OECD invites Brazil for global plan on carbon pricing

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The Organization for Economic Co-operation and Development (OECD) has invited Brazil to participate in a global plan it is articulating on carbon pricing, Valor has learned. The goal of the plan is to avoid trade wars amid the decarbonization of economies.

Carbon pricing is considered one of the good ways to tax polluters for their emissions. The issue is to determine what this price should be and establish a global solution.

The OECD Secretary General, Mathias Cormann, sent a letter to Economy minister Paulo Guedes explaining that his idea is for a group of countries to start working on mapping the carbon price, examining its impact and trying to avoid the multiplication of unilateral measures.

The plan is to gradually draw countries into discussions that could lead to an understanding on a voluntary basis on the best carbon tax and other environmental measures. This could later become a global agreement, along the lines of the international agreement to tax multinational companies more heavily with the support of 136 nations, well beyond the 38 members of the organization.

The Brazilian government has not yet responded, but initial reactions in Brasilia seem positive, amid concern about the unilateral “carbon border adjustment mechanism” announced by the European Union on July 14.

According to that, Brussels will set a carbon price for imports of iron and steel, aluminum, cement, electricity, and fertilizers. The goal is to avoid that polluting industries move to countries where standards are less strict and carbon dioxide emissions are not taxed.

Brazil is the eighth most vulnerable country to taxation in almost $2 billion of exports to the European market, basically on steel products, according to the United Nations Agency for Trade and Development (Unctad).

Source: Valor international