Background

The 12th BRICS Environment Ministers' Meeting held in New Delhi brought together member nations to address critical climate finance and trade issues. The meeting gains significance as climate protection measures increasingly intersect with international trade policies.

Key Points: EU's Carbon Border Adjustment Mechanism (CBAM)

What is CBAM?

  • Definition: A unilateral trade measure by the EU to prevent "carbon leakage"
  • Carbon leakage: Phenomenon where carbon-intensive production shifts to countries with less stringent climate policies to avoid emission costs
  • Definitive Phase: Entered force on 1st January 2026

Scope of CBAM

The mechanism covers the following carbon-intensive goods:

  • Iron and steel
  • Aluminium
  • Cement
  • Fertilisers
  • Hydrogen
  • Electricity

Importers of these goods must account and pay for carbon emissions associated with their production.

EU's "Fit for 55" Package

  • Aims to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels
  • Part of EU's broader climate neutrality roadmap

Impact on India

  • Iron and steel account for about 90% of India's exports to the EU under CBAM framework
  • A June 2026 Nature Climate Change analysis found:
  • High-emission Indian steel firms experienced declines in EU export quantities and revenues
  • Lower-emission firms maintained their export levels
  • This creates significant economic pressure on India's manufacturing sector
  • Highlights the need for decarbonization of Indian industries

BRICS Position on CBAM

BRICS nations labeled CBAM as:

  • Unilateral
  • Punitive
  • Discriminatory
  • Protectionist

They argue that CBAM:

  • Threatens developing nations' efforts to build climate resilience
  • Undermines the principle of Common But Differentiated Responsibilities (CBDR)
  • Places disproportionate burden on emerging economies

Demand for Adaptation Finance

BRICS ministers emphasized that financial support from developed nations must be:

  • New
  • Additional
  • Predictable
  • Adequate
  • Accessible

Nature of Finance Sought

  • Primarily grants and concessional finance
  • To avoid trapping developing nations in debt

Key Resolution

Urging developed countries to honor the agreement to triple adaptation finance to developing countries by 2035.

Adaptation vs Mitigation Finance

  • Adaptation finance: Supports water security, climate-resilient agriculture, infrastructure, disaster preparedness, and resilient livelihoods
  • Mitigation finance: Focuses on reducing greenhouse-gas emissions

COP31 Context

  • COP31 scheduled in Türkiye in November 2026
  • Adaptation finance remained unresolved during the June 2026 Bonn climate talks
  • The CBAM controversy adds another layer of complexity to negotiations

Related Concepts

Carbon Leakage

The phenomenon where businesses relocate production to countries with less strict environmental regulations to reduce costs, potentially increasing global emissions.

Common But Differentiated Responsibilities (CBDR)

A principle of international environmental law where all nations have shared responsibility to address environmental degradation, but developed countries have greater responsibility due to their historical contribution to environmental problems.

Significance for India

  1. Trade Impact: Direct threat to India's steel and iron exports worth billions
  2. Green Transition: Accelerates need for low-carbon manufacturing processes
  3. Negotiating Position: Strengthens India's stance in climate negotiations
  4. Policy Response: Need for domestic carbon pricing mechanisms
  5. Diplomatic Leverage: Building coalitions with emerging economies