A new global climate policy aimed at reducing carbon pollution could make it harder for developing countries to compete in international trade, a leading climate expert has warned.

Sunita Narain, Director General of the Centre for Science and Environment, a research organisation based in New Delhi, says the European Union’s Carbon Border Adjustment Mechanism (CBAM) is changing the rules of global trade.

CBAM, which commenced on January 1, 2026, places a carbon price on goods entering Europe, meaning products like steel, cement, aluminium, and fertiliser will face extra charges if they are produced using high levels of carbon pollution.

According to Narain, this policy shifts the decarbonisation costs to developing countries, which often lack the money, technology, and infrastructure to clean up their industries quickly.

She stressed that reducing pollution is important and unavoidable, but the transition must be fair and inclusive, and cannot be driven through unilateral measures alone.

The Centre for Science and Environment has recommended that countries like India collect a carbon tax locally on exports, with the money staying within the country to clean up domestic industries while meeting Europe’s carbon pricing rules.

Programme Manager of the Climate Change Unit at CSE, Avantika Goswami, said global climate action must be fair, and that provision of real sectoral decarbonisation support in the form of concessional finance and technology transfer from the EU to developing country partners is crucial.

CSE’s 2024 study titled Carbon Border Adjustment Mechanism CBAM: The Global South’s response to a changing trade regime in the era of climate change warned that CBAM fails to address historical responsibility for climate change and ignores deep inequalities in the global trading system.

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