BRICS Needs To Address CBAM Consequences

Syllabus: GS2/International Relation; GS3/Climate Change

Context

• India’s 2026 BRICS chairship has renewed debate over unilateral climate-linked trade measures, especially the EU’s CBAM, and the need for common carbon-accounting standards.

About Climate Agenda & Global Trade

• Climate policy and international trade are increasingly inseparable. 
• Environmental regulation can directly affect market access, competitiveness and global supply chains as countries impose carbon prices, deforestation rules, sustainability due diligence and product-level emissions standards.
• For BRICS economies pursuing rapid industrialisation while reducing emissions intensity, fragmented climate-trade rules pose a particular challenge.
• The principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) recognises differences in countries’ historical responsibility and developmental capacities.

BRICS Climate Agenda for Rules-Based Cooperation

• The BRICS Declaration (2026) reiterates familiar positions on the UNFCCC, Paris Agreement, CBDR-RC, climate finance, biodiversity, forests and opposition to unilateral climate measures.
• However, extensive repetition of earlier declarations risks diverting attention from operational deliverables.
• The Declaration recognises traditional knowledge, indigenous and local practices and community experience (people-centric and community-based adaptation), an important approach for countries such as India, Brazil and China, where traditional ecological knowledge remains significant.
• BRICS can build on this by moving from declarations to common methodologies, mutual recognition and technical cooperation.

Unilateral Climate Measures and Protectionism: EU & BRICS

• BRICS has objected to unilateral climate-related trade measures that may become discriminatory or protectionist. 
• The Rio Declaration (2025) specifically highlighted concerns regarding deforestation regulation, due-diligence requirements, taxes and other unilateral measures.
• The EU’s Deforestation Regulation (EUDR) and sustainability due-diligence requirements illustrate the trend towards embedding environmental compliance deep into supply chains.
  • For exporters, this creates demands for traceability, documentation, verification and emissions data.
• The challenge is to distinguish legitimate climate action from measures that impose disproportionate costs on developing-country producers.

Why Does Carbon Accounting Matters?

• Carbon accounting is the missing link in the BRICS climate-trade agenda.
• The Rio Declaration (2025) had proposed mutually recognised methodologies and standards for assessing greenhouse-gas emissions and welcomed principles for fair, inclusive and transparent carbon accounting in product and facility footprints.
• It is crucial because different jurisdictions may calculate the embodied emissions of the same product differently.
• Such fragmentation can result in different carbon values for identical goods, creating uncertainty and compliance costs for exporters.
• A common BRICS framework could establish comparable rules for:
  • system boundaries and emissions scopes;
  • treatment of precursor or embedded emissions;
  • verification and certification;
  • missing or incomplete data; and
  • mutual recognition of methodologies.

Cap-and-Trade: One Size Does Not Fit All

• Conventional cap-and-trade systems, developed around scarcity of emissions allowances in advanced economies, cannot simply be transplanted into developing economies whose simultaneous challenge is to expand production and reduce emissions intensity.
• India’s Carbon Credit Trading Scheme (CCTS) illustrates an alternative, intensity-oriented approach.
• Recognition of qualifying domestic carbon-pricing mechanisms can potentially reduce duplication, but exporters still need to establish emissions data, system boundaries and independent verification.
• Therefore, climate cooperation should recognise equivalent outcomes rather than impose identical policy architectures.

CBAM and India’s Export Challenge

• The EU’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase in January 2026.
• Initially covering sectors including iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, it links import obligations to embedded emissions.
• For Indian exporters, the concern is not merely the carbon price but the compliance ecosystem surrounding it.
  • Smaller firms may face substantial costs in monitoring, reporting and third-party verification.
• The proposed expansion of CBAM product coverage could further increase exposure of Indian exports, particularly in steel and aluminium.
  • Thus, India needs both domestic carbon-market capacity and international negotiations on recognition of its methodologies.

Way Forward for BRICS

• BRICS should use COP31 and other multilateral forums to build a cooperative alternative to fragmented climate-trade regulation.
• Operationalise the BRICS carbon-accounting principles sector by sector.
• Establish mutual recognition of emissions data and verification systems.
• Develop equivalence frameworks between different carbon-pricing mechanisms.
• Create technical assistance for MSMEs and developing-country exporters.
• Ensure climate-trade measures remain consistent with Paris Agreement principles, CBDR-RC and WTO rules.
• Link adaptation cooperation with traditional knowledge and community-based practices.

Conclusion

• BRICS can either remain a platform for repeatedly articulating opposition to unilateral climate measures or become a rule-making coalition for the Global South.
• A credible, transparent and mutually recognised carbon-accounting framework would allow BRICS to reconcile climate ambition with development, competitiveness and a fairer global trading system.

Source: BL