European Union formally notifies carbon tax at WTO

The European Union (EU) has formally notified the implementation of Carbon Border Adjustment Mechanism (CBAM) at the WTO members of the committee on trade and environment.

CBAM or carbon tax is seen as a protectionist move made by Europe and is feared to impact $8 billion worth of Indian exports, especially steel and aluminum sector. Mint had reported that the controversial law could raise trade tensions between India and the EU.

The EU communication to the WTO said that the EU will launch an information campaign, featuring online seminars, physical events, distribution of guidance documents, and direct assistance, aimed at assisting third country operators and importers to the EU in performing all new obligations required by the CBAM Regulation and its secondary legislation.

“The campaign will start mid 2023 upon the adoption of the implementing act concerning the reporting rules applicable in the transitional period. This will continue through autumn 2023, thus supporting all relevant actors with the entry into application of the CBAM Regulation in October 2023,” the EU’s official statement read. 

Mint had also reported that as part of India's strategy to mitigate the impact of growing adoption of carbon tax like policies globally on wide range of steel and aluminum products, the Bureau of Energy Efficiency (BEE) under the Power Ministry is working to develop standards to measure carbon embedded into such products which India would ask European Union and other countries to recognize, a senior government official said.

Measurement of embedded carbon assumes significance as the European Union’s Carbon Border Adjustment Mechanism (CBAM) has provisions to expand carbon tax even to low levels of embedded emissions in a bid to prevent exporters from finding loopholes in the CBAM to evade taxes.