The EU’s CBAM has lent urgency to fair carbon prices

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₹400 per tonne on domestic and imported coal are all emission charges. The government is also working towards a Carbon Credit Trading Scheme (CCTS), which is expected to accelerate our adoption of market-based price discovery for emissions. Nevertheless, carbon prices in India and the EU are unlikely to converge, since the determination of a carbon price is linked to the emission-reduction obligations of each country; these differ.

Another crucial fact is that there are no agreed principles for the measurement of and accounting for the price of emissions. The World Bank estimates that over 70 carbon pricing initiatives exist the world over. In an op-ed in the Financial Times in October 2021, World Trade Organization Director General Ngozi Okonjo-Iweala noted that the most straightforward solution would be a global carbon price aligned with the Paris Agreement.

That observation was rooted in a basic approach to equity and fairness, since the Paris Agreement is an acknowledgement by 195 countries (including EU members) that there is no one-size-fits all approach to emission reductions. The WTO’s efforts so far have not resulted in any clarity on carbon pricing. Reports indicate that a presentation by Okonjo-Iweala earlier this year proposed a scheme whereby countries would be split into four categories based on their development status and historical emissions, with less developed countries paying the lowest carbon price (placed at $27 for every tonne emitted) and the wealthiest paying the most (estimated at $181 per tonne).