Many Asian businesses are not fully aware of the potential financial impacts of carbon pricing in the region, nor are they prepared for the possibility of facing carbon import duties on their products, according to a senior UBS analyst. Sectors such as airlines, cement and steel firms, computer manufacturers, and shipping companies are at risk depending on their profit margins, ability to pass on costs, and exposure to the United States and Europe. The analyst also mentioned that a major climate conference in Denmark in December could lead to the wider implementation of carbon pricing in Asia, with a carbon tax or emissions trading potentially affecting numerous companies across the region within the next three years. Despite this, investors in Asia tend to overlook this issue due to their short-term focus and the belief that governments in countries like India and China are not prioritizing climate change. Smiles, the author of a significant UBS report titled "How might carbon pricing affect Asian company profits?", examined three scenarios: implementing carbon pricing within Asian countries, imposing equal carbon import duties between wealthier and less affluent nations, and enforcing stricter carbon import duties due to climate change. He suggested that the second scenario was the most probable in the near future, citing indications from the United States and the European Union regarding potential duties on products from countries lacking greenhouse gas regulations. The Waxman-Markey climate bill, which has yet to be voted on in Congress, includes a proposal for an international reserve allowance program. This scenario would require US companies to purchase energy-intensive goods from countries that do not have emissions targets similar to the United States. US companies would need to buy allowances to compensate for the carbon emissions associated with foreign products like cement or steel. According to Smiles, marine transport firms, airlines, steel manufacturers, and computer companies would be impacted by carbon duties, as exporters would be responsible for paying for the carbon emissions based on the amount of CO2 they release, while domestic firms would not be affected. With the implementation of carbon pricing in the US, more than 50 percent of global private consumption will be subject to carbon pricing. The report suggests that implementing carbon-related import duties could put Asian airlines, such as Taiwan's Eva Airways, at a significant disadvantage. For instance, Eva Airways could see a 34.3 percent drop in earnings per share based on 2010 projections and a carbon price of US$9 per tonne. Other companies like Thailand's Siam City Cement and South Korean Hyundai Merchant Marine could also experience significant declines in EPS. Industries most affected by these measures would include airlines, power utilities, marine transport, and cement makers. The study assumed that Asian countries would introduce carbon taxes or trading schemes aiming for a 20 percent reduction in CO2 emissions. China Airlines is expected to see a significant decrease in its 2010 EPS due to its high exposure to the United States and EU, 30 percent fuel cost exposure, and slightly negative earnings margin. On the other hand, Singapore Airlines' EPS is predicted to only drop by 8.6 percent because of its 9.5 percent net profit margin and slightly smaller fuel cost exposure. The report suggests that the third scenario, where exporters would pay for the CO2 emissions of their home countries, is currently less likely. This scenario was initially intended to encourage China, India, and other developing nations to join global efforts to combat climate change. Smiles, the author of the report, mentioned that the primary focus was to estimate the potential cost of a domestic carbon pricing regime for these countries. It was previously believed that the US and Europe placed a flat tax on all manufactured exports from various countries, leading to the assumption that the total cost borne by each country was attributed to these two regions. In 2007, China's estimated carbon cost was $55 billion, while India's was $9 billion.