What is CBAM and How will it have impact on India ? CBAM is a policy tool introduced by the EU to reduce carbon emissions by imposing a carbon tax on imported products, ensuring that they are subject to the same carbon costs as products produced within the EU. It is part of the EU's "Fit for 55 in 2030 package" to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. This is an attempt to prevent 'carbon leakage' . According to the EU, Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to countries where less stringent climate policies are in place than in the EU, or when EU products get replaced by more carbon-intensive imports. CBAM particularly performs two functions - It puts a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU. It encourages cleaner industrial production in non-EU countries. Foreign products ent...
FOR JPSC, UPSC