India's steel industry to look at renewable energy to avoid CBAM tariffs
Steel

India's steel industry to look at renewable energy to avoid CBAM tariffs

The EU Emissions Trading System (ETS), launched in 2005, is a key element of the European Union's climate change strategy and remains the world’s largest carbon market. Under the system, producers within the EU are required to offset their CO2 emissions by purchasing allowances from the EU ETS. This has led some companies to relocate their operations to regions with less stringent emissions regulations in order to reduce costs, a phenomenon known as ‘carbon leakage’. To counter this, the EU introduced a ‘carbon levy’ on imported goods, applying it to products from countries with lower emissions standards than those of the EU to prevent highly emission-intensive imports.

Building on this, the European Commission has proposed the world’s first ‘carbon border tax’, aimed at imports of carbon-intensive products such as steel, hydrogen, cement, fertilisers, and aluminium, in line with the EU’s climate goals. This tax is based on the EU’s domestic emissions regulations and includes fees for exceeding emissions limits. The Carbon Border Adjustment Mechanism (CBAM), which targets these sectors, is expected to affect around 4% of the EU's total imports by value.

Indian steel exports to Europe, which account for over 20% of India’s total steel exports in the first half of FY25, may be significantly impacted. Italy, Belgium, Spain, and the United Kingdom are among the primary destinations. Indian steel production emits 2.6 tonnes of CO2 per tonne of steel, higher than the global average of 1.85 tonnes, giving the EU a rationale for imposing higher duties on Indian products. According to ICRA, the CBAM framework could affect 15-40% of India's steel exports to Europe, with the impact expected to be felt from 2026 to 2034. Notably, the USA and Singapore are also likely to introduce similar policies.

The EU Emissions Trading System (ETS), launched in 2005, is a key element of the European Union's climate change strategy and remains the world’s largest carbon market. Under the system, producers within the EU are required to offset their CO2 emissions by purchasing allowances from the EU ETS. This has led some companies to relocate their operations to regions with less stringent emissions regulations in order to reduce costs, a phenomenon known as ‘carbon leakage’. To counter this, the EU introduced a ‘carbon levy’ on imported goods, applying it to products from countries with lower emissions standards than those of the EU to prevent highly emission-intensive imports. Building on this, the European Commission has proposed the world’s first ‘carbon border tax’, aimed at imports of carbon-intensive products such as steel, hydrogen, cement, fertilisers, and aluminium, in line with the EU’s climate goals. This tax is based on the EU’s domestic emissions regulations and includes fees for exceeding emissions limits. The Carbon Border Adjustment Mechanism (CBAM), which targets these sectors, is expected to affect around 4% of the EU's total imports by value. Indian steel exports to Europe, which account for over 20% of India’s total steel exports in the first half of FY25, may be significantly impacted. Italy, Belgium, Spain, and the United Kingdom are among the primary destinations. Indian steel production emits 2.6 tonnes of CO2 per tonne of steel, higher than the global average of 1.85 tonnes, giving the EU a rationale for imposing higher duties on Indian products. According to ICRA, the CBAM framework could affect 15-40% of India's steel exports to Europe, with the impact expected to be felt from 2026 to 2034. Notably, the USA and Singapore are also likely to introduce similar policies.

Next Story
Products

TOTO India Launches Premium G & L Showers with Sleek Faucet Range

TOTO India has launched its G Shower and L Shower series, alongside an expanded range of GT, LH, and Pull-Out lavatory faucets. The collection blends advanced technology, refined aesthetics, and everyday comfort, staying true to TOTO’s philosophy of creating spaces that are both beautiful and functional. The G Shower series delivers the 3Rs of showering: Relaxing, Refreshing, and Revitalizing. Features include the Calming Shawl spray mode, Warm Spa technology, and multiple overhead and hand-shower options across eight finishes. The L Shower complements this with easy-to-use controls sui..

Next Story
Infrastructure Energy

Hero Future Energies Secures Funding for 120 MW Hybrid Project

Hero Future Energies (HFE), through its SPV Clean Renewable Energy Hybrid Three, has secured Rs 19.08 billion in funding from the State Bank of India (lead) and Canara Bank. The funds will be used to develop and construct HFE’s 120 MW renewable energy hybrid project at Kurnool, Andhra Pradesh. The project, contracted with SJVN, integrates wind, solar, and storage technologies to deliver reliable peak power. With a 21-year repayment period, the funding ensures timely execution and the commencement of commercial operations. The financial closure demonstrates continued lender confidence in..

Next Story
Infrastructure Energy

IOC GPS Renewables Raises Rs 8.36 billion Debt for Compressed Biogas Plants

IOC GPS Renewables Private Limited (IGRPL), a joint venture between IndianOil Corporation  and GPS Renewables, has raised Rs 8.36 billion (approx. US$ 95 million) in debt financing from Indian Bank to execute nine Compressed Biogas (CBG) projects across India.   The funding is the largest single-bank debt raise in the CBG sector and the first fully non-recourse financing in India for these projects. The plants—four in Haryana, three in Uttar Pradesh, one each in Chhattisgarh and Andhra Pradesh—will each produce 15 tonnes of CBG per day using paddy straw as feedstock. All nin..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?