BRICS condemns EU carbon tax
2-minute summary
At the 12th BRICS Environment Ministers' Meeting in New Delhi, member nations jointly condemned the European Union's Carbon Border Adjustment Mechanism (CBAM) as a unilateral, protectionist, and discriminatory trade barrier. CBAM, which entered its definitive phase in January 2026, imposes carbon taxes on energy-intensive imports like steel, aluminium, cement, fertilisers, hydrogen, and electricity to prevent 'carbon leakage'. BRICS ministers argued that such measures undermine developing nations' capacity to build climate resilience. India is highly vulnerable, with iron and steel constituting nearly 90% of its CBAM-exposed exports to the EU. A Nature Climate Change study confirmed that high-emission Indian firms have already reduced EU exports due to compliance pressures. Consequently, BRICS has demanded that developed nations fulfill their 2025 UN climate commitment to triple adaptation finance to developing countries by 2035, emphasizing that this funding must be new, predictable, and provided via grants or concessional loans rather than debt-inducing instruments.
Why it's in the news
The 12th BRICS Environment Ministers' Meeting, held in New Delhi under India's chairship, issued a joint statement strongly opposing the EU's Carbon Border Adjustment Mechanism (CBAM) and demanding a tripling of international adaptation finance by 2035 ahead of the COP31 summit.
Facts to remember
- The 12th BRICS Environment Ministers' Meeting was held in New Delhi under India's chairship.
- Member nations at the meeting jointly condemned the European Union's Carbon Border Adjustment Mechanism (CBAM) as a unilateral, protectionist, and discriminatory trade barrier.
- The EU's CBAM entered its definitive phase in January 2026 to impose carbon taxes on energy-intensive imports and prevent carbon leakage.
- BRICS demanded that developed nations fulfill their 2025 UN climate commitment to triple adaptation finance to developing countries by 2035 via grants or concessional loans.
Background and context
The European Union introduced the Carbon Border Adjustment Mechanism (CBAM) to level the playing field for EU industries that pay a domestic carbon price under the EU Emissions Trading System (ETS). By taxing carbon-intensive imports, the EU aims to prevent 'carbon leakage'—where companies relocate production to countries with laxer environmental regulations. However, developing nations argue this violates the UNFCCC principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC). Historically, global climate finance has heavily favored mitigation (reducing emissions) over adaptation (building resilience against climate impacts). At the 2025 UN Climate Conference, developed nations committed to tripling adaptation finance by 2035, but negotiations on delivery mechanisms remain highly contested.
Constitutional provisions
- Article 48A — Directive Principle of State Policy directing the State to protect and improve the environment and safeguard forests and wildlife.
- Article 51(c) — Fosters respect for international law and treaty obligations, underpinning India's active participation in the UNFCCC and BRICS declarations.
Committees and reports
- Nature Climate Change Study on CBAM Impact — Analyzed shipment-level trade data showing that high-emission Indian steel firms reduced export volumes to the EU during the CBAM reporting phase, highlighting the tangible economic impact of the tax.
Government schemes
- National Adaptation Fund for Climate Change (NAFCC) — A central sector scheme supporting concrete adaptation activities in Indian states vulnerable to climate change.
- National Action Plan on Climate Change (NAPCC) — Houses eight national missions focusing on both mitigation and adaptation strategies (e.g., National Water Mission, Sustainable Agriculture).
International organisations
- BRICS — A major plurilateral grouping (Brazil, Russia, India, China, South Africa, and expanded members) acting as a collective voice for the Global South on trade, development, and climate justice.
- European Union (EU) — The regional bloc implementing the CBAM, driving global environmental standards through trade-linked regulatory mechanisms.
- UNFCCC — The primary international treaty framework for negotiating global climate action, finance targets, and adaptation goals.
Previous UPSC questions on this theme
- Mains GS-3 2021 — Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference?
- Prelims GS-1 2022 — "Climate Action Tracker" which monitors the emission reduction pledges of different countries is a : (a) Database created by coalition of research organisations (b) Wing of "International Panel of Climate Change" (c) Committee under "United Nations Framework Convention on Climate Change" (d) Agency promoted and financed by United Nations Environment Programme and World Bank
Mains practice: The European Union's Carbon Border Adjustment Mechanism (CBAM) is perceived as a green protectionist barrier by developing nations. Critically analyze its implications on India's export competitiveness and suggest strategic policy alternatives.
The European Union’s Carbon Border Adjustment Mechanism (CBAM) aims to prevent 'carbon leakage' by taxing carbon-intensive imports. However, developing nations, including the BRICS bloc, view it as a unilateral, protectionist measure that bypasses the UNFCCC principle of Common But Differentiated Responsibilities (CBDR).
**Implications on India's Export Competitiveness:**
• **High Sectoral Exposure:** Iron and steel constitute nearly 90% of India's CBAM-exposed exports to the EU. Aluminium is another highly vulnerable sector.
• **Increased Compliance Costs:** Indian exporters face dual compliance burdens—monitoring emissions at the facility level and purchasing expensive EU carbon certificates, which reduces price competitiveness.
• **Socio-Economic Disruption:** A decline in exports to the EU, as highlighted by a 2026 Nature Climate Change study, directly impacts employment and capital investment in India's core manufacturing sectors.
• **Precedent for Green Protectionism:** CBAM sets a precedent for other developed economies (like the US and UK) to erect similar trade barriers, fragmenting global trade.
**Strategic Policy Alternatives for India:**
• **Domestic Carbon Pricing:** India can establish its own Carbon Credit Trading Scheme (CCTS) to ensure that carbon tax revenues are collected domestically rather than paid to the EU.
• **Technology Transition Support:** Divert domestic cess and green funds to subsidize the transition of MSMEs and heavy industries to green hydrogen and low-carbon manufacturing.
• **Bilateral Negotiations and FTAs:** Leverage ongoing India-EU FTA negotiations to secure exemptions, transition periods, or mutual recognition of India's domestic carbon verification systems.
• **Multilateral Challenge:** Mobilize coalitions like BRICS and G77 at the WTO to challenge CBAM’s compatibility with General Agreement on Tariffs and Trade (GATT) non-discrimination principles.
While CBAM poses a severe transitional challenge, it also offers India an opportunity to accelerate industrial decarbonisation, provided international climate finance is mobilized effectively.
Prelims practice questions
Q1. Which of the following sectors are currently covered under the European Union's Carbon Border Adjustment Mechanism (CBAM)? 1. Iron and Steel 2. Aluminium 3. Organic Chemicals 4. Cement 5. Hydrogen 6. Pharmaceuticals Select the correct answer using the code given below:
- 1, 2, 3 and 4 only
- 1, 2, 4 and 5 only
- 1, 2, 4, 5 and 6 only
- 1, 2, 3, 4, 5 and 6
Answer: B. The CBAM covers carbon-intensive products consisting of iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity. It does not currently cover organic chemicals or pharmaceuticals.
Q2. With reference to global climate finance, consider the following statements: 1. Mitigation finance is directed towards reducing greenhouse gas emissions, while adaptation finance helps communities cope with unavoidable climate impacts. 2. At the UN Climate Conference in 2025, developed countries committed to tripling adaptation finance to developing countries by 2035. Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Answer: C. Both statements are correct. Statement 1 accurately distinguishes mitigation from adaptation. Statement 2 reflects the commitment made by developed nations at the 2025 UN climate conference to triple adaptation finance by 2035.
Q3. The 'Bonn Climate Change Conference', often in the news, serves primarily as which of the following?
- An annual mid-year technical meeting to prepare draft texts and agendas for the upcoming COP deliberations.
- The final authority to sign binding global carbon tax treaties.
- A dispute settlement body under the World Trade Organization for green trade barriers.
- An independent scientific panel that publishes the Assessment Reports on climate change.
Answer: A. The Bonn Climate Change Conference is an annual mid-year meeting under the UNFCCC that serves as a technical forerunner to the main Conference of the Parties (COP), where negotiators work on resolving technical details and drafting texts.
Revision flashcards
- What is the primary objective of the EU's Carbon Border Adjustment Mechanism (CBAM)? To prevent 'carbon leakage' by ensuring the price of imports matches the carbon price of domestic EU production, taxing carbon-intensive goods entering the EU.
- Which six sectors are targeted under the initial definitive phase of CBAM? Iron & steel, aluminium, cement, fertilisers, hydrogen, and electricity.
- Which sector accounts for approximately 90% of India's CBAM-exposed exports to the EU? Iron and Steel.
- What target year was agreed upon at the 2025 UN Climate Conference for developed countries to triple adaptation finance? By the year 2035.
- What is the key difference between climate mitigation and climate adaptation? Mitigation focuses on reducing or preventing greenhouse gas emissions (e.g., solar power), while adaptation focuses on adjusting to the actual or expected future climate effects (e.g., building flood seawalls).