The 29th Conference of Parties (COP29), which kicked off on November, 11th in Baku, Azerbaijan, will devote significant attention to the challenges posed by climate-related unilateral trade measures. The BASIC group—Brazil, China, India, and South Africa—has called on the COP29 Presidency and the UN Climate Change Secretariat to include an agenda item addressing concerns over such measures, including the EU’s Carbon Border Adjustment Mechanism (CBAM). This tax, which will come into full effect in 2026, along with other regulations, disproportionately impacts developing nations, raising the need for international cooperation aligned with the principles of the Paris Agreement.

Evidence highlights the financial strain these policies could impose on developing economies. For instance, a carbon price of 100 Euros per tonne could translate to an average annual burden equating to 0.05% of India’s GDP for goods exported to the EU. Similarly, Africa might face a 0.33% GDP reduction, or $25 billion annually, as free allowances under the EU's Emissions Trading System are phased out. Such outcomes emphasize the lack of sufficient climate financing and technology support for developing countries, which complicates their decarbonisation efforts.

The BASIC group argues that while CBAM and similar policies aim to prevent carbon leakage and support climate goals, they embody elements of economic protectionism that ignore the principle of common but differentiated responsibilities (CBDR). Past discussions at COP28 and recent declarations, including the October 2024 BRICS statement, have underlined the need to safeguard the economic development of the Global South against such trade measures. Integrating these concerns into the COP29 agenda would facilitate a global approach that respects the shared but differentiated needs of all nations.

CBAM Reports provides expert services to guide businesses in understanding and navigating the complexities of evolving climate trade measures. Contact us to learn how we can assist you in aligning with the upcoming policies.

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