The potential cost of the EU carbon tax for Russia under the European Commission’s draft carbon border tax could reach nearly $11.7 billion by 2030, experts claim.
“For Russia, this fee could reach a maximum of between $1.8 billion and $3.4 billion in 2026 and between $3.5 billion and $6.4 billion in 2030 (due to an increase in the price per ton of CO2 while maintaining export volumes at the average level for 2019-2020),” RIA Novosti reported on Friday, citing Boston Consulting Group (BCG).
However, these figures could be even larger, the firm says, if refined petroleum products and petrochemicals are included in the list of industries which will be subject to the new tax, with the maximum fee for Russia set at nearly $11.7 billion by 2030.
The European Commission (EC) last month published its draft plan for the world’s first carbon border tax, relating to the importation of goods with a high carbon dioxide footprint like steel, iron, electricity, aluminum, fertilizers and cement. The plan is part of the EU’s agenda for the complete elimination of carbon emissions in the bloc by 2050, known as the EU Green Deal.
BCG predicts that the majority of the new tax – some 55% – will target Russia’s steel industry. Overall, due to the introduction of the tax, BCG experts forecast a significant decrease in the volume of exports of certain categories of goods from Russia to the EU.
However, the firm notes that the EU carbon tax will be significantly lower for exporters who have paid a similar fee in their own territory.
The EC plan also allows for a transition period from 2023 to 2025, with the actual customs duties only coming into force from 2026. This, experts say, gives Russia an opportunity to prepare for the change by introducing domestic carbon regulation mechanisms.
“First of all, it is important to accelerate the development of internal carbon regulation, which can allow Russia to leave payments on the territory of the country, and in the future to invest in green technologies,” the firm suggests.
Russia’s Economy Ministry estimates the cost of the EU carbon tax for its export sector at $7.6 billion. The country recently unveiled plans to step-up the development of its carbon-neutral hydrogen industry, which could help Russia to maintain its export positions in the European market.
RT