This article is part of a series written by Dr. Bahram Shakouri, a member of the Sigma Council, which examines the role of carbon tax as a determining factor in the export competitiveness of mining industries and the necessity of Iran’s planning to move towards a low-carbon economy.
Carbon tax was mainly known as a tool for reducing greenhouse gas emissions until a decade ago, but today it has become one of the main components of the competitiveness of economies and international trade. Many countries, in addition to implementing carbon tax within their borders, are designing mechanisms to make high-carbon imports subject to environmental costs. This transformation has turned the concept of “carbon” from an environmental issue into an economic and trade variable.
More than a decade ago, in a study titled “Economic Consequences of Carbon Tax”, we showed that the success of this policy depends more on its design than on the tax rate. The experience of countries such as Sweden, Finland, Norway, Denmark, the UK, and Canada also showed that if the revenues from carbon tax are used to reduce other taxes, improve energy efficiency, develop clean technologies, and support vulnerable groups, this policy can help reduce carbon emissions while maintaining economic growth.
The Importance of Decarbonization in Iran’s Mining Industries
Today, this issue has become even more important for Iran. The country’s main exports are in the fields of steel, cement, aluminum, copper, construction stones, and other mineral and mineral-metallurgical products; industries that are considered high-carbon due to their high energy consumption. With the implementation of policies such as the “Carbon Border Adjustment Mechanism” in the European Union and the expansion of similar regulations in other countries, the amount of carbon emissions will gradually become one of the criteria for entering global markets.
Therefore, the future competitiveness of Iran’s mining industries will not only depend on product quality, production cost, or access to mineral resources, but also on energy intensity, carbon emissions, the use of renewable energy, and the adoption of new technologies. In the near future, every ton of steel, every ton of copper, or every square meter of construction stone will have a “carbon footprint” in addition to its price, and this index can directly affect the export power of enterprises.
Requirements for Successful Implementation of Carbon Tax and the Role of Government
Of course, carbon tax should not be seen merely as a tool for increasing government revenue. Global experience shows that if this policy is implemented without considering economic conditions, industry capabilities, and household situations, it can lead to increased production costs, reduced investment, and decreased competitiveness. On the other hand, if the revenues are directed towards industrial modernization, energy efficiency improvement, development of low-carbon technologies, and support for production, carbon tax can become a driving force for industrial transformation.
For Iran, the right policy is to develop a national plan to reduce energy intensity and carbon emissions before carbon tax is imposed on the country’s exports by its trading partners. Modernizing machinery, developing renewable energy, optimizing production processes, supporting a circular economy, recycling minerals, and developing green technologies should become part of the mining and mineral industries development strategy.
In addition to these measures, the government must also create financial incentives, facilitate investment, provide financing for energy optimization projects, and avoid imposing additional costs on production, in order to provide a framework for industries to move towards a low-carbon economy. Otherwise, carbon tax will not become a tool for sustainable development, but rather a factor that reduces the competitiveness of domestic producers.
Opportunities Ahead in the Path to a Low-Carbon Economy
The global economy is rapidly moving towards a green, smart, and low-carbon industry. Iran, with its vast mineral resources, high capacity for renewable energy, and skilled workforce, can use this transformation as an opportunity; provided that from today, it considers reducing energy intensity and carbon emissions not as an external obligation, but as part of the country’s industrial and export development strategy.