Riyasat IAS Mentorship Team
Updated 19 Jul 2026
2 min read
European Union (EU) Carbon Rules
GS PAPER II & III — International Relations, Environment
Why in News? A proposal within the European Union to hand out additional free carbon-emission permits to heavy industry has triggered sharp debate, with reports from Reuters and Goldman Sachs warning it could reward laggard polluters over early clean-tech adopters such as steelmaker SSAB. Critics argue the move risks undercutting the EU’s own 2040 climate target.
Key Facts for Prelims EU considering additional free CO2 permits for heavy industry to ease competitiveness pressure.Goldman Sachs: green tech becomes cost-competitive once carbon price hits ~$100 (~90 euros)/tonne.SSAB (Sweden) investing 6 billion euros to shift from coal to hydrogen-based steel.EU ETS carbon price: below 10 euros/tonne in the 2010s, now around 80 euros/tonne.EU’s 2040 climate target: 90% cut in net GHG emissions from 1990 levels.CBAM (Carbon Border Adjustment Mechanism) taxes carbon-intensive imports like steel, cement, aluminium.Carbon credit concept originated in the 1997 Kyoto Protocol; now governed by Article 6 of the Paris Agreement.India is developing its own Indian Carbon Market under the Energy Conservation (Amendment) Act, 2022.
Quick-Reference Data Table
Period
EU ETS Carbon Price (approx.)
2010s
Below 10 euros per tonne
Current (2026)
Around 80 euros per tonne
Threshold for green cost-competitiveness
~90 euros ($100) per tonne, per Goldman Sachs
UPSC Note — Prelims Angle Expect statement-based MCQs from European Union (EU) Carbon Rules testing numbers, scheme names, ratios and committee recommendations. Revise the data table above rather than the narrative — Prelims rewards precision on figures.
Prelims MCQ Practice With reference to the European Union’s carbon market, consider the following statements: 1. The Carbon Border Adjustment Mechanism taxes carbon-intensive imports to protect domestic EU industry. 2. The concept of tradeable carbon credits originated from the Paris Agreement of 2015. 3. Article 6 of the Paris Agreement currently provides the framework for international carbon markets. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3 Answer: (b) Statements 1 and 3 are correct. Statement 2 is incorrect — tradeable carbon credits originated under the 1997 Kyoto Protocol, not the Paris Agreement.
