India begins pre-consultation meetings for COP29, govt to take call on CBAM levies, says Bhupendra Yadav

New Delhi: The government has begun meeting experts to finalize its strategy for the next big international climate change conference, amid plans by the European Union to impose a tax on carbon embedded in key shipments from India and other countries.

The meetings come ahead of 29th UN Conference of the Parties of the UNFCCC (COP29), to be held in the Azerbaijan capital of Baku in November.

India will represent the global south, and voice issues faced by developing nations during climate negotiations for adaptation and mitigation, said union environment, forest and climate change minister Bhupendra Yadav.

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The forthcoming COP assumes significance as the planet grapples with unprecedented extreme weather events, including heatwaves, droughts and floods, with global warming shooting up closely to threshold of 1.5°C above the pre-industrial average.

COP29 holds special significance for India in terms of climate finance, including a much-delayed loss and damage fund, and plans by the EU and other developed economies to roll out a carbon border adjustment mechanism (CBAM) or carbon tax.

The 27-nation bloc plans to impose a 25% tariff on energy-intensive goods such as iron, steel, cement, fertilizers and aluminum exported to Europe.

Yadav said India will take its own call if starting January 2026 EU levies taxes under CBAM, which may impact 0.05% of India’s GDP.

Retaliatory tariffs considered

Mint earlier reported about India considering imposing retaliatory tariffs on EU exports in response to the bloc’s proposed carbon tax that could disrupt over $8 billion worth of Indian metal exports to the EU.

As the EU’s CBAM has been in discussion, Yadav said, “until a proposal comes, we cannot take a call. Our stand on this will be protecting the larger interests of all developing nations.”

“Before COP29, pre-consultations are taking place. The experts’ meeting has already taken place. A consultation at the secretary level has also been held. A different consultation dialogue of UNFCCC is ongoing. Another pre-COP meeting will take place and thereafter the agenda for COP will be set based on these,” Yadav said in an interview.

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As at other COPs, climate finance is expected to take the centre-stage at the 29th edition of COP for developing countries that need to transition to low carbon economies. India, along with the US and China, is one of the world's largest emitters of carbon.

A new collective quantified goal (NCQG) on climate finance, a key element of the Paris Agreement, designed to set a new financial target to support developing countries in their climate actions, will be set before 2025 from a floor of $100 billion per year.

Important voice in climate finance

India has been an important voice in the climate finance conversation and has been participating in the global discussion transparently and productively. As one of the world’s largest countries and economies, India is integral to meeting collective climate action goals.

“Our stand has always been towards fulfilment of developing countries’ financial commitment and technology transfer. India focuses on solutions instead of creating hurdles. You must have seen a constructive role of India in previous COPs. Be it the loss and damage fund or GST, India has contributed positively,” the minister said, hinting that India’s stand at COP29 will likely be the same as at the previous one.

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Conservation of biodiversity may find a place in India’s agenda for COP29, Yadav hinted.

“When we talk about saving nature, the key topic is deep ecological sense. Development activities involve not only technological intervention but also procurement of biodiversity and building land productivity. If you look at India’s green development in the last 10 years, soil health cards to farmers are being issued.

They need to lower pesticide usage to a minimum when we are talking of natural farming. We talk about conservation to protect biodiversity. For example, there is an international big cat alliance. Big cats are found there where the biodiversity is the purest and flora and fauna is good. Efforts towards conservation cannot be one-sided; it must be collaborative, and we must put in efforts in a positive way,” he added.

CBAM - the EU view

An EU official told Mint earlier that CBAM is not a trade tool nor a protectionist instrument and is simply a measure to help fight climate change by addressing the risk of carbon leakage. It will be applied in an even-handed manner in a way that does not constitute arbitrary or unjustifiable discrimination against third-country producers or a disguised restriction to trade, the official said.

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CBAM impacts imports from all non-EU nations except those that already have an emission trading system (ETS) linked to the EU’s ETS. Brazil, Russia, India, China and South Africa collectively condemned the CBAM policy as discriminatory in a joint statement in April 2021.uAs far as India is concerned, the metal industry will face a significant challenge because of CBAM, given that 27% of India’s iron, steel, and aluminium exports worth $8.2 billion in 2022 went to the EU, according to Global Trade Research Initiative (GTRI).

Fourth of exports

In 2022-23, the exports of CBAM-covered goods to the EU made up about one-fourth or 25.7% of India's total such goods exported globally, and of India's total goods exported worldwide, CBAM-covered goods exports to the EU accounted for only about 1.64%.

Companies are already affected by other reporting obligations such as EU Taxonomy, CSRD and national supply chain acts. The impact is expected to rise as the EU adds more products to the CBAM list and as the tax rate gradually increases to 100% of grey emissions by 2034, leading to potentially billions in lost exports and increased costs, according to Dentons, a global legal solutions provider.

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The EU argues that this mechanism creates a level playing field for domestically manufactured goods, which must adhere to stricter environmental standards, and helps reduce emissions from imports. But other countries, particularly developing countries, are worried this would harm their economies and make it too expensive to trade with the bloc.

The move has also sparked debate at multilateral forums, including UN climate conferences, with developing countries arguing that, under UN climate change rules, countries cannot dictate how others should reduce emissions.