Business Matters | How can EU’s carbon tax hurt India? | The Hindu
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- Опубліковано 14 бер 2023
- The European Union had in July last formalised a method to stop ‘carbon leakage’ or moving production of high-polluting products to nations outside of the EU in its bid to go green. This is called the Carbon Border Adjustment Mechanism.
Though the tax will be implemented in 2026, the transition period will begin in 2023, when importers in the EU will have to report (every quarter without attracting levies) the related emissions on goods brought in.
An article at the World Economic Forum website says: “CBAM will initially cover several specific products in some of the most carbon-intensive sectors at risk of "carbon leakage": iron and steel (including some downstream products such as nuts and bolts), cement, fertilizers, aluminium, electricity and hydrogen made using coal. The European Parliament also signalled a clear intention to include plastics and chemicals by 2026 and all sectors covered by the EU Emissions Trading System (ETS) by 2030.”
CBAM is part of the EU’s plan to cut greenhouse gas emissions by 55% by 2030 compared to 1990 levels, under the European Climate Law.
How does punitive pricing work?
An article in BusinessLine last week showed how Europe's emissions trading system or the ETS works. Polluting industries get a certain number of European Emission Allowance units, or EUAs - each equivalent to one tonne of CO2 emissions. If a company’s processes add to the pollution by more than the allowed level, it has to buy EUAs in the market. If it can show it has lowered pollution further, then it has surplus EUAs.
Which other countries have similar rules in place?
In its explainer on the CBAM, the EU says such mechanisms are in place in some regions around the world, such as California, where an adjustment is applied to certain imports of electricity.
It also says countries such as Canada and Japan are planning similar initiatives. In addition, the IMF and the OECD have recently carried out work to study how such measures could support international efforts to reduce greenhouse gas emissions.
So why is this a problem for other countries? Do the WTO rules allow this? What is India going to do?
Script and presentation: K. Bharat Kumar
Production: Shibu Narayan
Videography: Johan Sathyadas
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#europeanunion #carbontax #carbon
From the past, there is always a sheer transition and evolution from a highly polluting cycle to less emission mechanism. If CBAMs are imposed, it could possibly pave way for innovations to bolster further optimizations and reductions in carbon emissions.
Thank you Sir
Quite possible. But other parties in the equation tread with caution, to protect their interests...
Why should India bearing the burden of extra carbon emission to export Europeans. they are getting the essential raw materials so they have to pay the price. otherwise increase the price of raw materials..
Right decesion sir
This should act as an incentive for India reduce its carbon footprint.
Good nudge, yes.
That's alright. But who will pay for it?
Climate change is an existential threat for the whole world. It is everybody's problem so every country should take responsibility for controlling their own carbon footprint.
To a certain extent yes but look at another scenario where China stopping export to US and EU
Same materials exported to elsewhere there is no Carbon tax
What would India do ?
I dont think EU has that kind of power to impose on other economies especially when Dedollarization happens.
But lets not forget the hypocrisy of the western nations who are built on Carbon emissions, now putting the economic burden on Developing countries to clean up the mess they contributed to most heavily
If the EU must levy a carbon tax on India, then India should make the UK pay the reparations! There shall be no other way around it!!
Very good presentation sir . Will be looking forward to such educative videos 🙏🏽
Tq😊
It would only increase costs manifold making already inflation battered economies more vulnerable leading to a collective collapse. Addressing Carbon leakage should be a collective responsibility and we don't see much cooperation in that direction, instead, framing such unrealistic regulations and taxes much before the efforts to reduce emissions, is not well thought out.
You said it! Collective responsibility...
Any measure seeking to impose tariff or non tariff barriers must be predicated upon common but differentiated responsibilities. CBAM or other versions of such protectionist measures under the garb of sustainability smacks of climate justice. It's time that the western world sheds it's hypocrisy on climate change and fulfil its climate finance and technology transfer obligations that it has reneged for many years now. For the developing and the least developed world it is equally imperative to shore up adaptation efforts and gradually reduce dependence on fossil fuels through adopting sustainable lifestyles. A global partnership between the developed countries and the emerging economies is the need of the hour for arriving at a lasting solution to the climate conundrum.
Well articulated!
Really? Is it that simple to make up, or slap Western hypocrisy? The emissions in manufacturing green energy-producing instruments are ginormous in retrospect of the emissions/production ratio. The West has manufactured and stored, with, of course, better technological aids, massive infrastructural assets of "green" energy production. And now that the tax has been imposed, they are on the back seat, more than ready to reap the benefits of having emitted ridiculously, at the cost of those they feel authorized to decide the path of. And what are sustainable lifestyles? With growing economy, space, resources, and techniques of even faster expansion, will be increasingly sought. In the grand scheme of things, we have nothing "real" that is sustainable!
Thank you sir.
EUROPEAN UNION itself in big trouble . If they stop importing they only suffer .
This is EU last resort to generate money without any hardwork .
Both EU and US thrived on reserve currency status. These economies are thriving, and they print their currencies endlessly just because of reserve currency status so inflation can be passed to those who kept these currencies as reserve.
For example to Print a 100 $ bill it takes just 17 cents which is equal 2.55 rupees .
Once the 100 $ bill gets printed and comes to market, to get that bill we have to offer INR 8200 equivalent of goods and services. Simlar case for EURO .
As per the latest paper issued by Chinese external ministry, China is systematically stopping export to west.
By 2024 de Dollarization happens EU will end up in extreme poverty as the world moves to a new pegged currency. ( BRICS)
Germany for instance already moved to coal to produce electricity. And EU lecturing rest of the world
We should try for anti carbon tax and should focus for nature india should not be guru but india should be oxygen of the world
The Europeans has been exploiting since time immemorial and till now they somehow manage to exploit.Those affected countries should raise the price of export goods.
Tarrif should be levied by developing countries on Developed countries who had done a great damage due to which we are facing climate change.
If the final tax is to be imposed on EU importers then how will Indian Exporters be impacted? Pls explain
Developed economies realisation of developmental brim, hence entering into alternative ways like regulatory mechanisms (just creating documents) to swindle and sustain (middle class - otherwise called) "developing economies"....
Excellent..let us impose a "Common sense Tax", & an "Ex colonizer" tax on these holier than God specimens
FTAs is with UAE not UK ..
In talks for one with UK
Time for all colonies to put colonial tax on European products since they haven't paid reparations
there should be some room left for developing countries like india china etc in the form of incentive or they could abate taxes to some extent . 20 to 35 percent is huge.
இதே செய்தியை தமிழில் சொன்னால் சம்பளம் 400 ரூபாய். அதையே ஆங்கிலத்தில் பேசினால் 10000 ரூபாய் சம்பளம்.
இதன் பெயர் Development, Modern, educated etc...
What is your problem?