EU's Carbon Emission Default Values Alarm Indian Steel & Cement Exporters

New Delhi, Mar 4 (KNN) The recent release of default carbon emission values by the EU could potentially affect Indian steel and cement exporters if these figures are adopted as the standard for calculating carbon tax obligations under the proposed Carbon Border Adjustment Mechanism (CBAM), as per industry estimates.

Starting from 2023 until 2026, exporters are required to report embedded carbon emissions in their shipments to the EU on a quarterly basis. This reporting, even when based on default values, commenced in the last quarter of 2023, reported BL.

Indian steel and cement players anticipate a substantial impact on their exports due to the carbon-intensive nature of their manufacturing processes. The predominant use of thermal power over renewables adds to their concerns.

Currently, reporting is based on default values, exempting the declaration of actual emissions. However, industry sources express apprehension about the impending tax levy, expected to affect exporters across segments such as stainless steel, iron and steel, and cement.

The emissions embedded in exports from India surpass the present default values set by the EU, raising fears that country-specific default emission numbers could further exacerbate the situation.

“We will reach out to ministries like commerce, steel, and others for consultations on determining carbon numbers on its own and see how it compares with the EU parameters,” a stakeholder said.

An Asian Development Bank study highlights the disproportionate impact on regions with significant carbon-intensive exports to Europe, including India.

The EU's default values are based on a 'world' average, weighted by production volumes, and will be revised regularly. From 2026 onwards, a new set of default values will be established, reflecting the average emission intensity of each exporting country.

The EU has declared default values for various items, including hydrogen, fertilisers, aluminium, cement, iron, and steel, with detailed product-wise breakdowns of permitted carbon emissions during production.

(KNN Bureau)