An upcoming EU carbon border tax will have disparate impacts across Asia, but will likely set the tone for increased scrutiny going forward.
Carbon dioxide emissions from manufacturing have a major impact on global warming. To help tackle that, the European Union’s Carbon Border Adjustment Mechanism (CBAM), which will come into force in October, will tax goods — such as cement, iron and steel, and fertilizers — that require carbon-intensive production at a higher rate.
Those goods deemed at risk of “carbon leakage,” where businesses transfer production to other countries with more lax emission rules, will aso face greater scrutiny.
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