What is carbon border tax, which India opposed at COP27
What Is Carbon Border Tax?
A carbon border tax is a tax on carbon emissions attributed to imported goods that have not been carbon-taxed at source.
Carbon Border Tax - Key Points
The European Union has proposed a policy called the Carbon Border Adjustment Mechanism to tax products such as cement and steel, which are extremely carbon intensive, with effect from 2026.
Carbon Border Tax - Key Points
The carbon border tax proposal is part of the European Commission’s European Green Dealthat endeavors to make Europe the first climate-neutral continent by 2050.
How does this impact India?
As India's third largest trading partner, the EU accounted for $74.5 billion worth of trade in goods in 2020, or 11.1% of India's total global trade.
How does this impact India?
By increasing the prices of Indian-made goods in the EU, this tax would make Indian goods less attractive for buyers and could shrink demand.
How does this impact India?
A levy of $30 per metric ton of CO2 emissions could reduce the profit pool for foreign producers by about 20%if the price for crude oil remained at $30-40 per barrel.