EU carbon tax could affect Brazilian steel

Brazil’s exports of steel and iron will be affected by the European Union (EU) carbon tax, announced on July 14 against foreign competitors that are not subject to the same environmental standards.

The EU is the first to adopt this measure on the international stage. It was included in the broad green package with which the European bloc hopes to achieve its goals of reducing its greenhouse gas emissions by at least 55% by 2030.

The carbon tax will force EU steel, cement, aluminum, and fertilizer importers to pay a surcharge for amounts they buy from countries with no carbon price. For the EU, this is the only way to ensure fair competition for European companies trying to reduce their emissions.

In the case of Brazil, steel products may be more vulnerable to the European rate. Brazilian exports of steel and iron covered by the measure represented US$ 524.8 million to the EU in 2019, or 10.4% of the country’s total exports of these goods. However, not all steelmakers are listed for possible taxation.

In some specific cases, such as flat-rolled steel, iron, or unalloyed steel with a certain width, sales to the EU reach more than 90% of Brazil’s shipments abroad.

The EU does not represent an important market for other Brazilian products that the carbon tax will target. In the case of aluminum, Brazilian exports to the EU represented no more than 0.34% of sales of this product; cement, just 0.02% of its total exports; and fertilizers, the same percentage.

Source: Valor Econômico

To read the full original article, visit the link:

https://valor.globo.com/mundo/noticia/2021/07/14/taxa-de-carbono-da-ue-pode-afetar-aco-brasileiro.ghtml

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