1. Home
  2. Building Material
  3. Steel
  4. India's steel industry to look at renewable energy to avoid CBAM tariffs
India's steel industry to look at renewable energy to avoid CBAM tariffs
Steel

India's steel industry to look at renewable energy to avoid CBAM tariffs

26 Sep 2024 2 Min Read CW Team
The EU Emissions Trading System (ETS), launched in 2005, is a key element of the European Union's climate change strategy and remains the world’s largest carbon market. Under the system, producers within the EU are required to offset their CO2 emissions by purchasing allowances from the EU ETS. This has led some companies to relocate their operations to regions with less stringent emissions regulations in order to reduce costs, a phenomenon known as ‘carbon leakage’. To counter this, the EU introduced a ‘carbon levy’ on imported goods, applying it to products from countries with lower emissions standards than those of the EU to prevent highly emission-intensive imports.

Building on this, the European Commission has proposed the world’s first ‘carbon border tax’, aimed at imports of carbon-intensive products such as steel, hydrogen, cement, fertilisers, and aluminium, in line with the EU’s climate goals. This tax is based on the EU’s domestic emissions regulations and includes fees for exceeding emissions limits. The Carbon Border Adjustment Mechanism (CBAM), which targets these sectors, is expected to affect around 4% of the EU's total imports by value.

Indian steel exports to Europe, which account for over 20% of India’s total steel exports in the first half of FY25, may be significantly impacted. Italy, Belgium, Spain, and the United Kingdom are among the primary destinations. Indian steel production emits 2.6 tonnes of CO2 per tonne of steel, higher than the global average of 1.85 tonnes, giving the EU a rationale for imposing higher duties on Indian products. According to ICRA, the CBAM framework could affect 15-40% of India's steel exports to Europe, with the impact expected to be felt from 2026 to 2034. Notably, the USA and Singapore are also likely to introduce similar policies.

The EU Emissions Trading System (ETS), launched in 2005, is a key element of the European Union's climate change strategy and remains the world’s largest carbon market. Under the system, producers within the EU are required to offset their CO2 emissions by purchasing allowances from the EU ETS. This has led some companies to relocate their operations to regions with less stringent emissions regulations in order to reduce costs, a phenomenon known as ‘carbon leakage’. To counter this, the EU introduced a ‘carbon levy’ on imported goods, applying it to products from countries with lower emissions standards than those of the EU to prevent highly emission-intensive imports. Building on this, the European Commission has proposed the world’s first ‘carbon border tax’, aimed at imports of carbon-intensive products such as steel, hydrogen, cement, fertilisers, and aluminium, in line with the EU’s climate goals. This tax is based on the EU’s domestic emissions regulations and includes fees for exceeding emissions limits. The Carbon Border Adjustment Mechanism (CBAM), which targets these sectors, is expected to affect around 4% of the EU's total imports by value. Indian steel exports to Europe, which account for over 20% of India’s total steel exports in the first half of FY25, may be significantly impacted. Italy, Belgium, Spain, and the United Kingdom are among the primary destinations. Indian steel production emits 2.6 tonnes of CO2 per tonne of steel, higher than the global average of 1.85 tonnes, giving the EU a rationale for imposing higher duties on Indian products. According to ICRA, the CBAM framework could affect 15-40% of India's steel exports to Europe, with the impact expected to be felt from 2026 to 2034. Notably, the USA and Singapore are also likely to introduce similar policies.

Next Story
Infrastructure Energy
23 Nov 2024

REC Transfers HVDC Project to Power Grid

REC Limited has successfully handed over the Special Purpose Vehicle (SPV) for a High-Voltage Direct Current (HVDC) transmission project to Power Grid Corporation of India Limited (PGCIL). This strategic move aligns with the nation's objectives to strengthen its power transmission network. Key Highlights: Project Overview: The HVDC project, under the inter-state transmission system (ISTS) initiative, is a critical component of India's push toward robust and efficient electricity transmission. It aims to handle bulk power transfer across long distances while ensuring minimal losses. Role of RE..

Read More
Next Story
Infrastructure Transport
23 Nov 2024

NF Railway Collaborates with IIT Guwahati

The Northeast Frontier (NF) Railway has signed strategic Memorandums of Understanding (MoUs) with IIT Guwahati to foster technological advancements and improve railway operations in the region. This partnership focuses on innovative solutions to enhance safety, efficiency, and sustainability in rail infrastructure. Key Highlights: Purpose of MoUs: The collaboration aims to leverage IIT Guwahati's expertise in technology and research for implementing cutting-edge solutions across railway operations. Key areas of focus include: Automation and digitization in maintenance. Sustainability initiati..

Read More
Next Story
Infrastructure Transport
23 Nov 2024

Danapur Division Modernization Plans Revealed

The Railway Board has unveiled ambitious plans for the expansion and modernization of the Danapur Division, a critical hub under the East Central Railway. The initiative focuses on infrastructure development, enhanced passenger amenities, and operational efficiency. Key Highlights: Scope of Modernization: The Railway Board's blueprint emphasizes: Upgrading existing infrastructure to accommodate more passenger and freight traffic. Improving station facilities, such as platforms, waiting areas, and connectivity. Introducing advanced signal systems for safer and smoother operations. Freig..

Read More

Opinion Poll

Question : Which technological advancement do you believe will most transform the real estate industry in the coming years?

Latest updates

REC Transfers HVDC Project to Power Grid
POWER & RENEWABLE ENERGY
23 Nov 2024

REC Transfers HVDC Project to Power Grid

NF Railway Collaborates with IIT Guwahati
RAILWAYS & METRO RAIL
23 Nov 2024

NF Railway Collaborates with IIT Guwahati

Danapur Division Modernization Plans Revealed
RAILWAYS & METRO RAIL
23 Nov 2024

Danapur Division Modernization Plans Revealed

Indian Railways Deploys Kavach 4.0
RAILWAYS & METRO RAIL
23 Nov 2024

Indian Railways Deploys Kavach 4.0

KSR Bengaluru Station's Rs 1,500-Cr Makeover
AVIATION & AIRPORTS
23 Nov 2024

KSR Bengaluru Station's Rs 1,500-Cr Makeover

Southern India Rail Projects Progress
RAILWAYS & METRO RAIL
23 Nov 2024

Southern India Rail Projects Progress

Railways Introduces 1,000 General Coaches
RAILWAYS & METRO RAIL
23 Nov 2024

Railways Introduces 1,000 General Coaches

HBITS Leases Office Space in Thane
Real Estate
23 Nov 2024

HBITS Leases Office Space in Thane

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000