EU Carbon Tariff May Cost Russian Exporters $10Bln Over 10 Years - Research
Muhammad Irfan Published August 05, 2021 | 01:41 PM
Russian exporters could end up paying an estimated 760 billion rubles ($10 billion) over 10 years under European Union carbon border tariff, with most of the expenses coming in form of increased prices on the taxed goods, Petromarket, a Russian consulting service for oil and gas market, found
MOSCOW (UrduPoint News / Sputnik - 05th August, 2021) Russian exporters could end up paying an estimated 760 billion rubles ($10 billion) over 10 years under European Union carbon border tariff, with most of the expenses coming in form of increased prices on the taxed goods, Petromarket, a Russian consulting service for oil and gas market, found.
"Russian aggregated payments for the EU import carbon tax in the aluminum, gas chemistry, cement, iron and steel industries will total a little more than 760 billion rubles ($10 billion) over 10 years from 2026 to 2035, according to our estimates," the research, dubbed "Cross-border carbon regulation in EU: how to turn it in Russia's favor?" and released on Tuesday, found.
However, Russian exporters will not bear considerable revenue losses. The prices of Russian export products, subject to the EU regulations, will increase to compensate for the tax payments.
The price rise will earn exporters 650 billion rubles ($8.9 billion), which is enough to cover 86% of carbon tariff-induced extra expenses, according to Petromarket experts.
The key threat for Russia is a possible loss of the European market in the long run rather than short-term implications of the carbon tariff, the research said.
A cross-border carbon tariff, or carbon border adjustment mechanism (CBAM), serves as a tool to meet EU's climate-neutral objective by 2050 in line with the 2015 Paris Agreement. The draft law on the implementation of CBAM was published on July 14 and provides for imposing import tax on foreign businesses whose production leads to greenhouse gas emissions. The industries that will face potential costs include cement, iron and steel, aluminium, fertilisers and electricity. The first taxes will be levied from 2026.
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