Impacts of Carbon Pricing on Brazilian Industry: Domestic Vulnerability and International Trade Exposure

Abstract

After COP 21, with the adoption of the Paris Agreement in December 2015, the outlook for carbon pricing policies has been widened. While the agreement does not directly establish a global carbon pricing, the provisions accounted for in Article 6 have the potential to increase international cooperation in favor of greenhouse gas (GHG) mitigation through market mechanisms. The Brazilian Nationally Determined Contribution (NDC) considers the use of such mechanisms, though the configuration of the Brazilian climate policy does not specify the economic instruments for carbon pricing. When examining the recent evolution of GHG emissions in Brazil, the already achieved reduction in deforestation sheds light on the need to address GHG mitigation in other sectors, such as industry. Therefore, this paper analyzes the impacts of carbon pricing on the Brazilian industry in terms of sectorial value added (VA), emissions intensity, international trade exposure, and the risk of carbon leakage. Results indicate that, considering a price of carbon of US$10/tCO 2 , the cost of reducing emissions from 35% to 45% (same range of the Brazilian NDC) could represent an impact of 0.3% to 3.7% on sectorial VA. However, results for emissions intensity and international trade reveal medium to high carbon leakage risks for all analyzed industrial sectors.

Bio‐ethylene from sugarcane as a competitiveness strategy for the Brazilian chemical industry

“…However, there is no clear indication of how these instruments will be used . It signals that long‐term investments need to be made in order to decarbonize the economy . This paper does not aim to discuss the design of a carbon pricing instrument for Brazil but instead it shows that a local or a global CO 2 market could boost the use of abundant primary energy sources in Brazil to produce ethylene.…”

“…104 It signals that long-term investments need to be made in order to decarbonize the economy. [107][108][109] This paper does not aim to discuss the design of a carbon pricing instrument for Brazil but instead it shows that a local or a global CO 2 market could boost the use of abundant primary energy sources in Brazil to produce ethylene. Moreover, it shows that, under a carbon pricing mechanism, the bio-based chemical industry, based on sugarcane, could produce ethylene competitively when compared to the alternative process from naphtha.…”

Current Status Investigation and Predicting Carbon Dioxide Emission in Latin American Countries by Connectionist Models

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Green Procurement Decisions with Carbon Leakage by Global Suppliers and Order Quantities under Different Carbon Tax

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