{"id":42867,"date":"2024-10-10T10:02:18","date_gmt":"2024-10-10T04:32:18","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=42867"},"modified":"2025-05-05T21:07:14","modified_gmt":"2025-05-05T15:37:14","slug":"eus-carbon-border-adjustment-mechanism-cbam","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/eus-carbon-border-adjustment-mechanism-cbam\/","title":{"rendered":"EU\u2019s Carbon Border Adjustment Mechanism (CBAM)"},"content":{"rendered":"<h2><strong>What\u2019s in today\u2019s article?<\/strong><\/h2>\n<ul>\n<li>Why in the News?<\/li>\n<li>Carbon Border Adjustment Mechanism<\/li>\n<li>Why Developing Countries Like India Find EU\u2019s Deforestation Rules Discriminatory?<\/li>\n<li>News Summary<\/li>\n<\/ul>\n<h2><strong>Why in the News?<\/strong><\/h2>\n<ul>\n<li>Finance Minister Nirmala Sitharaman called out the European Union\u2019s initiatives such as the <strong>Carbon Border Adjustment Mechanism<\/strong> (CBAM) and <strong>Deforestation Rules<\/strong> as \u2018<i><strong>unilateral<\/strong><\/i>\u2019 and \u2018<i><strong>arbitrary<\/strong><\/i>\u2019 measures.<\/li>\n<\/ul>\n<h2><strong>Carbon Border Adjustment Mechanism<\/strong><\/h2>\n<ul>\n<li>The Carbon Border Adjustment Mechanism (CBAM) is a policy initiative by the <strong>European Union<\/strong> (EU) aimed at reducing carbon emissions by imposing a carbon price on imports from countries with less stringent climate policies.<\/li>\n<li>It ensures that imported products face the same carbon costs as those produced within the EU, promoting fair competition and encouraging global decarbonization efforts.<\/li>\n<li><strong>Key Features of CBAM:<\/strong>\n<ul>\n<li><strong>Objective:<\/strong>\n<ul>\n<li>CBAM aims to <strong>prevent carbon leakage<\/strong>, where companies shift production to countries with looser carbon regulations to avoid stricter EU climate policies.<\/li>\n<li>It aligns with the EU\u2019s climate goals, particularly its <strong>European Green Deal<\/strong>, targeting <strong>net-zero emissions by 2050<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Scope:<\/strong>\n<ul>\n<li>Initially, CBAM covers sectors with high carbon emissions, including <strong>cement, steel, aluminium, fertilizers, electricity<\/strong>, and <strong>hydrogen<\/strong>.<\/li>\n<li>The mechanism calculates the embedded carbon emissions in imported products and imposes an equivalent carbon price.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Implementation Timeline:<\/strong>\n<ul>\n<li><strong>2023-2025<\/strong>: Transition phase where importers report the carbon emissions of their goods without paying the adjustment.<\/li>\n<li><strong>2026<\/strong> onwards: Full implementation where importers will be required to purchase <strong>CBAM certificates<\/strong> corresponding to the embedded carbon emissions of their imports.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Working Mechanism of CBAM:<\/strong>\n<ul>\n<li><strong>CBAM Certificates:<\/strong>\n<ul>\n<li>Importers must buy CBAM certificates to cover the carbon emissions of their imported goods, matching the EU\u2019s <strong>Emissions Trading System<\/strong> (ETS) price.<\/li>\n<li>The price of CBAM certificates will reflect the EU\u2019s internal carbon price, ensuring a level playing field for domestic and foreign producers.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Calculation of Carbon Emissions:<\/strong>\n<ul>\n<li>The carbon footprint of imported goods is calculated based on direct emissions during their production.<\/li>\n<li>If a country already imposes a carbon price, this can be deducted from the CBAM obligation, avoiding double taxation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Why Developing Countries Like India Find EU\u2019s Deforestation Rules Discriminatory?<\/strong><\/h2>\n<ul>\n<li><strong>The European Union&#8217;s Deforestation Rules, aimed at preventing the import of <\/strong>commodities linked to deforestation, have faced criticism from many developing countries.<\/li>\n<li>These countries argue that the rules are discriminatory for several reasons, which largely revolve around issues of fairness, trade barriers, and the economic burden of compliance.<\/li>\n<li><strong>Increased Compliance Costs:<\/strong>\n<ul>\n<li>The EU rules require exporters to provide <strong>geolocation data<\/strong> and prove that commodities like <strong>soy, palm oil, coffee, and cocoa<\/strong> are not sourced from recently deforested areas.<\/li>\n<li><strong>Small-scale farmers<\/strong> and producers in developing countries often lack the resources, technology, and expertise to meet these stringent requirements, making compliance <strong>costly<\/strong> and <strong>administratively burdensome<\/strong>.<\/li>\n<li>These additional costs can make exports from developing countries less competitive in the EU market.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Disadvantage to Agricultural Exports:<\/strong>\n<ul>\n<li>Many developing countries are <strong>export-dependent<\/strong> on agricultural commodities that the EU has identified as high-risk for deforestation, such as <strong>palm oil<\/strong> from Indonesia and Malaysia or <strong>coffee<\/strong> and <strong>cocoa<\/strong> from African and Latin American nations.<\/li>\n<li>The rules can act as a <strong>non-tariff barrier<\/strong>, potentially reducing market access for these countries in the EU.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Limited Recognition of National Efforts:<\/strong>\n<ul>\n<li>Many developing countries feel that the EU&#8217;s rules do not sufficiently recognize their <strong>national efforts<\/strong> to combat deforestation and implement <strong>sustainable land-use practices<\/strong>.<\/li>\n<li>Countries like India, Brazil, Indonesia, and Ghana have pointed out that they have <strong>domestic policies<\/strong> and <strong>reforestation efforts<\/strong> in place, yet the EU\u2019s rules impose a one-size-fits-all standard that may not account for these efforts.<\/li>\n<li>This perceived lack of acknowledgment undermines the sovereignty of these countries in managing their own resources.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Unequal Responsibility for Climate Change:<\/strong>\n<ul>\n<li>Developing countries argue that the EU\u2019s deforestation rules place <strong>disproportionate responsibility<\/strong> on them for addressing global environmental issues like deforestation and climate change.<\/li>\n<li>Historically, developed nations have contributed more to <strong>global carbon emissions<\/strong> and deforestation through industrialization. Yet, developing countries, which often rely on agriculture for economic growth, are being pressured to adhere to stringent standards that may hinder their development.<\/li>\n<li>They view this as a form of <strong>environmental double standards<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>News Summary<\/strong><\/h2>\n<ul>\n<li>Finance Minister Nirmala Sitharaman criticized <strong>the European Union\u2019s (EU) Carbon Border Adjustment Mechanism (CBAM)<\/strong> and new <strong>deforestation rules<\/strong>, describing them as <strong>\u201cunilateral\u201d<\/strong> and <strong>\u201carbitrary\u201d<\/strong> measures that could harm countries like <strong>India<\/strong>.<\/li>\n<li>These measures, according to the Finance Minister, could negatively impact <strong>economic growth<\/strong> and hinder <strong>green energy transition goals<\/strong> in developing nations.<\/li>\n<li>The Finance Minister labelled the <strong>CBAM<\/strong> as a <strong>trade barrier<\/strong>, suggesting that it creates additional challenges for countries working towards their <strong>net-zero commitments<\/strong>.<\/li>\n<li>She pointed out that more such measures from developed countries could pose <strong>unforeseeable risks<\/strong> to nations like India, which are striving to address <strong>climate change<\/strong> while maintaining economic growth.<\/li>\n<li>When asked whether these issues might impact the <strong>Free Trade Agreement (FTA) negotiations<\/strong> with the EU, the Finance Minister expressed confidence that these concerns would not escalate to a level that would jeopardize the FTA talks.<\/li>\n<li>However, she emphasized that India\u2019s concerns would be <strong>repeatedly voiced<\/strong> in discussions with the EU, highlighting India&#8217;s dissatisfaction with the EU\u2019s approach to climate-related trade measures.<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q1. What is the UNFCCC and what do they do?<\/strong><\/h3>\n<p>The UNFCCC secretariat (UN Climate Change) is the United Nations entity tasked with supporting the global response to the threat of climate change. UNFCCC stands for United Nations Framework Convention on Climate Change.\u00a0<\/p>\n<h3><strong>Q2. What is the difference between mitigation and adaptation?<\/strong><\/h3>\n<p>In essence, adaptation can be understood as the process of adjusting to the current and future effects of climate change. Mitigation means preventing or reducing the emission of greenhouse gases (GHG) into the atmosphere to make the impacts of climate change less severe.<\/p>\n<p><strong>Source:\u00a0<\/strong> <a href=\"https:\/\/www.thehindu.com\/business\/eus-cbam-deforestation-norms-unilateral-arbitrary-fm\/article68737455.ece\" target=\"_blank\" rel=\"nofollow noopener\">EU\u2019s CBAM, deforestation norms unilateral, arbitrary: FM<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>EU\u2019s CBAM aims at reducing carbon emissions by imposing a carbon price on imports.<\/p>\n","protected":false},"author":5,"featured_media":42868,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-42867","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/42867","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=42867"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/42867\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/42868"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=42867"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=42867"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=42867"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}