BRICS Nations Urged to Negotiate Redesign of EU Carbon Border Adjustment Mechanism

The recent BRICS New Delhi Declaration has brought renewed attention to the Carbon Border Adjustment Mechanism (CBAM), with member nations opposing unilateral and protectionist measures that fall outside international law. While political discourse has often positioned CBAM as a policy to be entirely dismissed, experts argue for a more nuanced approach focused on negotiation and structural reform.

CBAM was introduced to prevent carbon leakage—a scenario where domestic production shifts to countries with weaker environmental policies, thereby increasing global net carbon emissions. By placing a carbon cost on imported competing goods that mirrors the internal EU emissions trading system, the mechanism aims to establish parity. The policy became legally binding on January 1, following an initial reporting phase that began in October 2023, and currently covers specific imports including cement, iron and steel, aluminium, fertilizers, hydrogen, and electricity.

Despite its technical justification regarding environmental objectives, analysts note that the mechanism intersects heavily with climate justice and equity. Developed nations have a historical responsibility stemming from earlier industrialization. Consequently, applying uniform border carbon prices can place an unequal burden on developing nations that lack equivalent access to climate finance, cheaper green alternatives, and established sustainability ecosystems.

Rather than rejecting the framework entirely, experts propose that BRICS and other developing countries engage in multilateral negotiations to redesign CBAM. Key areas for reform include fair procedures, financial support, technology transfer, and revenue sharing. Instead of imposing border charges without complementary support, importing blocs could direct a substantial share of proceeds toward funding decarbonization and adaptation in affected regions.

Additional proposals include establishing low-cost long-term loans, open access to green technologies, joint research and development, and technical assistance for monitoring and verification. Furthermore, BRICS countries could develop an internal framework encompassing carbon-intensity databases, mutual recognition of certification, clean technology investments, and common industrial benchmarks to align climate responsibility with developmental equity.

"The debate around the Carbon Border Adjustment Mechanism highlights a critical intersection between global climate policy and economic equity for developing nations. Rather than viewing CBAM purely as an obstacle, emerging economies and businesses must prepare for stringent carbon-reporting standards while actively pushing for multilateral frameworks that include financial support and technology transfer. For entrepreneurs and enterprises operating in global supply chains, understanding and adapting to these carbon compliance measures will be essential for long-term international trade." — Dr. Shishir Gupta, Founder & CEO, StartupLanes