Green Ambitions, Trade Concerns: India’s COP29 Roadmap
The Indian government is intensifying its efforts to finalize a strategy for the upcoming 29th UN Conference of the Parties (COP29) of the UNFCCC, scheduled to take place in Baku, Azerbaijan, in November 2024. This comes amid mounting concerns over the European Union’s (EU) plans to impose a carbon tax on key shipments from India and other nations, a move that could significantly impact India’s economy.
As one of the world’s largest emitters of carbon, India will play a crucial role at COP29, representing the interests of the global south and advocating for the needs of developing nations in the ongoing climate negotiations. Union Environment, Forest, and Climate Change Minister Bhupendra Yadav emphasized that India’s focus will be on addressing the challenges faced by these nations, particularly concerning climate adaptation and mitigation.
COP29 is particularly significant this year, as the world faces unprecedented extreme weather events like heatwaves, droughts, and floods, all driven by global warming nearing the critical threshold of 1.5°C above pre-industrial levels. The conference will be a vital platform for discussions on climate finance, including the long-delayed loss and damage fund, and the EU’s proposed Carbon Border Adjustment Mechanism (CBAM), commonly known as a carbon tax.
The EU’s CBAM, set to be implemented by January 2026, would impose a 25% tariff on energy-intensive goods such as iron, steel, cement, fertilizers, and aluminium exported to Europe. This move is expected to impact approximately 0.05% of India’s GDP. Minister Yadav indicated that India would thoughtfully evaluate its response to the CBAM and may consider imposing retaliatory tariffs on EU exports if the tax is implemented. The CBAM has already sparked significant concern, as it could disrupt over $8 billion worth of Indian metal exports to the EU.
Preliminary consultations with experts and stakeholders are already underway in India to shape the country’s agenda for COP29. According to Yadav, these discussions are crucial in setting the stage for India’s participation in the global climate summit. Climate finance will be a central theme, as developing countries, including India, continue to push for adequate financial support and technology transfer to facilitate their transition to low-carbon economies. A major expected outcome of COP29 is the development of a New Collective Quantified Goal (NCQG) on climate finance, aimed at setting a new financial target to support developing countries in their climate efforts, building on the benchmark set by the Paris Agreement of $100 billion per year.
India has consistently been a strong advocate for climate finance, emphasizing the need for developed nations to fulfil their financial commitments to the global south. Minister Yadav highlighted India’s constructive role in previous COPs, particularly in discussions on the loss and damage fund and the Global Stocktake (GST). He indicated that India would maintain a similar stance at COP29, focusing on practical solutions rather than creating obstacles in the negotiations.
Conservation of biodiversity is also expected to feature prominently in India’s agenda for COP29. Yadav hinted at a broader approach to environmental protection, linking development activities with the preservation of biodiversity and enhancement of land productivity. India’s recent initiatives, such as issuing soil health cards to farmers and promoting natural farming practices, reflect this integrated approach to sustainable development. The minister also underscored the importance of collaborative efforts in conservation, citing the International Big Cat Alliance as an example of how protecting biodiversity requires joint action.
On the EU’s CBAM, European officials maintain that the mechanism is not intended as a trade tool or protectionist measure but rather as a means to combat climate change by addressing the risk of carbon leakage. The CBAM will apply to imports from all non-EU nations that do not have an emissions trading system (ETS) linked to the EU’s ETS. India and other major developing nations like Brazil, Russia, China, and South Africa have condemned the CBAM as discriminatory, arguing it could severely damage their economies and make EU trade prohibitively costly.
In 2022-23, goods covered by the CBAM constituted about one-fourth of India’s total exports to the EU, with iron, steel, and aluminium exports particularly vulnerable. As the EU gradually increases the tax rate to cover 100% of grey emissions by 2034, Indian industries could face billions in lost exports and increased costs. The EU argues that CBAM creates a level playing field for domestically manufactured goods, which must meet strict environmental standards, but developing countries fear that it will further disadvantage their economies in global trade.
The debate over the CBAM is likely to be a contentious issue at COP29, with developing nations, including India, pushing back against what they see as an unfair imposition by developed countries. As the world grapples with the dual challenges of climate change and economic inequality, the outcomes of COP29 will be closely watched by nations around the globe.
The image added is for representation purposes only
