Carbon emissions: India may accept EU’s default values

  • November 6, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Carbon emissions: India may accept EU’s default values

Subject :Environment

Section: Climate change

Key Points:

  • During the ongoing transition phase of the EU’s Carbon Border Adjustment Mechanism (CBAM), India is likely to accept the bloc’s default values for calculating carbon emitted during production of identified polluting items, including steel & aluminium, in the country, for export to the region.

What is required under the transition period?

  • Carbon taxes on carbon-intensive goods covered under CBAM will not kick in before 2026 and thus EU-based importers only need to report data on the embedded emissions only till end of 2025.

Why is India choosing to accept EU default embedded carbon values?

  • India does not yet have a carbon verification and accreditation system in place and, therefore, may find it difficult to do its own carbon emission determination at the moment.
  • Thus it may be a more practical idea to just allow them to apply the EU’s default value for both direct and indirect emissions for imports from India during the transition phase. This will allow time for our own systems to be read.

What are the default values?

  • Based on averages and their own estimates, the EU is working on a country-wise list of ‘default’ values of embedded emissions for the identified carbon intensive items, and is expected to share it soon, the official said.
  • The items include cement, iron & steel, aluminium, fertilisers, electricity, and hydrogen.
Embodied/embedded carbon emissions of goods, also known as embedded carbon emissions, refer to the greenhouse gas emissions generated during the production and transportation of goods, from the extraction of raw materials to the manufacturing process and final delivery to the consumer.
  • Indian steel and aluminium sectors are likely to be hit the most by CBAM as some estimates show that they may attract additional levies up to 20-35 per cent if compliance cannot be established.

What is carbon price?

  • CBAM is an EU regulation to put a “fair” price on carbon emitted during production of carbon intensive items in non-EU countries when they are imported into the bloc.
  • It seeks to level the field for producers in the EU already facing a carbon price for their emissions under the EU Emission Trading System (ETS).
  • While the transition period for CBAM began on October 1 2023, wherein importers need to report the embedded carbon content in their imports on a quarterly basis till end of 2025, the carbon tax regime will kick in from January 2026
Carbon emissions: India may accept EU’s default values Environment