- EU is doing up a border carbon tax to be applied initially to cement, fertilisers, iron, steel, aluminium and electricity, products which are deemed the most carbon intensive.
- The rationale is if EU is going green (solar, wind power, bicycles, trams, EVs etc), its imports should be green too.
- Each tonne of CO2 emmitted in making a product must be offset by one carbon certificate or carbon credit.
- Eg, the production of one tonne of steel emits 1.85 tonnes of CO2. So to import one tonne of steel into EU requires 1.85 carbon credits (raw steel only or all steel products eg. cars?).
- In 2020, the price of a carbon credit is ~USD 20 but it go up 10x.
- Exports from countries that are as green as or greener than EU will not be subjected to the tariff.
- Thus, green is no longer a distant, nice-to-have initiative. It is a present imperative if one does global trade.
- To find out more, check out these forthcoming ASEAN-based green conferences: Joint Committee on Climate Change (JC3) Conference 2021 (June 23-25, 2021), The Art of Balance (June 24) and Partnership for Sustainability (June 29).
- The conferences centre around finance and corporate strategy rather than operations. Finance is important because through it, major go-green projects can be sustained.