62 2025 TSMA impacts that may need to include different aspects of direct and indirect costs comprehensively. These consideration aspects involve the carbon pricing signal or carbon border adjustments (i.e., carbon tariffs) in a particular country and may also encompass raw materials, commitments to carbon neutrality, and related administrative costs. A firm decision-maker should conduct in-depth consideration and analysis from the cost accounting perspective, as the case illustrated in Table 2. Table 2 The Case of an Evaluation of Comprehensive Carbon Costs in the Sports Goods Manufacturing Industry Costs category Items Contents Direct Material Costs Domestic raw materials Domestic carbon fees costs are passed-through from different sectors, including iron and steel, aluminum, plastics, synthetic fibers, and glass. Foreign raw materials Costs are passed-through from domestic carbon border adjustments Costs are passed-through from foreign CBAMs Production and manufacturing costs Electricity consumption Demands for fulfilling green electricity (e.g., Renewable Energy Certificates, RECs) Installation of renewable energy facilities Installation/replacement of energy-efficient facilities Freight costs Logistics and transportation costs Costs are passed-through from domestic and international fossil fuels’ carbon taxes or purchasing carbon credits for carbon neutrality. Costs are passed-through by domestic and international freight companies that adopt alternative fuels or install renewable energy facilities. Compliance carbon costs Carbon fees Liability provisions of taxable emissions should be made if an emitter exceeds GHG emissions by 25,000 tons of CO2e annually. Costs for obtaining compliance reduction credits Compliance reduction credits purchased or acquired for offsetting taxable emissions in carbon fees, e.g., reduction credits from voluntary reduction projects, etc.
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