Q. Consider the following statements regarding CBAM [carbon border adjustment mechanism]
1. It will impose a border fee on imports in carbon-intensive sectors from nations with lower environmental standards
2. Recently the European Commission’s Fit To 55 Package introduces this CBAM
Which of the above statements is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: C
Notes:
  • Fit To 55 – Recently, The European Commission adopted the Fit for 55 Package of proposals. It aims to make the EU’s climate, energy, land use, transportation, and taxation policies fit for lowering greenhouse gas emissions by 55% by 2030 (relative to 1990 levels). 
  • The Fit for package opens new markets for the Indian industry, for example, electric vehicles. However, it also introduces a globally unprecedented carbon border adjustment mechanism (CBAM) for pricing imported carbon. 

CBAM will impose a border fee on imports in carbon-intensive sectors like steel, cement, and fertilizers from nations with lower environmental standards than the EU. The scheme would start in 2023 with a transition period until 2025. 

Read more: Implication of EU’s new GHG emissions law for Indian industry 

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