Carbon emissions impact export competitiveness in Latin America

Carbon emission costs are transitioning from environmental concerns to critical variables for market access and competitiveness for Mexican and Latin American companies. At the Mexico Carbon Forum 2026, World Bank economist Sara Turner highlighted the impact of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which imposes costs on imported goods such as steel, aluminum, cement, and fertilizers based on their embedded emissions.

Exporters face a direct consequence: if a recognized carbon price exists in the country of origin, it may be deducted; otherwise, the cost must be paid upon entering the European market. Companies unable to measure, manage, and reduce emissions will face disadvantages against competitors with lower-carbon production processes.

Global coverage of direct carbon pricing schemes has risen to 29 percent of greenhouse gas emissions, up from less than 10 percent a decade ago. However, a significant regional gap remains. While the global average price is approximately 21 dollars per ton, Europe’s price is around 78 dollars, whereas Latin America and the Caribbean average only 4 dollars per ton.