Indian Exporters to Europe will need to Calculate Emissions

PARIS, November 25, 2023 – On October 1, 2023, the European Union’s Carbon Border Adjustment Mechanism (CBAM) entered into application in its transitional phase, with the first reporting period for importers ending 31 January 2024.

CBAM seeks to level the playing field between European industries and their international counterparts in terms of carbon emissions. By imposing a tax on carbon-intensive imports, the EU aims to incentivize foreign producers to adopt greener practices and curb their carbon emissions. This development is especially relevant to the Indian steel industry, as the country is one of the world’s largest steel producers and exporters.

As the CBAM proposes to impose a tax on carbon-intensive imports, it becomes increasingly vital for Indian steel exporters to initiate rigorous efforts to calculate and subsequently reduce their carbon emissions.

Why Calculate Carbon Emissions?

1. Compliance with International Standards: As the world shifts towards sustainability, adhering to internationally recognized carbon accounting standards not only facilitates compliance with regulatory measures such as the CBAM but also enhances the reputation of Indian steel exporters. Accurate carbon emission calculations reflect a commitment to transparency and responsible environmental stewardship.

2. Access to Lucrative Markets: Many countries, not just the EU, are prioritizing environmentally conscious trade practices. Calculating and reducing carbon emissions will enable Indian steel exporters to access a broader range of markets that demand goods produced with minimal ecological impact.

3. Competitive Advantage: Businesses that proactively address their carbon emissions stand to gain a competitive edge. By calculating and disclosing emissions, Indian steel exporters can showcase their commitment to sustainability, attracting environmentally conscious consumers and business partners.

Why Reduce Carbon Emissions?

1. Cost Savings: Transitioning towards energy-efficient and low-carbon practices can lead to substantial cost savings in the long run. Energy-efficient technologies, waste reduction, and sustainable energy sources can lower operational expenses and improve resource utilization.

2. Innovation and Technology Adoption: The pursuit of emission reductions often drives innovation. Indian steel exporters can explore cutting-edge technologies that not only minimize carbon emissions but also improve overall operational efficiency and product quality.

3. Resilience against Future Regulations: The global trend is moving towards stricter environmental regulations. By proactively reducing carbon emissions, Indian steel exporters can position themselves to adapt more seamlessly to future regulations, avoiding abrupt and costly adjustments.

4. Environmental Responsibility: Embracing carbon reduction aligns with broader environmental responsibility goals. By playing a role in mitigating climate change, the Indian steel industry can contribute to a more sustainable and secure future.

Steps to Start Calculating and Reducing Carbon Emissions

1. Adopt Carbon Accounting Standards: Implement internationally recognized carbon accounting standards, such as the Greenhouse Gas Protocol, to accurately measure and report emissions.

2. Assess the Supply Chain: Analyze the entire supply chain to identify emission hotspots and opportunities for improvement. This could include energy sources, transportation, raw materials, and waste management.

3. Invest in Technology: Explore energy-efficient technologies, renewable energy sources, and process improvements that can lead to emissions reduction.

4. Promote Circular Economy Practices: Encourage the reuse and recycling of steel products to reduce the demand for new production and conserve resources.

5. Collaborate and Share Knowledge: Collaborate with industry peers, research institutions, and governmental bodies to share best practices and collectively work towards emission reduction goals.

Indian steel exporters have a unique opportunity to lead the charge in creating a greener and more resilient industry. By taking proactive steps to calculate and reduce carbon emissions, they can not only meet regulatory requirements but also enhance competitiveness, embrace innovation, and contribute meaningfully to a more sustainable future. The time to act is now, for the benefit of both business and the planet.