NamasteIndia notes CBAM unilateral and arbitrary, will hurt Indian industry: FM Sitharaman
CBAM is perceived as potentially unfair for India, as it could hinder the country’s economic growth and green transition efforts.
Here’s why:
Economic_Impact: Like India, other developing countries with significant carbon-intensive industries (e.g., steel, cement, fertilizers) could face increased costs and reduced competitiveness in the EU market.
Unilateral Nature: The perception of CBAM as a unilateral and arbitrary measure is a common concern. Many developing nations feel that such policies should be developed through multilateral agreements to ensure fairness and inclusivity.
Transition Costs: Developing countries are at various stages of their green transitions. Additional financial burdens from CBAM could slow down their efforts to adopt sustainable practices, which is a shared challenge.
Historical_Emissions: Many developing countries argue that they have lower historical emissions compared to developed nations. They believe that measures like CBAM could unfairly penalize them despite their ongoing efforts to reduce emissions.
WTO Compliance: Concerns about CBAM’s compliance with World Trade Organization (WTO) rules are also widespread. Developing countries worry that such measures could be protectionist and discriminatory.
Whats_CBAM: The Carbon Border Adjustment Mechanism (CBAM) is a policy tool introduced by the European Union to address carbon leakage and promote global decarbonization. Here are the key points:
Purpose: CBAM aims to put a fair price on the carbon emissions associated with the production of certain carbon-intensive goods imported into the EU. This helps prevent companies from relocating production to countries with less stringent climate policies, a phenomenon known as carbon leakage.
Scope: Initially, CBAM will apply to imports of goods such as cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. Over time, it may expand to cover more products¹².
Implementation: The mechanism will be phased in gradually. The transitional phase started in October 2023, requiring importers to report emissions embedded in their products. From 2026, importers will need to purchase CBAM certificates corresponding to the carbon emissions of their imports¹².
Compatibility: CBAM is designed to be compatible with World Trade Organization (WTO) rules, ensuring that it does not unfairly disadvantage non-EU countries.
Impact: By equalizing the carbon cost between domestic products and imports, CBAM encourages cleaner production practices globally and supports the EU’s ambitious climate goals.
This mechanism is part of the EU’s broader strategy to combat climate change and promote sustainable industrial practices worldwide.
Originally published on LinkedIn on 2024-10-09 16:09:13: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A7249813163561414657
