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Speaking at an industry event, Goyal also said that India, currently in talks with the European Union (EU) on Carbon Border Adjustment Mechanism (CBAM), hopes to find a solution around a domestic tax to take care of equating with European taxes on carbon emissions.

“India is not responsible for the mess-up there. Despite supporting 17% of the global population, our contribution to greenhouse emission is barely 2-2.5%,” Goyal said.”Keeping in mind the polluter-based principle, it was expected that these countries would go that extra mile by providing very low cost or zero cost long tenure fundings, or grant based fundings, to encourage the less developed countries in the developing world to transition,” he added.

At the 15th Conference of Parties (COP15) of the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen in 2009, developed countries pledged to provide $100 billion per year from 2020 in climate finance to developing and emerging economies.

This pledge was renewed during COP21 held in Paris in 2015. However, developed countries have failed to meet the long-standing pledge.

According to the Organisation for Economic Co-operation and Development (OECD), developed countries provided $83.3 billion in 2020, falling short of the target.

Goyal also said that CBAM can sound the death knell for manufacturing in Europe, with the first casualty being the bloc’s auto sector.

The CBAM is a tax on carbon emitted during the production of carbon-intensive goods entering the EU.

“If the country from which the goods originate taxes carbon at the level at which the European Union taxes their own domestic companies then there would be no additional tax on our exports to those countries. So if we collect the tax in India itself and use it for our green energy transition there will be no additional CBAM tax in the European border,” Goyal said.

CBAM will initially apply to imports of electricity, aluminium, iron and steel, cement, fertilizers, and hydrogen. Imports of these goods will be charged with a carbon levy, based on the emissions generated during the production process, from 2026.

“Their (EU’s) own concern is that they want to make their own industries survive. If they tax carbon in Europe, and we don’t, their own domestic industry will collapse,” Goyal said.

“Steel and aluminium are only base products. On top of that are all the value-added products that are manufactured there. The first casualty, I can visualise, is the auto sector,” he added.

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Updated: 02 Nov 2023, 08:46 PM IST