European Union Implements Carbon Border Adjustment Mechanism (CBAM) Phase 2
The European Union has entered Phase 2 of its Carbon Border Adjustment Mechanism (CBAM), impacting Indian exports of steel and aluminum.
Key Points for Quick Revision
- CBAM Phase 2 involves the collection of carbon taxes on imports.
- Key sectors affected include steel, aluminum, cement, and fertilizers.
- The mechanism aims to prevent 'carbon leakage' from the EU.
- India is challenging the move at the World Trade Organization (WTO).
How This Topic is Tested in Competitive Exams
| Exam | Frequency | Approx. Marks | What Gets Asked |
|---|---|---|---|
| UPSC / State PCS | Very High | 10–20 | International relations is a core GS-II topic for UPSC. Bilateral agreements, multilateral bodies, and geopolitics are essential. |
| Banking (IBPS / SBI) | Medium | 2–4 | G20, IMF/World Bank decisions, and global trade events are tested in banking exams. |
| SSC (CGL / CHSL / MTS) | Medium | 2–4 | International summits, treaties, and India's bilateral relations appear in SSC GK. |
What to Memorize from This Topic
- Summit venue, participating nations, key outcomes, and India's stand
- Bilateral agreements: India + partner country, subject area, signing date
- Multilateral organizations: new members, leadership changes, major resolutions
- India's position on key global issues: UN voting, climate, trade
- Indices: Global Peace Index, Press Freedom Index, India's rank and change
Practice Questions
Q1. What is the primary purpose of the EU's CBAM?
- To promote tourism
- To tax carbon-intensive imports
- To subsidize European farmers
- To regulate digital currency
Explanation: CBAM is designed to put a fair price on the carbon emitted during the production of carbon-intensive goods entering the EU.
Q2. Which Indian export sector is most likely to be affected by CBAM?
- Software services
- Textiles
- Steel and Aluminum
- Pharmaceuticals
Explanation: Heavy industries like steel and aluminum are the primary targets of the carbon tax due to their high emissions.
How to Prepare International Affairs for Government Exams
Focus on India-centric news — India's bilateral visits, MoUs signed, and positions in international bodies. This is what domestic exams test.
For UPSC, understand geopolitical context: Why does India take a particular position? What is India's strategic interest?
Keep a running note of all G20, SCO, BRICS, and QUAD-related outcomes. These bodies generate 3–5 questions per major exam cycle.