'Trade Day' at COP28: To deliberate on policy options for climate action

Last Thursday, the 28th Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC) began its annual two-week deliberations at Dubai. The conference brings together industry chiefs, political leaders, policymakers, climate experts, and civil society representatives to take stock of how far the global community has progressed towards curbing greenhouse gases (GHG) emissions and achieving the target of limiting the rise in global temperatures to well below 2 degrees centigrade agreed at its 21st meeting (COP21) at Paris in 2015 and the way forward.  
 

In the run-up to COP28, the UNFCCC said that some notable progress has been made, especially in the generation of electricity through solar and wind energy, but overall, the efforts fall short of what is required to achieve the targets set at COP21.
 

At COP26 held at Glasgow, Scotland, in 2021, most developed countries committed to achieving net-zero GHG emissions by 2050. 
 

China, the biggest GHG emitter, committed to get there by 2060 and India, the third biggest GHG emitter, by 2070. In later updates in August 2022, India committed to achieve by 2030 reduction of the emissions intensity of its GDP by 45% from 2005 level, installation of about 50% cumulative electric power capacity from non-fossil fuel based energy resources (with the help of transfer of technology and low-cost international finance including from Green Climate Fund) and creation of an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover.
 

The Paris agreement includes a number of elements such as mitigation provisions, climate adaptation, finance for transition towards greener economies, technology transfer, capacity building, transparency, loss and damage due to climate change etc. But, it does not include the role of global trade. However, recognising that freer cross border movement of technology, goods, services and professionals can and must be a part of the policy ‘toolbox’ to achieve shared climate goals at the depth and speed required by the climate emergency and that trade plays a crucial role in the transition to a global low-carbon economy and a greener, more sustainable world, COP28 will have its first ever ‘Trade Day’ on December 4 to deliberate on trade policy options for climate action.
 

India, South Africa and some other countries are hoping to raise the issue of non-tariff barriers by way of Carbon Border Adjustment Mechanism (CABM) introduced by the European Union (EU) with the aim of putting a fair price on the carbon emitted during the production of carbon-intensive goods entering the EU.  
 

India has always maintained that no trade barriers should be erected on the basis of the method used to produce the goods. The EU, however, says that the CBAM is compatible with WTO disciplines. 
 

Another issue may be the imposition of quantitative restrictions or high tariffs with a view to protect the domestic industries producing goods like solar cells/panels that provide alternatives to the use of fossil fuels for electricity generation.
 

Barring some major business houses, Indian producers and exporters are not well prepared for stringent measures to curb GHG emissions that may come forth in the coming days in one form or the other either from our own government or other governments. They need knowhow on how to cope with the evolving realities and stay competitive.

Email : tncrajagopalan@gmail.com