2.4 Financial considerations Companies have the option to harness powerful approaches to financing, including quantifying decision-making and accessing transformative capital.Beyond the PACE framework, it is worth focusing on two key financial considerations: cost–benefit analyses and the development of government- supported and sustainable financing strategies. BCA-oriented cost–benefit analysis Companies should evaluate how technologies and projects deliver emissions reductions and carbon cost savings, calculating abatement cost per tonne of CO2e versus potential for total tonnes of CO2e reduced for different projects (a marginal abatement cost curve [MACC]). Corporations should structure cost–benefit analyses by setting GHG baselines across operations and value chains and measure Scope 1, 2 and 3 emissions to identify the highest-impact reduction opportunities and quantify emissions savings from interventions. Companies can then prioritize projects delivering multiple benefits – operational improvements, measurable GHG reductions and enhanced competitive positioning. They can also quantify how decarbonization investments enhance market access, particularly in BCA jurisdictions, and strengthen supply chain relationships.Dynamic carbon-pricing scenario building and probability analysis The cost–benefit framework should incorporate dynamic carbon-pricing scenarios, modelling how different policy stringency levels affect project economics over asset lifetimes. These scenarios must recognize that while currently hypothetical, costs created by BCAs will be real, substantial and ever-increasing over the next decade. Probabilistic analysis and simulations can then inform internal carbon pricing points over short- and long-term timeframes, and be factored into cost-benefit analyses. Probabilistic analysis can help organizations navigate uncertainty by quantifying the likelihood of different outcomes, making it a useful tool for assessing exposure to evolving carbon prices, BCA adjustments and other transition risks that cannot be predicted with certainty. Scenarios should also include evaluating how stakeholder engagement strategies may achieve broader value-chain emissions reductions. Climate and Competitiveness: Border Carbon Adjustments in Action 32

Climate and Competitiveness Border Carbon Adjustments in Action 2025