Carbon Border Tax Bill to Be Released Soon... Which Overseas Stocks Will Benefit?

EU to Unveil Carbon Border Tax Bill Draft on 7th
Shinhan Financial Investment: ETFs Tracking Carbon Emission Allowance Prices to Benefit

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Ahead of the European Union (EU) unveiling the draft of the Carbon Border Adjustment Mechanism (CBAM) bill in July, securities firms have started identifying related stocks. Exchange-traded funds (ETFs) tracking carbon emission allowance prices and companies equipped with renewable energy facilities have emerged as beneficiary stocks.

According to Shinhan Investment Corp. on the 12th, the EU plans to release the draft of the CBAM bill, which will be implemented from 2023, in July. The introduction of the carbon border tax means that environmental levies previously imposed on domestic companies will also be applied to foreign companies. Researcher Ham Hyung-do of Shinhan Investment said, "This is expected to accelerate the global transition to eco-friendly energy," adding, "Recently, U.S. Special Envoy John Kerry also mentioned considering the introduction of a carbon border tax, and related policies will be discussed at the G7 summit on the 12th."

The carbon border tax is expected to impose about 50,000 KRW per ton of carbon emissions. Additionally, the tax is likely to be concentrated on cyclical industries with high carbon dioxide emissions. The carbon emission proportions by industry are 27% each for steel and cement, and 15% for chemicals, with these three industries accounting for 70%. Considering the CO2 emissions per ton of products produced in each industry and the product sales prices, the impact on profits is calculated to be greatest in the order of cement, steel, and chemicals. Researcher Ham said, "There is about one to two years left until the introduction of the carbon border tax," and predicted, "Manufacturers' carbon reduction measures will involve hydrogen and carbon capture, utilization, and storage (CCUS)."

Accordingly, Shinhan Investment expects that among overseas stocks, ETFs tracking carbon emission allowance prices and companies equipped with renewable energy facilities will benefit. Researcher Ham said, "The ETF KRBN, which tracks carbon emission allowance prices, and Plug Power (PLUG) and Nel (NEL), which have water electrolysis facilities, will be the primary beneficiaries," explaining, "Plug Power is the only company that has completed vertical integration from green hydrogen production through water electrolysis facilities to applications such as forklifts and fuel cells."

This content was produced with the assistance of AI translation services.