Published on: November 18, 2022

Carbon border tax’

Carbon border tax’

Why in news?

At COP-27, India and three other nations oppose ‘carbon border tax’


  • The European Union has proposed a policy called the Carbon Border Adjustment Mechanism to tax products such as cement and steel, which are extremely carbon intensive, with effect from 2022
  • BASIC, a group comprising Brazil, India, South Africa and China, that are significantly dependent on coal, has voiced common concerns and reiterated their right to use fossil fuels during their transition to clean energy

What is carbon tax?

  • A carbon border adjustment tax is a duty on imports based on the amount of carbon emissions resulting from the production of the product in question.
  • As a price on carbon, it discourages emissions. As a trade-related measure, it affects production and exports.
  • There is the risk that it becomes a protectionist device, unduly shielding local industries from foreign competition in so-called ‘green protectionism’x