EU’s Emissions Trading System and free emissions allowances

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The European Union’s Emissions Trading System (ETS) is the principle and the architecture based on which the EU will implement its Carbon Border Adjustment Mechanism (CBAM). The CBAM is intended to create a level playing field between EU producers subject to the ETS and non-EU producers not subject to the ETS. However, in reality, it instead exacerbates inequalities between industrial actors coming from disparate and unequal situations. It pits the EU’s emissions-evolved, free emissions allowances–rich industry against developing-country industry which has zero exposure to carbon emissions reductions and trading.

Please find attached an article by Sangeeta Godbole, a former officer with the Indian Revenue Service, that looks into this issue. The article will also be published as a TWN Briefing Paper. – Third World Network