"BRICS opposes EU carbon border mechanism, demands increased adaptation finance"
Carbon Border Adjustment Mechanism (CBAM)
EU instrument imposing carbon costs on imports to prevent carbon leakage from weaker-regulation countries.
Carbon leakage
shifting of carbon-intensive production to jurisdictions with less stringent climate policies to avoid domestic carbon costs.
The Carbon Border Adjustment Mechanism (CBAM) is the European Union's instrument to prevent carbon leakage — the risk that carbon-intensive production migrates to jurisdictions with weaker climate regulations, undermining the environmental gains of the EU Emissions Trading System (EU ETS). The EU ETS, established under Directive 2003/87/EC in 2005, is the world's first and largest mandatory carbon market, operating on a cap-and-trade principle where covered industries must hold allowances for every tonne of CO₂ they emit. As the ETS progressively phases out free allowances for domestic producers, imported goods from countries without equivalent carbon pricing gain a competitive advantage — CBAM is designed to close this gap by imposing a carbon cost on imports.
The broader normative tension underlying CBAM is the principle of Common but Differentiated Responsibilities (CBDR), enshrined in the Rio Declaration (1992) and reaffirmed in the Paris Agreement (2015). Developing countries argue that historical emissions from industrialised nations created the climate crisis, and that imposing equivalent carbon compliance costs on emerging economies violates the spirit of CBDR. India's per capita emissions remain far below the global average, and the country is still in an active phase of industrial development — a context that shapes its consistent opposition to measures it views as disguised trade protectionism.
The Paris Agreement's Article 6 provides the multilateral framework for carbon markets and cooperative approaches between countries. Its operationalisation — including rules on avoiding double-counting of emission reductions — remains contested in annual climate negotiations, making unilateral mechanisms like CBAM politically charged in the absence of a universally agreed carbon pricing architecture.
CBAM entered its definitive phase from January 1, 2026, after a transitional reporting-only phase. In its operative form, importers of six carbon-intensive product categories — iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity — must purchase CBAM certificates corresponding to the carbon price that would have been paid under the EU ETS had the goods been produced within the EU. The mechanism effectively extends the EU's carbon price to the border, neutralising the cost advantage of producers in countries without comparable carbon pricing.
For India, the exposure is concentrated and significant. Iron and steel account for approximately 90% of India's EU-bound exports that fall within the CBAM framework. Empirical analysis published in Nature Climate Change found that during the CBAM reporting phase, high-emission Indian steel firms reduced both export volumes and revenues to the EU, while lower-emission firms maintained their market position. This creates a within-sector differentiation effect: CBAM inadvertently accelerates a competitive sorting among Indian exporters based on their emissions intensity, rewarding firms that have already invested in cleaner production. …
Consider the following statements:
Statement-I:
Recently, the European Parliament approved The Net-Zero Industry Act.
Statement-II:
The European Union intends to achieve carbon neutrality by 2040 and therefore aims to develop all of its own clean technology by that time.
Which one of the following is correct in respect of the above statements?
Consider the following statements:
Statement I: Article 6 of the Paris Agreement on climate change is frequently discussed in global discussions on sustainable development and climate change.
Statement II: Article 6 of the Paris Agreement on climate change sets out the principles of carbon markets.
Statement III: Article 6 of the Paris Agreement on climate change intends to promote inter-country non-market strategies to reach their climate targets.
Which one of the following is correct in respect of the above statements?
The 'Fortaleza Declaration', recently in the news, is related to the affairs of
With reference to the EU's Carbon Border Adjustment Mechanism (CBAM), consider the following statements:
1.CBAM requires importers to purchase certificates corresponding to the carbon price applicable under the EU Emissions Trading System.
2.Electricity is among the product categories covered under CBAM.
3.CBAM entered its definitive operational phase in January 2025.
Which of the statements given above is/are correct?
The principle of 'Common but Differentiated Responsibilities' (CBDR) in international environmental law was first formally accepted in which of the following?
Assertion (A): India's iron and steel exports to the EU are disproportionately affected by the Carbon Border Adjustment Mechanism compared to other Indian export sectors.
Reason (R): Iron and steel account for approximately 90% of India's EU-bound exports that fall within the CBAM framework.
Which one of the following is correct?
Which of the following best describes the concept of 'carbon leakage' as used in the context of the EU's Carbon Border Adjustment Mechanism?
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