Phase IFoundation
Background
Overview
Understanding the global trade implications of climate policies, the impact of such mechanisms on Indian exports, and international efforts to address climate change and carbon leakage is vital for UPSC aspirants.
A Carbon Border Adjustment Mechanism (CBAM) is a tariff on carbon-intensive products imported from countries with less stringent climate policies. Its primary goals are to prevent 'carbon leakage' (where production moves to countries with weaker emission rules) and to encourage global climate action by ensuring a level playing field.