Abstract
Brazilian merchant pig iron (MPI) mills, even those relying exclusively on charcoal, are at least as harmful to the global climate as the coal-based competitors they confront in international trade. However, when timber from deforestation is replaced by sustainably managed forest plantations, a carbon neutral process emerges. Yet the cost of growing trees can be large enough to discourage mills from pursuing such a climate change mitigation route. The paper shows that the impasse can be overcome by the improvement of pyrolysis kilns coupled with a multilateral agreement in which (1) Brazil supplies attested carbon-neutral MPI and (2) importers of Brazilian MPI take environmental concerns to the field of MPI trade, paying a premium of 19% of MPI price or of US$3 per ton of avoided emissions.
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