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International cooperation

BRICS Nations Unite Against EU's Carbon Border Tax as a Threat to Developmental Equity

Strategic Insights

— 2 min read

The BRICS nations, comprising 41% of the global population and nearly 40% of the global economy, have banded together to condemn the European Union's Carbon Border Adjustment Mechanism (CBAM), which they perceive as a trade barrier that discriminates against developing countries. The CBAM, set to come into effect in 2026, would impose a tariff on carbon-intensive imports into the EU, mirroring the bloc's Emissions Trading System (ETS). The mechanism is ostensibly aimed at preventing "carbon leakage" but effectively acts as a trade policy dressed in green robes. The BRICS nations argue that CBAM unilaterally shifts the burden of decarbonisation onto developing economies, bypassing principles of equity and common but differentiated responsibilities (CBDR) that underpin the Paris Agreement.

Key Takeaways:

  • The BRICS nations, representing 41% of the global population and nearly 40% of the global economy, have joined forces to condemn the EU's Carbon Border Adjustment Mechanism (CBAM).
  • CBAM is perceived as a trade barrier that discriminates against developing countries, effectively imposing a unilateral tariff on carbon-intensive imports into the EU.
  • The Indian steel exporters could face cumulative losses of over $551 million by 2034 due to CBAM, with the country's aluminium and cement sectors also vulnerable.
  • India's aluminium industry emits roughly 20 tonnes of carbon dioxide per tonne of primary aluminium, compared to the EU average of 6.5--7 tonnes, leading to a price disadvantage under CBAM.
  • The developing world's pushback against CBAM is driven by a growing recognition that global climate action cannot be built on the ruins of developing economies' growth ambitions.
  • BRICS countries argue that they were not the historical emitters of greenhouse gases -- the West industrialised for over two centuries on the back of carbon-heavy growth.
  • The CBAM does not consider whether countries have carbon pricing mechanisms of their own, undermining indigenous climate policy instruments and incentivising compliance with EU regulations.
  • India is facing a dual challenge: shielding its exporters and protecting its economic sovereignty while accelerating its green transition without external pressure.
  • A 2024 CEEW study estimates that green hydrogen adoption in steel manufacturing could reduce carbon dioxide emissions by 60--70% by 2040, making Indian steel CBAM-compliant in the long run.

Statistics:

  • The EU's Emissions Trading System (ETS) has a weekly average auction price of EU ETS allowances, fluctuating between 60 and 90 euros per tonne of carbon dioxide in recent years.
  • India's aluminium industry emits roughly 20 tonnes of carbon dioxide per tonne of primary aluminium.
  • India exported over $3 billion worth of steel to the EU in FY2022-23, accounting for roughly 23.5% of its steel exports.
  • The cumulative losses for Indian steel exporters could reach over $551 million by 2034 due to CBAM.

Sources:

  • "India needs to work with the US and BRICS to build suitable negotiating leverage against such unilateral and unfair trade measures imposed by the EU." - Anil Trigunayat and Kaviraj Singh, (2025)
  • Grant Thornton Bharat report, (no date mentioned)
  • CEEW study, (2024)

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