Asian producers warned over carbon price liability

Asian cement companies will see consistent negative margins in the next decade if they do not decarbonise, according to a report by the Imperial College Business School. The report, published in partnership with the Singapore Green Finance Centre, explored the financial impact of decarbonisation on Asia’s cement and steel companies covered by selected Asian Emission Trading Schemes. 

Researchers Dr Anastasiya Ostrovnaya, Antigoni Theocharidou, Julian Smart, Jan Ahrens and Dr Bob Buhr concluded that the only way to reduce carbon price liability would be for these companies to decarbonise. However, the paper also reveals that the funds needed for firms to fully decarbonise may exceed most companies’ valuations. 

The cost of carbon is expected to increase considerably over the next 30 years, in order to encourage action against climate change, says the report. The issue of rising carbon prices has become a pressing issue for many organisations, particularly in the steel and cement industry. Although the impact varies across firms, industries, and countries, the study finds that the majority of companies in the Asian region cannot survive rising carbon prices, with decarbonisation being offered as the only solution.