New EU taxes could force Brazil into the global carbon market

When the European Commission formally launched a set of measures to reduce carbon emissions in the bloc last July, Brazilian industry immediately declared the move extremely worrying for the country. Indeed, the measures include the creation of a carbon tax on some imported products, which would impact Brazilian steel exports. However, one upshot may be that the move bolsters Brazil’s position on the global carbon market.

The main goal of the EU Green Deal, so-named by the commission’s president, Ursula von der Leyen, is to reduce the bloc’s greenhouse gases by 55 percent by 2030. For that, 13 bills covering different sectors, such as energy, infrastructure, and transport, were presented by Ms. Leyen to be analyzed and voted on by the 27 member countries of the European Union. The mechanism will be operational from 2023. 

Among the measures is the creation of a carbon tax on products imported from foreign competitors that are not subject to the same environmental standards as the bloc. The Border Carbon Adjustment Mechanism (CBAM) will force steel, cement, aluminum, and fertilizer importers to pay an additional fee if they buy from countries that do not price carbon in, that is, lack mechanisms to address climate change by creating financial incentives for companies to reduce their emissions. 

In justifying the creation of the measure, Ms. Leyen declared that “it is necessary to reduce CO2 emissions in the world, not just in Europe.” “European industries are going to invest heavily in decarbonization. So it would not be fair that imported products, cheap but with a high carbon footprint, come to ruin [our] efforts,” explained. 

For the EU, implementing the tax...