- Why in news
- On 12 October 2026, Power Secretary Pankaj Agarwal met the European Commission's Director-General for Taxation and Customs Union, Gerassimos Thomas, in New Delhi. They discussed India's carbon market, the EU's CBAM and technical cooperation.
- What it is
- The EU Carbon Border Adjustment Mechanism (CBAM) puts a carbon price on certain carbon-intensive imports, so that they face a cost similar to EU producers under the EU Emissions Trading System. India's Carbon Credit Trading Scheme (CCTS) is a domestic compliance carbon market that sets emission intensity targets for industries and trades credits for over- or under-performance. Recognition of India's carbon price could matter for CBAM liability on Indian exports.
- Meeting topics
- The talks covered India's carbon market, CBAM and technical cooperation.
- CCTS targets
- Emission intensity reduction targets have been notified for 490 industrial units under the CCTS.
- Non-fossil capacity
- Non-fossil sources account for 308 GW of India's 558 GW installed power capacity.
- Areas of continued engagement
- Both sides will continue technical work on recognition of carbon pricing mechanisms, MRV systems and capacity building.
- CBAM nature
- CBAM is an EU instrument that charges importers for the embedded carbon in covered goods such as steel, aluminium, cement, fertiliser, electricity and hydrogen.
Don’t confuse with CBAM vs EU ETS: The EU ETS is the EU's internal cap-and-trade system for its own producers. CBAM extends a comparable carbon price to imports.
Don’t confuse with CCTS vs Perform, Achieve and Trade (PAT): PAT is an energy-efficiency trading scheme using energy saving certificates. CCTS trades carbon credits tied to greenhouse gas emission intensity.
International bodies and relations: the largest group of news questions in Prelims (61 since 2013), often about background, members and location. In Mains, 27 news-triggered questions, mostly on India's interests.
Why it matters
- Recognition of India's carbon price could reduce CBAM costs for Indian exporters.
- A credible domestic carbon market supports India's climate goals and trade competitiveness.
Problems
- CBAM may hurt Indian exports of steel, aluminium and similar goods to the EU.
- India's CCTS is based on intensity targets, not absolute caps, and may not be fully comparable to the EU's system.
Way forward
- Continue technical talks on mutual recognition of carbon prices and MRV standards.
- Strengthen MRV and the domestic carbon market so Indian carbon prices can be credited against CBAM.
Put in your answer
CCTS coverage: Targets notified for 490 industrial units show the domestic carbon market is moving to implementation.
Clean power share: Non-fossil capacity of 308 GW out of 558 GW can be cited as evidence of India's energy transition.
- 2014Mains GS3 · Q13Maintain carbon credits and CDM despite falling carbon credit value?
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UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
No practice question for this one; the card may still help an answer. Why: CBAM and India's CCTS are lasting topics; this bilateral meeting adds little new decision, so reading only.
Worth revising until Prelims 2028: most news questions come within two years of the event.