Carbon Accounting and CBAM

Carbon accounting and trading mechanisms have gained significant attention as effective tools to manage and mitigate carbon emissions. In this article, Siddartha Ramakanth Keshavadasu aims to explore the impacts of these mechanisms on developing and underdeveloped nations, focusing on India, and consider the aspects of climate justice and energy equity.

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Assessing Impact and Implications for Developing Nations

With the intensifying impact of climate change, a wide array of measures are being undertaken globally to reduce greenhouse gas (GHG) emissions. Carbon accounting and trading mechanisms have gained significant attention as effective tools to manage and mitigate carbon emissions. However, these policies have varying implications, especially for developing and underdeveloped countries. Among them, the European Union’s Cross-Border Adjustment Mechanism (CBAM) is of particular significance.

Carbon Accounting: The Bedrock of Emissions Management

Carbon accounting is a system to measure and track GHG emissions and reductions. It provides a quantitative basis for understanding, managing, and disclosing climate change-related risks, facilitating the setting of emission reduction targets, tracking progress, and formulating mitigation strategies. It encompasses various methods, including corporate level, product level, and national level accounting, taking a comprehensive approach towards managing emissions.

Carbon Trading: Turning Liability into Opportunity

Carbon trading, or emissions trading, is a market-based approach to control pollution by providing economic incentives for reducing the emissions of pollutants. Under this system, governments or international bodies set a limit or cap on the amount of a pollutant that can be emitted. Companies are issued emission permits and are required to hold an equivalent number of allowances, which represent the right to emit a specific amount. Companies that need to increase their emission allowance must buy credits from those who pollute less.