Latest news with #CarbonBorderAdjustmentMechanisms
Indian Express
09-07-2025
- Business
- Indian Express
What is the European Union's CBAM, and why has BRICS condemned and rejected it?
BRICS nations have 'condemned and rejected' the Carbon Border Adjustment Mechanisms (CBAM) of the European Union (EU) and similar restrictive trade measures, saying they undermine their transition to a cleaner economy. CBAM is an import duty that is imposed by Europe on goods produced in other countries by processes that lead to greater carbon emissions than domestic European manufacturers are allowed to emit. The ostensible purpose is to check 'carbon leakage', but this has the effect of making items like steel or cement manufactured in countries like India more expensive, and thus less competitive, in European markets. Developing countries including India and China have been strongly critical of CBAM, and called it a unilateral and unfair trade barrier. They have said CBAM violates international agreements on both trade and climate, and have raised this issue at multiple international forums, including the annual climate conferences. But the EU has refused to relent. On Monday (July 7), BRICS, a group of nine large developing economies including India, said in a statement issued at their summit in Rio de Janeiro, Brazil: 'We condemn and reject unilateral, punitive and discriminatory, protectionist measures that are not in line with international law, under the pretext of environmental concerns, such has unilateral and discriminatory carbon border adjustment mechanisms (CBAMs), due diligence requirements with detrimental impacts on global efforts to halt and reverse deforestation, taxes and other measures…'. What are climate-related trade restrictions such as CBAM? CBAM, rolled out by the EU in 2023, taxes certain products coming in from other countries on the basis of the emissions footprint of their production process. So, if a product imported into the EU was produced by a process that entailed higher emissions than the emissions standard for that product in Europe, it will be taxed. CBAM, the EU says, is a 'tool to put a fair price on carbon emitted during the production of carbon-intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries'. The European Commission's website describes CBAM thus, 'Designed in compliance with World Trade Organization (WTO) rules and other international obligations of the EU, the CBAM system will work as follows: EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU's carbon pricing rules. 'Conversely, once a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods in a third country, the corresponding cost can be fully deducted for the EU importer.' CBAM will apply in its 'definitive regime' from 2026, with a 'transitional phase' of 2023 to 2025, the EU has said. So what is the problem with such a policy tool? CBAM keeps European industries competitive while also maintaining high environmental standards. Industries are disincentivised from relocating to countries that have less strict emission norms where production may be cheaper – a situation described as carbon leakage. In the process, Europe hopes to contribute to reducing global emissions. However, this policy tool hurts the export competitiveness of developing countries such as China and India. To these nations, it appears as an unfair barrier to trade, and a violation of international agreements. For example, the Paris Agreement adopted in 2015 protects developing countries from the social and economic impacts of 'response measures' against climate change. And the Dubai climate meeting (COP28) in December 2023 acknowledged that 'measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade'. Developing countries have also pointed out that CBAM overlooks the 'differentiation' embedded in the global climate architecture that allows them to be treated differently from the developed nations. Industries in developed economies with emissions standards comparable to the EU's stand to benefit from a CBAM-like measure, since their products would not be taxed and, hence, become more competitive in the European market. CBAM, therefore, can have the net effect of helping industries in the developed world, while putting those in developing countries at a disadvantage. How have developing economies pushed back? While the BRICS statement this week is the strongest used so far, the opposition from India and other developing countries has been firm and consistent. A formal submission by China, India and some other countries to discuss climate change-related trade measures such as those introduced in the EU delayed the opening plenary of the climate conference in Baku, Azerbaijan (COP29), on November 11 last year by several hours. On behalf of the BASIC group of countries that also includes India, Brazil and South Africa, China requested a discussion on these issues at the climate meetings. It met with strong opposition from the EU and some other countries, and the proposal had to be put on the back burner. The BASIC group had opposed the carbon border taxes policy at COP27 in Sharm El Sheikh, Egypt, as well, saying it could 'result in market distortion'. In a joint statement issued on November 15, 2022, these countries said: 'Unilateral measures and discriminatory practices, such as carbon border taxes, that could result in market distortion and aggravate the trust deficit amongst Parties, must be avoided.' The BASIC countries called for a 'united solidarity response by developing countries to any unfair shifting of responsibilities from developed to developing countries'. What other trade measures have countries taken to ostensibly address climate change? CBAM, the EU's policy to tax carbon-intensive products such as iron and steel, cement, fertiliser, aluminium, and electricity generation from 2026, was proposed in 2021. CBAM was not the first-of-its-kind trade measure linked to climate change, but it is expected to be the most impactful till now. This is because the EU is a large market, accounting for about 15% of global imports. While CBAM currently applies to only a handful of goods, the list is set to be expanded to a large number of other items in the coming years. Other countries too may be tempted to bring in similar regulations. The United Kingdom and Canada have been reported to be considering their own versions of CBAM. There are other non-tariff trade measures linked to climate change. Several regions, including the EU, ban the import of products made from illegally harvested forests. The incentives offered to American clean energy technology or electric vehicle industries in the US federal Inflation Reduction Act (IRA) that was signed into law by former President Joe Biden in August 2022, are examples of climate-related non-tariff measures that can impact and reshape global trade. Climate change is also accelerating a process of increasing protectionism that is being driven by several other considerations, including economic, strategic, and security-related. While President Donald Trump's tariffs on imports is not cloaked in climate imperatives, it does play on America's fears on energy security which is threatened by the heavy concentration of renewable energy supply chains in China. In fact, the dominance of China in the control of resources and technologies related to new energy sources — solar, wind, batteries, and critical minerals — far exceeds that of oil-producing countries in the fossil fuel era. This too has been facilitated by climate change that is forcing a global energy transition. ======================= This explainer draws on two earlier explainers published on November 13, 2024 and November 17, 2022.
Indian Express
08-07-2025
- Business
- Indian Express
BRICS nations ‘condemn and reject' Europe's carbon-based import duties
In in strongest statement on the subject yet, the BRICS nations have 'condemned and rejected' Europe's Carbon Border Adjustment Mechanisms (CBAMs), and other similar restrictive trade measures taken under the pretext of climate concerns, saying these undermined their development and transition to cleaner economy. CBAM is an import duty imposed by the European Union (EU) on goods produced by processes that lead to more carbon emissions than domestic European manufacturers are allowed to emit. The ostensible reason is to check 'carbon leakage', but this has the effect of making items like steel or cement, from a country like India for example, more expensive, and thus less competitive, in the European markets. Developing countries including India and China have been strongly critical of CBAM, calling it a unilateral and unfair trade barrier. They maintain this violates international agreements on both trade and climate, and have raised this issue at multiple international forums, including the annual climate conferences. But EU has been unrelenting. The statement by the BRICS nations, a group of nine large developing economies whose annual two-day summit concluded in Brazil on Monday, is another reiteration of the stand of the developing countries, though in a much stronger language. 'We condemn and reject unilateral, punitive and discriminatory, protectionist measures that are not in line with international law, under the pretext of environmental concerns, such has unilateral and discriminatory carbon border adjustment mechanisms (CBAMs), due diligence requirements with detrimental impacts on global efforts to halt and reverse deforestation, taxes and other measures …', the BRICS nations said in a statement on climate finance that is a new addition to the outcomes from this annual meeting. The Leaders' Framework Declaration on Climate Finance is the result of the discussions held by a new contact group of ministers on climate change and sustainable development that was formed last year under Russia's chairmanship of BRICS. The declaration said CBAMs, and other measures like restrictions on trade of forest goods, violated the provisions of the 1994 UN Framework Convention on Climate Change (UNFCCC) and agreements reached at other climate meetings. For example, Article 3(5) of UNFCCC calls upon countries to 'promote a supportive and open international economic system' that would lead to sustainable economic growth and development in all countries, particularly those in the developing world. Importantly, it also says that 'measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade'. The BRICS countries, in their latest statement said they want a full implementation of this provision in UNFCCC. 'We also oppose unilateral protectionist measures which deliberately disrupt the global supply and production chains and distort competition,' it said. 'We express concern that such measures, as well as unilateral economic and financial sanctions, may undermine BRICS countries' capacities to invest in their own just transitions and development priorities and risk diverting away critical resources at a time when developing countries face a financial gap to pursue climate action and sustainable development. We emphasise the importance of non-discriminatory access to trade and to climate finance for all countries and the need to address existing barriers,' it said. The BRICS nations also asked the rich and developed world to fully deliver on their commitments under the UNFCCC and the 2015 Agreement, particularly those related to providing financial resources to the developing countries to take climate action. Developed countries are obligated to raise at least US$ 100 billion a year in climate finance meant for developing countries. They have promised to raise this to at least US$ 300 billion a year from 2035. But developing countries say this is too less and too late, considering that they already need at least US$ 1.3 trillion a year. 'We emphasize that although developing countries have contributed to a lesser extent to climate change, populations in these countries are the most vulnerable to its adverse impacts and the lesser equipped, including in terms of relevant infrastructure, to withstand its effects. Therefore, we highlight the need to increase the share of financing for adaptation, particularly public finance…,' the BRICS statement said. The BRICS nations called on the developed world to urgently increase their financial contribution to adaptation projects, at least doubling the amount in 2019 by 2025, as has been agreed in climate conferences. 'We emphasise that adaptation finance must be primarily concessional, grant-based and accessible to local communities and should not substantially increase debt burdens on developing economies, while ensuring predictability, adequacy and direct access modalities that facilitate implementation of context-appropriate solutions aligned with national adaptation plans and priorities,' their statement said.
Indian Express
08-07-2025
- Business
- Indian Express
BRICS nations 'condemn and reject' Europe's carbon-based import duties
In in strongest statement on the subject yet, the BRICS nations have 'condemned and rejected' Europe's Carbon Border Adjustment Mechanisms (CBAMs), and other similar restrictive trade measures taken under the pretext of climate concerns, saying these undermined their development and transition to cleaner economy. CBAM is an import duty imposed by the European Union (EU) on goods produced by processes that lead to more carbon emissions than domestic European manufacturers are allowed to emit. The ostensible reason is to check 'carbon leakage', but this has the effect of making items like steel or cement, from a country like India for example, more expensive, and thus less competitive, in the European markets. Developing countries including India and China have been strongly critical of CBAM, calling it a unilateral and unfair trade barrier. They maintain this violates international agreements on both trade and climate, and have raised this issue at multiple international forums, including the annual climate conferences. But EU has been unrelenting. The statement by the BRICS nations, a group of nine large developing economies whose annual two-day summit concluded in Brazil on Monday, is another reiteration of the stand of the developing countries, though in a much stronger language. 'We condemn and reject unilateral, punitive and discriminatory, protectionist measures that are not in line with international law, under the pretext of environmental concerns, such has unilateral and discriminatory carbon border adjustment mechanisms (CBAMs), due diligence requirements with detrimental impacts on global efforts to halt and reverse deforestation, taxes and other measures …', the BRICS nations said in a statement on climate finance that is a new addition to the outcomes from this annual meeting. The Leaders' Framework Declaration on Climate Finance is the result of the discussions held by a new contact group of ministers on climate change and sustainable development that was formed last year under Russia's chairmanship of BRICS. The declaration said CBAMs, and other measures like restrictions on trade of forest goods, violated the provisions of the 1994 UN Framework Convention on Climate Change (UNFCCC) and agreements reached at other climate meetings. For example, Article 3(5) of UNFCCC calls upon countries to 'promote a supportive and open international economic system' that would lead to sustainable economic growth and development in all countries, particularly those in the developing world. Importantly, it also says that 'measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade'. The BRICS countries, in their latest statement said they want a full implementation of this provision in UNFCCC. 'We also oppose unilateral protectionist measures which deliberately disrupt the global supply and production chains and distort competition,' it said. 'We express concern that such measures, as well as unilateral economic and financial sanctions, may undermine BRICS countries' capacities to invest in their own just transitions and development priorities and risk diverting away critical resources at a time when developing countries face a financial gap to pursue climate action and sustainable development. We emphasise the importance of non-discriminatory access to trade and to climate finance for all countries and the need to address existing barriers,' it said. The BRICS nations also asked the rich and developed world to fully deliver on their commitments under the UNFCCC and the 2015 Agreement, particularly those related to providing financial resources to the developing countries to take climate action. Developed countries are obligated to raise at least US$ 100 billion a year in climate finance meant for developing countries. They have promised to raise this to at least US$ 300 billion a year from 2035. But developing countries say this is too less and too late, considering that they already need at least US$ 1.3 trillion a year. 'We emphasize that although developing countries have contributed to a lesser extent to climate change, populations in these countries are the most vulnerable to its adverse impacts and the lesser equipped, including in terms of relevant infrastructure, to withstand its effects. Therefore, we highlight the need to increase the share of financing for adaptation, particularly public finance…,' the BRICS statement said. The BRICS nations called on the developed world to urgently increase their financial contribution to adaptation projects, at least doubling the amount in 2019 by 2025, as has been agreed in climate conferences. 'We emphasise that adaptation finance must be primarily concessional, grant-based and accessible to local communities and should not substantially increase debt burdens on developing economies, while ensuring predictability, adequacy and direct access modalities that facilitate implementation of context-appropriate solutions aligned with national adaptation plans and priorities,' their statement said.
Time of India
09-06-2025
- Business
- Time of India
SAfrica's coal dependency puts economy at risk: report
Johannesburg: South Africa's coal-dependent economy could lose billions in export revenue and thousands of jobs as more countries and companies seek carbon-free imports, the Net Zero Tracker watchdog said Monday. Africa's most industrialised nation is one of the largest polluters in the world and generates about 80 percent of its electricity through coal. This makes it "uniquely vulnerable" as companies decarbonise their supply chains and countries penalise carbon-intensive imports, according to the group, a collaboration of four non-profit organisations that tracks net zero pledges. "78 percent of South Africa's exports, worth $135 billion, are traded with 139 jurisdictions which have net zero targets in place. Collectively, these exports support over 1.2 million domestic jobs," the report said. If the country fails to decarbonise its supply chains, it could lose some of that trade and related jobs, it said. The group said South Africa could avoid this scenario by phasing out coal more rapidly and positioning itself as a "strategic supplier in low-emission value chains". "South Africa has the tools to pivot -- proven renewables potential, critical minerals, and seats at global tables," said Net Zero Tracker project lead John Lang. The report argued that South Africa was "well-positioned to become a key supplier of low-emission goods". One of the driving forces behind the decarbonisation push is the European Union's Carbon Border Adjustment Mechanisms (CBAMs). Adopted in 2022, the policy imposes a carbon price on imports of goods such as steel, aluminium and cement from countries with lower environmental standards. A test period began in October 2023 before the law's full entry into force in 2026. The South African Reserve Bank has warned that carbon-based tariffs could reduce exports by up to 10 percent and that CBAMs alone could shrink exports to the EU by four percent by 2030.
IOL News
09-06-2025
- Business
- IOL News
South Africa's coal dependency puts economy at risk: report
Africa's most industrialised nation is one of the largest polluters in the world and generates about 80% of its electricity through coal. Image: Tyna Janoch/Pixabay South Africa's coal-dependent economy could lose billions in export revenue and thousands of jobs as more countries and companies seek carbon-free imports, the Net Zero Tracker watchdog said Monday. Africa's most industrialised nation is one of the largest polluters in the world and generates about 80% of its electricity through coal. This makes it "uniquely vulnerable" as companies decarbonise their supply chains and countries penalise carbon-intensive imports, according to the group, a collaboration of four non-profit organisations that tracks net zero pledges. "78% of South Africa's exports, worth $135 billion, are traded with 139 jurisdictions which have net zero targets in place. Collectively, these exports support over 1.2 million domestic jobs," the report said. If the country fails to decarbonise its supply chains, it could lose some of that trade and related jobs, it said. The group said South Africa could avoid this scenario by phasing out coal more rapidly and positioning itself as a "strategic supplier in low-emission value chains". "South Africa has the tools to pivot -- proven renewables potential, critical minerals, and seats at global tables," said Net Zero Tracker project lead John Lang. The report argued that South Africa was "well-positioned to become a key supplier of low-emission goods". Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading One of the driving forces behind the decarbonisation push is the European Union's Carbon Border Adjustment Mechanisms (CBAMs). Adopted in 2022, the policy imposes a carbon price on imports of goods such as steel, aluminium and cement from countries with lower environmental standards. A test period began in October 2023 before the law's full entry into force in 2026. The South African Reserve Bank has warned that carbon-based tariffs could reduce exports by up to 10 % and that CBAMs alone could shrink exports to the EU by 4% by 2030. AFP
