Dubai PR Network, Online Press Release from Dubai and Middle East
 
Oil & Gas(Energy and Industry)
Filter PR by
  
An EU Carbon Border Tax Could Impact the GCC Oil Exporters and Be the Next Disruptive Force in Global Trade
 
An EU Carbon Border Tax Could Impact the GCC Oil Exporters and Be the Next Disruptive Force in Global Trade
A tax on carbon emissions tied to imports would cut profits for foreign suppliers of oil, steel, and other goods with high greenhouse gas footprints but could pose an opportunity for GCC companies to gain a competitive edge, BCG research finds
 
Dubai, United Arab Emirates, July 08, 2020:   A plan being considered by the European Commission to tax the carbon emissions attributed to imported goods could create competitive advantages for foreign companies with low greenhouse gas footprints--and “serious near-term challenges” for other exporters, adding to financial strain caused by the COVID-19 crisis. The tax could slash the profits generated by imported materials such as oil, flat-rolled steel, and wood pulp by a range of 10% to 65%, and impact both EU and non-EU producers of goods such as chemicals and machinery, according to new research released today by Boston Consulting Group (BCG). 
 
The study, whose findings were described in an article titled “How an EU Carbon Border Tax Could Jolt World Trade,” found that an EU “carbon border tax,” as the measure is commonly known, could also rewrite the terms of competitive advantage in one of the world’s biggest markets. Higher prices for Russian crude oil, for example, could cause European chemical producers to import more from Saudi Arabia, where extraction methods leave a lower carbon footprint, which therefore could be taxed at a lower rate than, in this instance, Russian producers. And steel produced in Chinese or Ukranian mills using blast-furnace technology would become less competitive in the EU against steel from other countries made in more carbon-efficient mills. 
 
The details and timing of the policy are still to be determined and must be approved by legislators. But the study contends that some sort of carbon-pricing mechanism is likely to imposed on imports—and companies should prepare. 
 
“GCC oil producers have an opportunity to gain market share in the EU market as their fuels will be less taxed compared to many other fuel importers which could ultimately influence EU players’ sourcing decisions and trading relationships,” said Michael McAdoo, Partner and Associate Director, BCG Middle East. “It is prudent however, for GCC companies to manage their carbon footprints with greater urgency, considering more decarbonization policies.”
 
A carbon border tax is one of several measures the European Commission is considering as part of the European Green Deal, a bold initiative to cut greenhouse gas emissions in the EU by 50% over the next decade—compared with the current target of 40%—and make Europe the world’s first climate-neutral continent. A carbon tax on imports has strong support among the European Commission, environmentalists, and many European manufacturers, which have been paying for carbon emissions since 2005 under the EU’s Emission Trading System (ETS) and demand a more level playing field against imports, especially from nations with more lax environmental standards.
 
As per BCG’s findings, a carbon border tax would alter the competitive dynamics of crude oil alone, with efficient oil producers such as Saudi Arabia potentially paying between 30-50 percent less in carbon tax than countries such as Russia and Iraq. Despite an EU carbon tax affecting all imports, 25% of the EU's carbon footprint comes from imported goods not covered by existing emissions pricing mechanisms. The tax implication is less severe to importers with relatively lower greenhouse gas emissions, such as Saudi Arabia’s crude production relative to Russia. 
 
“To capitalize on such scenarios, the onus is on regional CEOs to formulate and implement new strategies that will drive emission reduction across their operations and ensure they are well-positioned to reap the rewards of having competitive advantages,” said Cristiano Rizzi, Managing Director and Partner, BCG. “Middle Eastern oil producers could consider a more structural advantage through new low emission alternatives. Furthermore, CEOs should first examine all sectors that stand to be impacted by an EU carbon tax, such as crude-derived exports and flat-rolled steel. Immediately afterward, they should act accordingly and proactively to ensure they are fully capable of benefitting. Given the uncertainty and unpredictability with the ongoing pandemic, every opportunity must be taken advantage of to ensure survival.”
 
BCG has identified how CEOs can prepare for an EU carbon border tax:
 
• Measure exposure: Determine the company’s emissions footprint and assess its position relative to its competitors.
• Adopt internal carbon pricing: Use parallel accounting to track the cost of carbon emissions and incorporate carbon costs into decision making. 
• Build a playbook: Co-develop plans with key suppliers that have downstream exposure and established options and trigger points for actions as the EU’s policy nears implementation.
• Navigate and shape policy: Stay abreast of policy developments and shape a fair low-carbon economy.


Posted by : Dubai PR Network Editorial Team
Viewed 5826 times
PR Category : Energy and Industry
Posted on : Wednesday, July 8, 2020  1:17:00 PM UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of DubaiPRNetwork.com.
Previous Story : Green Petrochem Announces Expansion Plan in Hamriyah Free Zo...
Next Story : Market Access Concludes Second Cohort With Several Corporate...
Email this article Print this article

Share this article with your friends and followers
NewsVine
Back to Section Home

Related Stories



 
 
Most Viewed Press Release posted in the last 7 days
Parmigiani Fleurier Salutes the Spirit of Valentine's Day with Tonda Reine de Mai [6855-Views]
AIGNER Haute Couture Jewellery Collection CHIARA [4629-Views]
Cisco Reveals the Top 6 Tech Trends for 2021 and Beyond [4432-Views]
Add Extra Sparkle to Your Holidays With Make Up for Ever's 2020 Holiday Collection [4026-Views]
Golden Moment Continues for UAE's Jewellery Shoppers This Dubai Shopping Festival [3686-Views]
Dubai Sports Council Announces Four-stage Dubai Women's Running Challenge [3243-Views]
Liverpool Legend Ian Rush visits Dubai Sports Council, Discusses Starting Projects in Duba... [2899-Views]
Hundreds of Thousands of Cervical Cancer Cases Could Be Prevented with HPV Vaccines and Pa... [2882-Views]
Discover the Ingredients [2874-Views]
Samsung Introduces Latest Innovations for a Better Normal at CES 2021 [2862-Views]
The Arab Fashion Council in Partnership with Facebook, Inc Pioneer the First Men's Fashion... [2837-Views]
Dubai Culture Completes Inventory of Knowledge Assets at Dubai Public Library Branches [2813-Views]
Dubai Central Lab Is Now Esma Halal Certification Body [2808-Views]
Canon Recognizes 3 Leading Photographers from the UAE, KSA & Jordan for their Ambassador P... [2735-Views]
The Ideal 2021 Shoedrobe - Steve Madden [2640-Views]
Roma Proves the Pace of the Hunter to Go 5th Overall, as Loeb Suffers Suspension Damage [2571-Views]
The University of Queensland wins Ericsson Innovation Awards 2020 [2468-Views]
What's your Colour Code? [2440-Views]
A Warm Summer Rain in Winter: The New Head Shower GROHE Tempesta 250 [2394-Views]
Dubai Customs: Exceptional Achievements in 2020 Despite Coronavirus Challenges [2308-Views]
Rashid Hospital Doctors Perform Special Implant Procedure for an Epilepsy Patient. [2292-Views]
ADU's College of Health Sciences Enters Strategic Partnership with Mubadala Healthcare's N... [2276-Views]
Schneider Electric Unveils New Sustainable Energy Products at CES 2021 [2271-Views]
Moonwatch now Master Chronometer Certified [2259-Views]
Kinetics Embraces Winter With a New Collection ‘Blank Space 2020 [2247-Views]
 
RSS Facebook Twitter LinkedDin
 
Top Sections
 
Top Stories