Strategic concerns, response and supports needed Compliance complexity and uncertainty Fragmented regulatory regimes, definitions and standards are raising strategic and administrative complexity and costs. Some jurisdictions allow corporations using eligible carbon offsets to reduce a portion of their domestic carbon pricing, whereas the EU’s CBAM does not recognize traditional offsets; there are differences in scope, reporting periods and cost calculation methods between the EU’s CBAM and the UK’s. Convergence of international standards would enable fair recognition and incentives for reduction efforts with smooth cross-border compliance. Given the evolving and uncertain market and regulatory landscape, companies are advised to engage in policy development and adopt an adaptive approach to strategy and operations. Technology constraints Limited access to mature decarbonization technologies remains a barrier. Breakthroughs in aluminium technologies are in early R&D stages, with uncertain timelines for commercial viability and high associated costs, underscoring the need for sustained innovation and investment. Technology transfer and knowledge-sharing are key to accelerating change. Financial barriers and incentives Decarbonization is capital-intensive, requiring long-term capital expenditure planning. Yet internal gatekeepers or clients of green industries often have short payback expectations (two to three years, with a maximum of five), hindering low-carbon investments. Current carbon price levels and existing financial mechanisms do not create a sufficient business case for deep decarbonization, particularly in commodities where cost competitiveness is critical. Green premiums, industry-specific government aid to cover both capital and operating expenditure for decarbonization and access to affordable renewable energy are essential to enable transformation. Recycling domestic carbon revenues to fund technology upgrades and MRV tools can accelerate the transition. Enablers Affordable green finance helps first movers scale retrofits and bring breakthroughs to market. Jinko Solar51 secured favourable trade financing support from an international bank under its adaptation and resilience finance framework, enabling the delivery of climate-resilient solar modules to international markets. Industries are seeking support from the financial sector through lower interest rates. Financing models, such as energy service contracts, may also unlock investments. “Decarbonization is not free,” said one chemicals industry participant. “The high costs place considerable strain on corporate balance sheets, making access to green finance essential. Instruments such as green loans are critical to enable compliance with BCA requirements without compromising competitiveness.” Implications Companies are implementing near-term measures that focus on efficiency gains and process tweaks to reduce emissions intensity, while preparing for profound structural shifts as regulations tighten. Procurement practice adjustments and supply chain collaborations are also part of risk management responses. Favourable trade financing support from an international bank under its adaptation and resilience finance framework, enabling the delivery of climate-resilient solar modules to international markets. “The high costs place considerable strain on corporate balance sheets, making access to green finance essential. Instruments such as green loans are critical to enable compliance with BCA requirements without compromising competitiveness.” Climate and Competitiveness: Border Carbon Adjustments in Action 19

Climate and Competitiveness Border Carbon Adjustments in Action 2025