CBAM isn't the end, it could be start of a green story, Pg11

Key Highlights:

• The EU's Carbon Border Adjustment Mechanism (CBAM) has entered definitive implementation, imposing carbon costs on steel, aluminum, and cement imports.
• Indian steel exports to the EU sharply declined by 30% by FY25 compared to FY24 due to CBAM's transitional reporting phase.
• The EU ETS auction in December 2025 cleared at €87.57 per tonne CO2, exceeding historic floors.
• India's National Green Hydrogen Mission aims for 5 MMTPA by 2030 but faces challenges with electrolyser capacity.

Detailed Insights:

• Post-Covid, India's steel exports to the EU surged, but the introduction of CBAM's transitional phase reversed this boom, impacting export volumes.
• Despite CBAM, EU steel importers continue to source Indian steel, valuing cost advantages in decarbonized tonnes over cheaper alternatives.
• India needs to align its Measurement, Reporting, and Verification (MRV) systems with EU ETS equivalents to maintain competitiveness.
• The progress of India's National Green Hydrogen Mission is slow, with only 3 GW of electrolyser capacity awarded against the required 60-100 GW.
• Delays in projects like Sembcorp’s Tuticorin green ammonia hub are due to technology IP issues and restrictions on using Chinese electrolysers.
• India should liberalize imports of intermediate goods for green products to accelerate green hydrogen and renewable energy capacity.
• Building green steel plants is more expensive, requires renewable energy backups, and cleaner blends are needed until green hydrogen surpasses old methods around 2040.
• India can dominate green metals with abundant renewable energy, low-cost ore, and the 5 MMTPA green hydrogen ambition.

Key Concepts Involved:

• Carbon Border Adjustment Mechanism (CBAM): A carbon tariff on imports based on the carbon intensity of their production.
• EU Emissions Trading System (ETS): A cap-and-trade system for limiting greenhouse gas emissions within the European Union.
• National Green Hydrogen Mission: An initiative to promote the production and utilization of green hydrogen in India.