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A new report by Delhi-based think tank Centre for Science and Environment (CSE) has criticised the European Union’s Carbon Border Adjustment Mechanism (CBAM) as an unfair burden on developing countries. Policies like the CBAM shift the responsibility of decarbonising heavy industrial sectors onto the Global South, creating obstacles to development, CSE said in a statement released on July 18, 2024.
The CBAM, announced in 2022, taxes imports like iron, steel, cement, aluminium and fertilisers based on the carbon emissions used in their production. This aims to level the playing field for European companies facing stricter environmental regulations. However, experts at the CSE argued that developing countries, which often have less developed economies and rely on heavier industries, will be disproportionately impacted.
Sunita Narain, director general of CSE, emphasised the need for climate justice in trade policies. She pointed out that developed nations, which historically emitted more greenhouse gases, are placing the financial burden of transitioning to cleaner technologies on developing countries.
“Measures like CBAM are unilateral measures and shift the burden of the transition to the developing world. This, when developed countries themselves have not reduced their emissions sufficiently and continue to occupy carbon space. What is of particular concern is that such measures may further hurt the economies of countries in the South, restricting their abilities to decarbonise,” Narain said in a statement.
The report launch coincided with a webinar by the think tank. Aside from Narain, panellists at the webinar included Claudia Contreras, economic affairs officer at UNCTAD (UN Trade and Development); Faten Aggad, executive director, African Future Policies Hub; Avantika Goswami, programme manager, Climate Change, CSE and Trishant Dev, programme officer, Climate Change, CSE.
Developing nations are unfairly penalised by the CBAM, which overlooks the historical factors that have shaped their current circumstances, Goswami said in the press statement. “The CBAM is a clear violation of the principle of common but differentiated responsibilities (CBDR) enshrined in the Paris Agreement and the United Nations Framework Convention on Climate Change,” she said.
Contreras pointed out that policies like CBAM should be designed and developed in alignment with the Paris Agreement, taking into consideration whether other countries have the capacity to comply.
“Despite Africa’s historical contribution being under 4 per cent of global GHG emissions, CBAM comes across as an attempt by the EU to shift the burden of decarbonisation to other countries without providing the necessary financial or large-scale technical support, such as accounting systems,” Aggad stated.
The CSE report recommended the EU allocate revenue from CBAM to support developing countries' shift to low-carbon manufacturing, increase overall climate finance for developing nations and exempt the most vulnerable countries from the CBAM tax.
The report also suggested several strategies for developing countries to manage the CBAM’s impact. These are: implementing sectoral mitigation plans that outline emissions reduction targets; considering a domestic carbon tax on exports to create a decarbonisation fund; diversifying production processes for different markets, with a priority on greener methods for regions with CBAMs, and exploring a “historical polluter tax” on developed countries to fund their own decarbonisation efforts.
The CSE emphasised the need for climate-friendly trade policies that consider the historical responsibility of developed nations and prioritise a just transition for developing economies.
