India works on standards to soften EU carbon tax blow

Move aims to avoid disputes if EU, other countries recognize embedded carbon standards

- Ravi Dutta Mishra, Subhash Narayan

India is working to develop standards to measure the carbon embedded in products, and expects the European Union and other developed countries to recognize these in order to avoid disputes over Indian exports, a senior government official said.

The standards, being developed by the Bureau of Energy Efficiency (BEE) under the power ministry, are seen as necessary to mitigate the impact of carbon taxes planned by the EU and several countries on a wide range of steel and aluminium products.

The measures have been discussed by an inter-ministerial group of a number of ministries including steel, power, environment and commerce. The commerce ministry, which is leading the talks with the EU, has challenged its Carbon Border Adjustment Mechanism (CBAM) at the World Trade Organization.

The standards are also needed for a key defensive purpose—the CBAM has provisions to extend the tax even to low levels of embedded emissions in a bid to prevent exporters from finding loopholes in the CBAM to evade the tax.