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					</table><p>The European Union has taken one more step towards implementing the Carbon Border Adjustment Mechanism (CBAM), with the <a href="https://commission.europa.eu/index_en" target="_blank" rel="noopener">European Commission</a> adopting the rules governing the implementation of the carbon tariff on imported goods.</p>
<p>The transitional phase of CBAM, which starts on October 1 this year, will be in force until the end of 2025.</p>
<p>The carbon tariff measure has governments outside the EU and exporters of goods from those countries worried because they fear the competitiveness of their products will be dented. They have accused the bloc of being protectionist. India and China earlier this year <a href="https://www.mercomindia.com/india-voices-concern-over-europes-carbon-tariff-measure-at-wto" target="_blank" rel="noopener">raised</a> concerns about CBAM at the World Trade Organization.</p>
<p>The EU describes CBAM as a landmark tool to fight carbon leakage. According to it, carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to take advantage of lower standards or when EU products are replaced by more carbon-intensive imports, undermining the bloc’s climate action.</p>
<p>In CBAM’s transitional phase, the tariff measure will apply only to imported products and commodities like cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen.</p>
<p>The EU rules detail the reporting obligations for importers of CBAM goods and the methodology to calculate embedded emissions released during the manufacture of goods.</p>
<p>In the transitional phase, EU traders will only have to report on the emissions embedded in their imports without making any financial adjustments. The transitional phase will allow time for businesses to prepare for the mechanism and also for the definitive methodology to be fine-tuned by 2026.</p>
<p>The rules specify the specific embedded direct emissions of the goods, which will be determined by converting the attributed direct emissions of the production processes into emissions specific to the goods expressed as CO2e per ton.</p>
<p>The specific embedded emissions of goods produced in an installation can be determined using a carbon pricing mechanism where the installation is located or an emission monitoring system which can include verification by an accredited verifier.</p>
<p>Importers will also have to declare the electricity consumption, expressed in megawatt hours, of the production process per ton of goods produced for embedded indirect emissions associated with the products.</p>
<p>EU importers will have to collect fourth-quarter data as of 1 October 2023, and their first report must be submitted by January 31, 2024.</p>
<p>The rules provide for setting up a CBAM Transitional Registry, a system for filing and managing CBAM reports for reporting declarants.</p>
<p>India has said it would try convincing the EU to honor its carbon certificates to be issued after the Carbon Credit Trading Scheme comes into force. The government had <a href="https://www.mercomindia.com/comments-draft-carbon-credit-trading-program" target="_blank" rel="noopener">sought</a> feedback from stakeholders on the draft carbon credit trading program.</p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://cms.mercomindia.com/author/nagaraj/" class="vcard author" rel="author"><span class="fn">B.S. Nagaraj</span></a></div><div class="saboxplugin-desc"><div itemprop="description"><div class="designboxt">
<p><img class="alignleft" style="border-radius: 50%;height: 50px;margin-top: -4px;border: 1px solid #00b451" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/Nagaraj_edtd-1.jpg" width="50" /></p>
<p><strong style="text-decoration: underline">B.S. Nagaraj,</strong> Senior Editor at Mercom India<br />
<a href="https://mercomindia.com/author/nagaraj/" target="_blank" rel="noopener">More articles from B.S. Nagaraj.</a></p>
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<div class="authorboxn"><img class="alignleft" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/Nagaraj_edtd-1.jpg" alt="Nagaraj Bharadwaj" /><a href="https://mercomindia.com/author/nagaraj/" target="_blank" rel="noopener"><strong style="color: #00b451">B.S. Nagaraj</strong></a> is a Senior Editor at Mercom India. Nagaraj is an experienced journalist and has held senior roles in publications like The Indian Express and Deccan Herald, and Qatar Tribune. He has also worked for business advisory and risk management consulting firms in New Delhi.<br />
<a href="https://mercomindia.com/author/nagaraj/">More articles from B.S. Nagaraj.</a></p>
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EU Takes a Step Closer to CBAM, Adopts Rules Governing Carbon Tariff Measure


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					</table><p>With the Damocles’ sword of the European Union’s Carbon Border Adjustment Mechanism (<a href="https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en" target="_blank" rel="noopener">CBAM</a>) hanging over Indian exporters, the government is planning to seek validation of its proposed carbon certificates and the exemption for some micro, medium, and small enterprises (MSME).</p>
<p>According to a PTI report, officials of Finance, Commerce, Power, Mines and Steel, and industry representatives met this week to discuss the strategy to counter the EU’s move to subject imports to a carbon tax of up to 35% starting 2026.</p>
<p>The CBAM will initially <a href="https://www.mercomindia.com/india-voices-concern-over-europes-carbon-tariff-measure-at-wto" target="_blank" rel="noopener">apply</a> to imported products and commodities like cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. The implementation of its transitional phase will begin on October 1, 2023.</p>
<p>India will seek to convince the EU to honor its carbon certificates to be issued after the Carbon Credit Trading Scheme (CCTS) comes into force. The Ministry of Power has already <a href="https://www.mercomindia.com/comments-draft-carbon-credit-trading-program" target="_blank" rel="noopener">sought</a> comments from stakeholders on the draft CCTS.</p>
<p>Under CCTS, each carbon credit certificate issued by the government to registered companies and individuals would represent the reduction or removal of one ton of CO2 equivalent.</p>
<p>An Indian Carbon Market will also come into force to decarbonize the economy by pricing the greenhouse gas emissions by trading carbon credit certificates.</p>
<p>The CBAM has Indian exporters worried because their products may lose the competitive edge due to the carbon tax they would have to pay.</p>
<p>India and China have already voiced their concerns over CBAM at the World Trade Organization. While India presented a paper on the issue at the WTO’s Committee on Trade and Environment, China introduced a proposal to deepen multilateral discussions on the trade aspects and implications of environmental measures with wide ramifications.</p>
<p>It suggested that members start discussions on CBAM at the June meeting of the committee.</p>
<p>After the EU, the United Kingdom is also proposing a similar measure. In April, it <a href="https://www.mercomindia.com/uk-follows-european-carbon-price-on-imports" target="_blank" rel="noopener">opened</a> a consultation on its version of CBAM, which would introduce a carbon price on imported products.</p>
<p>The PTI report said India may raise the CBAM issue at the India-EU Trade and Technology Council meeting in Brussels on May 15-16.</p>
<p>In February this year, the Council established working groups on green and clean energy technologies and trade, investment, and value chains. These groups will work to resolve identified trade barriers and global trade challenges by promoting cooperation in multilateral fora.</p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://cms.mercomindia.com/author/nagaraj/" class="vcard author" rel="author"><span class="fn">B.S. Nagaraj</span></a></div><div class="saboxplugin-desc"><div itemprop="description"><div class="designboxt">
<p><img class="alignleft" style="border-radius: 50%;height: 50px;margin-top: -4px;border: 1px solid #00b451" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/Nagaraj_edtd-1.jpg" width="50" /></p>
<p><strong style="text-decoration: underline">B.S. Nagaraj,</strong> Senior Editor at Mercom India<br />
<a href="https://mercomindia.com/author/nagaraj/" target="_blank" rel="noopener">More articles from B.S. Nagaraj.</a></p>
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<div class="authorboxn"><img class="alignleft" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/Nagaraj_edtd-1.jpg" alt="Nagaraj Bharadwaj" /><a href="https://mercomindia.com/author/nagaraj/" target="_blank" rel="noopener"><strong style="color: #00b451">B.S. Nagaraj</strong></a> is a Senior Editor at Mercom India. Nagaraj is an experienced journalist and has held senior roles in publications like The Indian Express and Deccan Herald, and Qatar Tribune. He has also worked for business advisory and risk management consulting firms in New Delhi.<br />
<a href="https://mercomindia.com/author/nagaraj/">More articles from B.S. Nagaraj.</a></p>
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India to Seek EU’s Nod for its Carbon Certificates Ahead of New Import Norms

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