Department of Commerce Holds Workshop on Trade and Sustainable Development Policy Landscape ↗
Consider the following statements regarding India's carbon market framework and the EU's Carbon Border Adjustment Mechanism (CBAM):
- Under India's Carbon Credit Trading Scheme (CCTS), carbon credits are generated by entities that reduce greenhouse gas emissions below a prescribed intensity threshold, and these credits can be traded on a designated exchange.
- The EU's Carbon Border Adjustment Mechanism (CBAM) applies a carbon cost on imports of covered goods from countries that do not have equivalent carbon pricing, and it directly affects Indian exporters in sectors such as steel, aluminium, and cement.
- The Extended Producer Responsibility (EPR) framework in India is a carbon pricing instrument that places a monetary cost on greenhouse gas emissions from industrial production, functioning as a domestic equivalent of CBAM.
Which of the statements given above is/are correct?
Explanation
Statement 1 is correct. Under India's Carbon Credit Trading Scheme (CCTS), notified under the Energy Conservation (Amendment) Act 2022, entities in specified sectors that reduce their greenhouse gas emission intensity below prescribed targets can generate carbon credit certificates, which are tradeable on power exchanges. Statement 2 is correct. The EU's Carbon Border Adjustment Mechanism (CBAM) imposes a carbon-cost levy on imports of carbon-intensive goods — including steel, aluminium, cement, fertilisers, hydrogen, and electricity — from countries whose domestic carbon pricing is less stringent than the EU's. Indian exporters in steel and aluminium are directly exposed to this cost, making CBAM a significant trade-environment interface issue for India. Statement 3 is incorrect. The Extended Producer Responsibility (EPR) framework is NOT a carbon pricing instrument. EPR is a waste-management and circular-economy policy under which producers, importers, and brand owners are legally responsible for the end-of-life collection and recycling (or safe disposal) of their products — typically plastics, e-waste, and tyres. It does not place a cost on greenhouse gas emissions and does not function as a domestic equivalent of CBAM. Conflating EPR with carbon pricing is a common conceptual error: EPR addresses waste externalities, while carbon pricing instruments such as CCTS address emission externalities.