If South Korea passes a carbon tax bill in line with global standards, local companies, particularly those in heavy industries that emit high levels of carbon dioxide, may face between 7.3 trillion won ($6.26 billion) and 36.3 trillion won in additional taxes, a local credit rating agency said Wednesday. The carbon tax bill is currently pending in the parliament.

The financial costs will be even higher with the implementation of the European Union’s Carbon Border Adjustment Mechanism, said Lee Soo-min, a researcher with Nice Rating, at a webinar. The mechanism, which will impose taxes on products responsible for higher levels of carbon dioxide emissions during the manufacturing process, is scheduled to be fully implemented in 2026. In Korea it will mainly affect power utility, steel and petrochemical companies.

“According to the internal stress test that analyzes the impact of the Carbon Border Adjustment Mechanism, the amount of border tax paid to China could be up to 1.5 trillion won. The EU and the US are expected to aggressively impose tax on Korean companies,” Lee said.

Lee said the current costs borne by Korean companies are below global standards suggested by the International Monetary Fund and the World Bank. “Any additional measure will impose bigger pressure on the companies,” he said.