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The two-day G-20 ministerial meeting on environment and climate change in Italy are expected to raise their concerns over the European Union’s recent proposal on the first of its kind carbon border tax.

Under this proposal, the 27 EU nations will impose a border tax on imports of carbon-intensive goods.  Yet to be legally formalized, the tax plan could come into force from 2026.

So, what exactly is a carbon border tax? Why do developed countries want to impose such a tariff and why are developing nations opposed to the idea?

What is Carbon Pricing?

• Carbon pricing is an approach to reducing carbon emissions that uses market mechanisms to pass the cost of emitting to emitters.
• Its goal is to discourage the use of fossil fuels, address the causes of the climate crisis and meet national and international agreements.
• Well-designed carbon pricing can change the behavior of consumers, businesses and investors while encouraging technological innovation and generating revenue that can be used productively.
• There are a few carbon pricing instruments, such as a carbon tax and cap-and-trade programmes.

What is Carbon Border Tax?

• A carbon border tax (CBT) is a tax on carbon emissions attributed to imported goods that have not been carbon-taxed at source.
• The carbon border tax proposal is part of the European Commission’s European Green Deal that endeavours to make Europe the first climate-neutral continent by 2050. 

Objective:

• To ‘incentivize’ greener manufacturing around the world and create parity with European manufacturers who are already subjected to substantial carbon levies.

A move to benefit local EU manufacturers

The carbon border tax has wide appeal in Europe. It is supported by the new president of the European Commission.

• A carbon border tax is able to protect a country’s local manufacturers, motivating them to adhere to green regulations.
• Many EU companies are at a cost disadvantage as they have been paying a carbon border tax and for carbon emissions since 2005 under the EU’s Emissions Trading System.
• The new carbon border tax can therefore lead to a more level playing field against importers, especially those from nations with more lax environmental standards.

What could the new proposal mean politically?

• Notably, China’s continuing reliance on non-renewable energy to power its economy leaves it particularly vulnerable in this matter.
• For example, given that China produces steel with blast furnaces that release a large amount of carbon, it will have to pay an additional layer of carbon border tax, which will increase its costs and its market price.
• This will consequently reduce the competitiveness of steel produced in China, compared to steel from other countries that is made in more carbon-efficient mills that do not have to pay this additional tax.

This suggests that the carbon border tax is also politically preferable to Europe as it slows down the gradually rising economy in China, and would therefore preserve the European countries’ competitiveness. 

The BASIC (Brazil, South Africa, India and China) countries’ grouping had opposed the EU’s proposal.

How does this impact India?

• As India’s third largest trading partner, the EU accounted for €62.8 billion ($74.5 billion) worth of trade in goods in 2020, or 11.1% of India’s total global trade.
• India’s exports to the EU were worth $41.36 billion in 2020-21, as per data from the commerce ministry.
• The CBT would cover energy-intensive sectors such as cement, steel, aluminium, oil refinery, paper, glass, chemicals as well as the power sector.
• By increasing the prices of Indian-made goods in the EU, this tax would make Indian goods less attractive for buyers and could shrink demand.
• Sadly, India’s many ‘self-reliance’ tariffs are also a contributor to this.

Issues with CBT

• Impact on trade: The degree of impact on industrial sectors would be largely influenced by two factors: carbon intensity and trade intensity.
• Altering competitiveness: For companies, it will raise the administrative burden of crossing borders and increase trade frictions, especially for small businesses. That will inevitably reduce choice and raise costs for consumers.
• Promoting protectionism: The carbon tax may end up being protectionist, and will hit emerging economies like India hard.
• Unfair practices under WTO: Depending on their design they could fall foul of WTO measures designed to prevent importing countries from discriminating against particular exporting countries.
• A violation of Paris Accord: CBT compels developing countries to pay the same price as the developed countries to climate change. The EU is essentially bypassing the principle of ‘common but differentiated responsibilities’ that should guide international climate action.

Way forward

• Carbon taxing is just one way of holding large emitters accountable for their role in harming the environment.
• However, fundamental changes can’t be forced by tariffs.
• If the planet is to have any hope of meeting the Paris Agreement goals, drastic measures that consider both the economic and social wellbeing of nations’ inhabitants must be taken.
• This should take all nations into confidence than imposing such overnight tariffs.
• It is no doubt that India must be in the forefront in climate politics. But it must also be cautious about the negotiations in global laws to protect domestic interests.

Aspirants,

The UPSC exam is undoubtedly the toughest exam in India with a syllabus so vast that most students feel overwhelmed within just a few weeks of starting their preparation. 

In fact, the 2 biggest problems students face while preparing for this exam are:

1. Syllabus Management And
2. Time Management

FACT: As an aspirant, you can either spend a lot of time and effort trying to figure out how to cope with your syllabus and manage time or you can simply speak with our mentors and get the right study plan and timetable custom-made for you!

So, how can you learn to manage time and your syllabus? Here’s what you can do!

• Syllabus Management:
  • Go through the entire syllabus thoroughly.
  • Mark the topics you feel comfortable with and those you aren’t familiar with.
  • Break down the syllabus into small parts and prioritise them in order.
  • Gather the relevant study material for the syllabus and start studying them in order.
  • Figure out where you need guidance – Is it with the subject matter? Do you need help with organising your syllabus? Or you just aren’t sure how to begin?

Our guidance program is, in fact, designed specifically to solve this problem. We speak with students personally and understand their concerns on a one-on-one basis. Our mentors spend time understanding the individual requirements of our students and teach students how to break down the syllabus and create a plan they can stick to.

This is what our mentors do after speaking one-on-one with students:

1. They assess the students and understand their requirements.
2. They develop a study plan for the students that match their learning abilities.
3. They break down the syllabus for the student to make it easier for them to cope.
4. They provide important study material so that the student doesn’t feel lost.
5. They provide regular feedback to students to help them remain focused.
6. They handhold the students at every stage of the exam, supporting them with all their needs.

• Time Management:
  • Prioritise your study material
  • Complete the easier topics first.
  • Allocate at least one hour to answer-writing
  • Allocate at least one hour to MCQ practice
  • Make notes on Current Affairs while reading the newspapermatter?
  • Allocate at least 2 hours for your optional.

This plan, however, does not suit everyone since every student has a different learning pace and different time available. Our guidance program solves this problem by creating a personalised timetable for you after speaking with you personally. Our mentors understand the requirements of students and they know which topics require how much time. That is why they prepare a customised timetable for you and all you need to do is follow it!

So, if you are starting to prepare for the exam, do not waste your time trying to reinvent the wheel. Just get in touch with us and we will create a study plan that is based around you. 

Limited slots are available. Don’t wait, get in touch immediately!

Few Kind Words before we wrap up.

A dream does not become reality through magic; it takes sweat, determination, and hard work. 

The Streak Daily Initiative is aimed to help out UPSC aspirants in their day-to-day preparation. You can follow the monthly, weekly, and daily timetables and continue this streak until you find yourself on the final list.

So, let us look at Today’s activities.

For full-time Aspirants

1. Council of Ministers at Central and State level
2. Cabinet Committees
3. Parliament

For working Aspirants

1. Council of Ministers at Central and State level
2. Cabinet Committees
3. PM & CM

Target Assignment by Ravi Sir

Try these Prelims Questions :

Q1. There is a Parliamentary System of Government in India because the

(a) Lok Sabha is elected directly by the people

(b) Parliament can amend the constitution

(c) Rajya Sabha cannot be dissolved

(d) Council of Ministers is responsible to the Lok Sabha

Q2.Consider the following statements:

1. The Council of Ministers in the Centre shall be collectively responsible to the Parliament.
2. The Union Ministers shall hold the office during the pleasure of the President of India.
3. The Prime Minister shall communicate to the President about the proposals for Legislation.
   Which of the statement given above is/are correct?

(a) only 1

(b) only 2 and 3

(c) only 1 and 3

(d) 1, 2 and 3

Q3. Which of the following are not necessarily the consequences
of the proclamation of the President’s rule in a State?

1.Dissolution of the State Legislative Assembly

2.Removal of the Council of Ministers in the State

3.Dissolution of the local bodies
Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 1 and 3 only

(c) 2 and 3 only

(d) 1, 2and 3

Q4. Which of the following are the members of the Cabinet Committee on
Security?

1. Prime Minister

2. Minister of Home Affairs

3. Minister of External Affairs

4. Ministry of Road Transport and Highways

Select the correct answer using the code given below

(a) 1 and 2

(b) 1,2 and 3

(c) 1,3 and 4

(d) All are correct

Q5. A Parliamentary System of Government is one in which

(a) all political parties in the Parliament are represented in the Government

(b) the Government is responsible to the Parliament and can be removed by it

(c) the Government is elected by the people and can be removed by them

(d) the Government is chosen by the Parliament but cannot be removed by it before completion of a fixed term

Q 6. Consider the following statements:

1.In the election for Lok Sabha or State Assembly, the winning candidate must get at least 50 percent of the votes polled, to be declared elected.

2.According to the provisions laid down in the Constitution of India, in Lok Sabha, the Speaker’s post goes to the majority party and the Deputy Speaker’s to the Opposition.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Q 7. Consider the following statements:

1.The President of India can summon a session of the Parliament at such a place as he/she thinks fit.

2.The Constitution of India provides for three sessions of the Parliament in a year, but it is not mandatory to conduct all three sessions.

3.There is no minimum number of days that the Parliament is required to meet in a year.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) 1 and 3 only

(d) 2 and 3 only

Q 8. Consider the following statements regarding ‘No confidence motion’

1. Only a motion expressing want of confidence in the
   council of ministers as a whole is admitted
2. A no confidence motion needs to set out grounds on
   which it is based.
3. Any no confidence motion once moved can’t be
   withdrawn
4. Rajya Sabha is not empowered to entertain a motion of
   no confidence

Which of the following given above are not correct?

(a) 1 and 2 only

(b) 1, 2, and 3 only

(c) 2 and 3 only

(d) 1, 2, 3 and 4

Q 9. The Provision for the Calling Attention Notices has restricted the scope of which of the following?

(a) Short duration discussion

(b) Question hour

(c) Adjournment motion

(d) Zero hour

Q 10. The Parliament of India acquires the power to legislate on any item in the State List in the national interest if a resolution to that effect
is passed by the

(a) Lok Sabha by a simple majority of its total membership

(b) Lok Sabha by a majority of not less than two-thirds of its total membership

(c) Rajya Sabha by a simple majority of its total membership

(d) Rajya Sabha by a majority of not less than two-thirds of its members present and voting

Q 11. Consider the following statements related to Article 368 of the
Constitution:

1. A Constitutional Amendment Bill can be passed at a joint session
   of Parliament in case of deadlock between the two Houses.
2. It is obligatory for the President of India to give his assent to a
   Constitutional Amendment Bill passed under Article 368.
3. To amend 7 th Schedule of the Constitution, ratification of more
   than half of the State legislature is essential.
4. A proposal to amend the Constitution can only be introduced in
   the House of the People.

Which of these are correct?

(a) 1 ,2 and 3

(b) 1, 3 and 4

(c) 2 and 3

(d) All are correct

Video Discussion of Prelims Questions by Santosh Sir:

Try these Mains Questions :

Q: Identify the major obstacles in the smooth functioning of Parliamentary democracy in India. (15)

Q: ‘The essential purpose of the Cabinet committee is to relieve the cabinet of some burden of work.’ Discuss (10)

Video Discussion of Mains Questions by Sukanya Ma’am:

Stay tuned with us for tomorrow’s targets.

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Visit our course page for further details