CBAM Update – Provisional Deal Reached Post EU Negotiations

On December 13, 2022, negotiators of the Council and the European Parliament reached an agreement of a provisional and conditional nature on the Carbon Border Adjustment Mechanism (CBAM).  In this update, we summarize the key changes introduced by the provisional agreement to the operation of the CBAM. Key changes include:

• Expanded product scope
• Expanded emission scope to include indirect emissions
• Postponing the implementation period to provide exporters with an additional period to fully understand the CBAM prior to its implementation

The update highlights how the imposition of the CBAM is likely to affect a significant share of India’s exports to the EU. The update further delves into future steps to be taken, with a focus on the Energy Conservation (Amendment) Bill on December 12, 2022 to set up a domestic carbon trading scheme. Further clarity on the actual operation of the CBAM is expected through the issuance of the final agreement which is expected in the coming weeks.

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