In the case of the introduction in Europe of a new tax on carbon emissions, Russian exporters will lose from 3 to 4.8 billion dollars a year. This is stated in the study by the Boston Consulting Group (BCG) “border carbon collection EU can affect global trade” (How an EU Carbon Border Tax Could Jolt World Trade), which arrived in edition “Tapes.ru”.
the Idea of a carbon fee popular among European authorities, and among local businesses. Many local producers since 2005 have to buy quotas on emissions of greenhouse gases and to compete with foreign producers who have no such obligations. The EU authorities expect that the introduction of fees will contribute to the EU goals of the “European green deal” — an initiative by 50 percent to reduce greenhouse gas emissions in the region over the next 10 years and to turn Europe into the world’s first carbon neutral continent.
the Decision on the introduction of a carbon fee not yet settled and is under discussion in the European Union. Tax can tax goods whose production produces emissions of carbon dioxide into the atmosphere. For example, it will affect the oil and gas industries, manufacturers of metal products, importers of wood pulp, mining and chemical industries, as well as engineering. BCG expects that the carbon collection will be available in Europe in late 2021 to early 2022.
One of the most affected by the carbon fee countries will be Russia. Its economy is heavily dependent on exports to Europe (42% of deliveries abroad go to the EU). In addition, Russia is in second place after China in volume of carbon-intensive exports. According to the Organization for economic cooperation and development (OECD), Russia’s carbon-intensive exports to the EU a total of about 150-200 million tons annually for all goods and services. If you don’t consider part of the goods and services that have not yet hit the European scheme for trade with quotas for greenhouse gas emissions (Emission trading scheme, EU ETS) such as transport services, the taxable base the new collection will be 100-160 million tons.
This will generate additional burden for exporters from Russia in the amount of from 3 to 4.8 billion dollars a year. In their calculations the BCG comes from the fact that be subject to gathering all emissions. In an alternative embodiment, the tax will circulate only for the excess emissions over the established benchmark. The largest tax burden will fall on the oil and gas industry. It will be 45-53 percent (45-84 million tons of carbon dioxide) and will cost 1.4- $ 2.5 billion per year. In second place analysts put the steel and mining companies, including producers of steel. They will have 25-30 percent of uglerodwow fee, which will cost 0,4-0,6 billion dollars. In third place was the fertiliser, pulp and paper and glass industries.
the Introduction of a carbon fee will raise the cost of Russian goods in several sectors and enhance competition in the European market. The greatest risks are the energy and metallurgical sectors, in which there are products with low added value. Some Russian companies can and do lose their share on the EU market because of the big, than competitors, emissions. This threat will hang over the producers of nitrogen fertilizers, for which the tax may be prohibitive duty, reaching 40-65 percent of current export value.
the Introduction of a carbon fee would inevitably lead to the increase in the cost of Russian goods
In the oil industry, the carbon tax may lead to lower profitability of the products. The fact that the production of Russian raw materials carbon is twice than that of the fuel from Saudi Arabia. The fee will increase the cost of production for Russia for two dollars per barrel, and Saudi Arabia — just for one dollar. Higher prices for Russian oil may result in the fact that European producers will begin to purchase more raw materials from Saudi Arabia.
At the same time, Russian steel, the imposition of a fee, in contrast, will allow you to press competitors. Local producers have a competitive cost structure and a lower carbon footprint compared to China. So, in China, the cost per tonne of steel is around 480-500 dollars at the current market price of 530 dollars per ton. If the carbon fee for China will be about $ 55, the cost for China will exceed the market price. Russian producers with an average cost of a ton of steel in the 320-340 dollars, and collect about $ 47 per ton will be able to maintain low prices and competitive advantage.
Analysts say that Europe could be exempt from tax from the companies with their own schemes of “carbon pricing”, such as Australia, Canada or Japan, if their governments will sign new trade agreements with the European Union or revise existing ones. Russian exporters of this relief will not apply because of the top-8 suppliers of goods in the EU, Russia and Turkey are the only that have no internal mechanisms, similar to ETS, and there is no agreement on the synchronization with the European system.
BCG Analysts urged the Russian government to start preparations for the introduction in Europe of the carbon fee on five key areas. The first was the development of transparent rules, standards, measurements and reporting on greenhouse gas emissions, as well as the mechanisms and targets to reduce emissions in Russia. Second step experts have called the creation of the internal control mechanism “the carbon market”. We are talking about introduction of state of a carbon tax or creation of a Russian analogue of ETS on the EU’s example. In this case, due to EU regulations when certain conditions possible consideration of mutual releases.
Also, the Russian government called for a review of the system of regulation of emissions, the formation of requirements and incentives to match European or international standards and makes it possible to keep them synchronized. Among other things, in preparation to the tax authorities need to start subsidizing strategic sectors and bind it to obligations to reduce emissions, and diversify exports. Companies from its part, should begin to measure your carbon footprint, to track the cost of carbon emissions and their impact on the overall costs, plan for various scenarios, as well as to connect to the process of forming the state policy in this sphere.
Previously, the estimation of losses of Russia from the carbon collection conducted by analysts at KPMG. According to them, the worst case scenario will introduce a tax in 2022, and it will affect both direct and indirect emissions (those that occur directly in the manufacture of goods, and emissions from sources owned by other organizations, but associated with the activities of the exporter). In this case, Russian companies will pay 50,6 billion euros until 2030. Under the baseline scenario, the tax will be introduced in 2025, and will be available only on direct emissions, it will cost Russian exporters at 33.3 billion euros. The positive scenario involves a tax in 2028 and the loss of six billion dollars.
