THE boss of Australia's biggest mining company has urged the Federal Government to introduce a carbon tax before the rest of the world.

BHP Billiton chief Marius Kloppers conceded a global move on carbon would come in the future, and Australia needed to move ahead of the curve to stay competitive.

"We believe that such a global initiative will eventually come, and when it does Australia will need to have acted ahead of it to maintain its competitiveness," he said yesterday at an Australian British Chamber of Commerce lunch in Sydney.

He said passing the cost of a carbon tax to consumers was the only way to get results.

"Carbon emissions need to have a cost impact in order to cause the consumer to change behaviour and favour low-carbon alternatives," he said.

"We all recognise this is a politically charged subject.

"But in this case there is really no easy answer. All of us who care about this issue need to also recognise that making a difference comes at a price."

Mr Kloppers said the tax should be revenue neutral and go back to consumers through income tax cuts and lump-sum payments to low-income earners.

He said Australia needed to move from coal as its main source of power to avoid being disadvantaged once a global price on carbon emerged.

Originally published as BHP calls for carbon tax