with low carbon emissions through reduced tariffs.
The proposal is the polar opposite to the carbon tariff being strongly considered by many of the world's biggest traders, including the European Union and the United States.
The tax would be proportional to the amount of carbon in the imports, and the relative difference in carbon price between the EU or US and the exporting country.
The issue is expected to be raised on Friday at the G7 summit, where the leaders of many of the wealthy democratic economies will meet to discuss pressing global issues.
Australia, though not a member of the G7, has been invited to attend the summit in Cornwell, United Kingdom.
Trade Minister Dan Tehan said Australia would make its position very clear to the other nations.
"We don't want to use a protectionist measure," Mr Tehan said.
"We think it's much better if you use a liberalising measure by reducing the tariffs on environmental goods and making sure that we're freeing up environmental services.
"We'll be strongly putting our case that we're much better off going down a path which isn't protectionist."
Mr Tehan said using the carrot instead of the stick was true to Australia's principles.
"The best thing you can do for your economy is to liberalise," he said.
"If you look at the success of Australia in coming out of this pandemic, we're back in a stronger economic position than we were before we went in to the pandemic.
"That sets us aside from all other G7 nations who still haven't reached the economic point where they've advanced beyond where they were before the coronavirus pandemic hit."