Indian Industry Leaders Embrace CBAM Amidst Climate Talks at COP28

As the United Nations’ 28th Conference of Parties (COP28) in Dubai enters the decisive phase, Indian industry representatives are making headlines for their unexpected stance on Europe’s Carbon Border Adjustment Mechanism (CBAM), a carbon tax introduced by the European Union last October.

CBAM, aimed at carbon-intensive imports like iron, steel, cement, fertilizers, and aluminum, has become a focal point for Indian delegates. Despite being labeled “unfair” by Indian government leaders, industry voices at the UN Climate Change conference are welcoming CBAM, seeing it as a potential catalyst for market-driven sustainability.

Rajiv Mangal, Tata Steel’s Vice President of Safety, Health, and Sustainability, expressed support, emphasizing CBAM’s role in creating economic incentives for emission reduction. Seema Arora, Deputy Director General at the Confederation of Indian Industry (CII), echoed this sentiment, advocating for a strategic approach rather than outright opposition.

However, the Indian government’s description of CBAM as an “unfair” tax has led to diplomatic action, with India taking the matter to the World Trade Organisation (WTO). Meanwhile, industry representatives at COP28 are suggesting a change in strategy, emphasizing the need for economic incentives and policy support for the transition to greener practices.

As the debate unfolds, Tata Steel, with a market cap of almost $20 billion, advocates for subsidies akin to the United States’ Inflation Reduction Act (IRA) to incentivize green economic measures. The discussions also delve into the controversial Carbon Capture, Use, and Storage (CCUS) method, with analyses revealing challenges and the International Energy Agency chief cautioning against overreliance.

The industry’s proactive approach involves proposing a base standard for carbon emissions, encouraging a shift to green practices, and aligning strategies with government policies. However, challenges arise regarding data sharing and varying levies based on company size and technology.

Commerce and Industry Minister Piyush Goyal assures confidence in addressing CBAM, pledging retaliation if necessary. He unveils plans to convert challenges into opportunities, urging the industry to embrace electric mobility for sustainable growth. Goyal emphasizes the economic value of electric vehicles, citing examples like Mumbai’s BEST transitioning to 100% electric buses.

While India prepares to navigate the implications of CBAM on exports, Goyal projects confidence in the country’s foreign exchange reserves and hints at potential trade pacts with countries like Chile and Peru. As discussions continue, India’s evolving stance on CBAM and commitment to sustainable practices mark a critical juncture in the global climate dialogue. Stay tuned for more updates as COP28 unfolds.

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