Global Dialogue on Border Carbon Adjustments

This report details a series of national dialogues in Brazil regarding Border Carbon Adjustments (BCAs), specifically focusing on the impacts of the European Union's Carbon Border Adjustment Mechanism (CBAM). While the immediate economic impact of the EU CBAM on Brazil is estimated to be limited, the report highlights significant risks if such mechanisms proliferate to other major trading partners like the United States and Japan. The document synthesizes the concerns of the Brazilian government and industrial sectors, emphasizing the need for standardized emissions reporting, the recognition of non-price-based climate efforts, and the provision of financial support for technological adaptation in developing countries.

• The immediate economic impact of the EU's Carbon Border Adjustment Mechanism (CBAM) on Brazil is expected to be limited, as affected exports in 2022 were estimated at just over USD 3 billion, representing only 0.15% of Brazil's GDP.
• While the EU market is not a primary destination for Brazil's CBAM-affected products, the diffusion of BCAs to other jurisdictions poses a significant threat. The United States absorbs nearly 50% of Brazilian Chapter 72 (cast iron, iron, and steel) exports and 25% of Chapter 73 (works of cast iron, iron, or steel) exports, while Japan accounts for 30% of Brazilian foreign sales of aluminum.
• The Brazilian government and the National Confederation of Industry (CNI) have raised concerns that CBAM may be discriminatory and violate international trade principles. Key arguments include the potential violation of the General Agreement on Tariffs and Trade (GATT) non-discrimination principles and the principle of 'common but differentiated responsibilities' in international environmental law.
• Stakeholders in Brazil argue that the EU CBAM's focus on direct emissions (Scope 1) ignores Brazil's comparative advantage in renewable energy. There is a consensus among participants that Scope 2 and Scope 3 emissions should be incorporated into BCA designs to truly reduce greenhouse gas emissions and reflect the cleanliness of Brazil's electricity matrix.
• The CNI recommends that any new BCA should be based on several principles, including transparency, compatibility with WTO rules and the Paris Agreement, and the avoidance of arbitrary discrimination. They specifically suggest that developed countries should use revenues collected from BCAs to finance technological adaptation in developing countries.
• The debate on BCAs in Brazil is currently limited and characterized by a defensive stance from the government. The financial sector, including the federal development bank BNDES, has not yet fully integrated BCAs into its policy agenda, although new sustainability reporting rules following IFRS S1 and S2 may help companies prepare for emissions monitoring, reporting, and verification (MRV) practices.

APA

International Institute for Sustainable Development (2024). Global Dialogue on Border Carbon Adjustments. https://www.iisd.org/system/files/2024-07/border-carbon-adjustments-brazil.pdf

Chicago

International Institute for Sustainable Development. Global Dialogue on Border Carbon Adjustments. 2024. https://www.iisd.org/system/files/2024-07/border-carbon-adjustments-brazil.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Global Dialogue on Border Carbon Adjustments |date=July 2024 |url=https://www.iisd.org/system/files/2024-07/border-carbon-adjustments-brazil.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2024global, author = {{International Institute for Sustainable Development}}, title = {{Global Dialogue on Border Carbon Adjustments}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = jul, url = {https://www.iisd.org/system/files/2024-07/border-carbon-adjustments-brazil.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }