European Union (EU) Carbon Rules
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. |
European Union EU Carbon Rules: 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. |
Ravi Raaz
Hassan Khan
Shadab Ali