Posted on 26 Apr 2023
The proposed implementation of the European Union's Carbon Border Adjustment Mechanism (CBAM), effective 1 October 2023, has raised concerns among the Indian steel industry, Kallanish notes.
The Indian commerce ministry, on behalf of the steel industry, is countering the CBAM and having a formal discussion with the EU authorities, as it will have a deteriorating impact on the Indian steel industry.
"We have had discussions with the commerce ministry, who are in turn taking this matter up with the European Union," Indian steel secretary Nagendra Nath Sinha informed the media during the Federation of Indian Chambers of Commerce and Industry (FICCI) India Steel 2023 event.
"The commerce ministry will be involved in a formal way [with the EU]. But in principle, we believe the EU shouldn't impose its standards because different nations have varying levels of development and, consequently, varying responsibilities," Sinha added.
The CBAM will initially apply to imports of certain goods whose production is carbon intensive and at the most significant risk of carbon leakage, like cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. With this enlarged scope, CBAM will eventually capture more than 50% of the emissions in EU Emissions Trading System (ETS)-covered sectors. Under the political agreement, the CBAM will enter into force in its transitional phase on 1, 2023.
Once the permanent system enters into force on 1 January 2026, importers will need to declare each year, the quantity of goods imported into the EU in the preceding year and their embedded greenhouse-gas emissions. They will then surrender the corresponding number of CBAM certificates.
The price of the certificates will be calculated depending on the weekly average auction price of EU ETS allowances expressed in Euros/tonne of CO2 emitted. The phasing-out of free allocation under the EU ETS will take place in parallel with the phasing-in of CBAM in the period 2026–2034.
Source:Kallanish
