EU's carbon tax could deepen climate inequities for developing countries: Delhi-based think tank
NEW DELHI: A New Delhi-based environmental think tank, the Centre for Science and Environment (CSE), has warned the European Union (EU) that imposing a carbon tax on developing countries like India will exacerbate climate inequities by shifting the burden of decarbonisation onto the Global South. The EU's Carbon Border Adjustment Mechanism (CBAM) came into effect on January 1, taxing selected industrial goods exported to the EU. CBAM is a carbon tax that the EU impose on imported goods to protect the climate and its companies. For countries like India, this has significant implications. Analysis indicates that CBAM could reduce the actual price of Indian steel and aluminium—mainly produced using coal—by 16 to 22%. Such shocks are likely to be mitigated through price compression in order to maintain competitiveness. "By putting a carbon price at the border, the CBAM alters the definition of competitiveness in global trade. However, it also shifts the costs of decarbonisation to developing countries, perpetuating a familiar dynamic where these nations adapt to rules set elsewhere under conditions that structurally disadvantage them," said Sunita Narain, Director General of CSE.
