Carbon Border Adjustment Tax


    In News

    • At COP27  India, China, Brazil, South Africa opposed the ‘carbon border tax’.

    About Carbon Border Adjustment Tax

    • The European Union has proposed a policy — called the Carbon Border Adjustment Mechanism —  to tax products such as cement and steel that are extremely carbon intensive, with effect from 2026.
    • It is a duty on imports based on the amount of carbon emissions resulting from the production of the product in question. 
      • As a price on carbon, it discourages emissions. As a trade-related measure, it affects production and exports.
    • Opposition : BASIC, a group constituting Brazil, India, South Africa and China, and therefore large economies that are significantly dependent on coal, has for several years voiced common concerns and reiterated their right to use fossil fuel in the interim during their countries’ eventual transformation to clean energy sources.
      • They  jointly stated that carbon border taxes, that could result in market distortion and aggravate the trust deficit amongst parties, must be avoided.