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India to push for carbon certificates mutual recognition with EU

India will push for mutual recognition of its carbon certificates with the EU and carve outs for its micro, small and medium enterprises (MSME), with the bloc’s Carbon Border Adjustment Mechanism (CBAM) kicking in from October.

In a meeting chaired by the chief economic advisor V Anantha Nageswaran and commerce secretary Sunil Barthwal on Tuesday, the government also asked industry to be prepared for the new system. Officials from ministries of finance, power and environment, and industry representatives attended the meeting.

From October, domestic companies from seven carbon-intensive sectors including steel, cement, fertiliser, aluminium and hydrocarbon products would have to seek compliance certificates from the EU authorities to comply with the CBAM norms.

India has asked the EU to recognise its Carbon Credit Trading Scheme (CCTS) which is being finalised by the power ministry.

While the CBAM has no exemptions for MSMEs, India will seek carve outs as around 40-45% of the affected companies in these sectors are MSMEs. They had exemptions in the EU’s earlier Emission Trading System.

“We have to have carbon auditors. India is dealing with the issue both at bilateral and multilateral levels to ensure that our industry doesn’t get hurt,” said an official.

“Bilaterally, we are asking the EU to have a mutual recognition agreement and give a carve out for MSMEs,” the official said.As per the official, India is also likely to raise these issues in the upcoming meeting of the India-EU Trade and Technology Council (TTC) in Brussels on May 15-16 where commerce and industry minister Piyush Goyal, external affairs minister S Jaishankar and Minister for Railways, Communications, Electronics and Information Technology Ashwini Vaishnaw would participate.

Though the EU has said that CBAM is a part of their climate action efforts, countries like India are of the view that it is a trade-related measure. India has told the World Trade Organization (WTO) that carbon border measures are being selectively applied to “trade-exposed industries” such as steel, aluminium, chemicals, plastics, polymers, chemicals and fertilisers, reflects the underlying competitiveness concerns driving such measures.

While domestic steel companies are setting up a captive solar power plants and following climate-friendly manufacturing processes to reduce carbon emissions, the government is also focussing on afforestation and promotion of the use of renewable energy, according to the official.

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