CBAM is part of the “Fit for 55 in 2030 package”, which is the EU’s plan to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels in line with the European Climate Law.

Aim

• The CBAM is a policy tool aimed at reducing Carbon Emissions by ensuring that imported goods are subject to the same carbon costs as products produced within the EU.

Facts

• It applies first to carbon-intensive sectors such as cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen.
• The CBAM will be implemented by requiring importers to declare the quantity of goods imported into the EU and their embedded Greenhouse Gas (GHG) emissions on an annual basis.
• It is linked to the EU Emissions Trading System and the gradual phase-out of free allowances.

Impact on India

• India’s exporters in steel, aluminium, and related sectors may face higher compliance costs.
• It may push the Indian industry toward cleaner production and stronger MRV systems.
• It also raises concerns about climate equity, trade fairness, and CBDR-RC under UNFCCC

Source: The Hindu