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What is the EU’s Carbon Border Tax Mechanism and why is it worrying other countries, including India?

Topic: Environment Conservation

5. What is the EU’s Carbon Border Tax Mechanism and why is it worrying other countries, including India? (250 Words)

Difficulty level: Moderate

Reference: TH

Why the question: 

EU voted to approve a sweeping deal to reform the EU’s carbon market to cut emissions by 62% from 2005 levels by 2030. It has an impact on other countries, including India.

Key demand:

The question seeks to explain what the EU’s Carbon Border Tax Mechanism is, why it has raised concerns among other countries, and specifically, why it is worrying India.

Structure of the answer:

Introduction: Provide a brief overview of the EU’s proposed Carbon Border Tax Mechanism and why it has been in the news lately. Body:

Definition of Carbon Border Tax Mechanism: Explain what CBAM is and how it works.

Objectives of CBAM: Discuss the goals and objectives of CBAM, such as reducing carbon leakage and promoting climate neutrality.

Concerns raised by other countries: Discuss the concerns raised by other countries, including India, such as the potential impact on trade and the need for fair and non-discriminatory implementation.

Why is India worried about CBAM?: Explain the specific reasons why India is worried about CBAM, such as the potential increase in the cost of exports and the need for adequate transitional measures.

Impact on India: Analyze the potential impact of CBAM on India’s economy, especially its exports to the EU.

Conclusion:

Provide a concluding remark on the potential implications of CBAM for the global economy and climate change.