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Are India’s FTAs Becoming Climate Policy by Default? The CBAM Challenge

The climate impact of FTAs is reshaping India’s trade strategy as EU carbon rules like CBAM alter market access and industrial competitiveness.

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The climate impact of FTAs is becoming a defining issue for India’s trade negotiations, as carbon-linked rules like the EU’s CBAM increasingly shape market access and industrial competitiveness.
Image credit: Markus Spiske/Pexels

The climate impact of FTAs is becoming a defining issue for India’s trade negotiations, as carbon-linked rules like the EU’s CBAM increasingly shape market access and industrial competitiveness.

As India accelerates negotiations on free trade agreements (FTAs) with the European Union, United Kingdom, EFTA countries and the United States, a parallel transformation is unfolding — one where trade policy is increasingly shaped by climate-linked conditions.

A recent policy discussion summarised in India’s FTAs: Trade, Climate and Strategic Choices, organised by Climate Trends, argues that the EU’s Carbon Border Adjustment Mechanism (CBAM) represents not a marginal environmental tool, but a structural shift in global trade governance. The deeper question is whether India’s trade engagements are effectively becoming instruments of climate policy — and if so, under whose terms.

CBAM: From Environmental Tool to Structural Trade Instrument

Ajay Srivastava, Founder and CEO of GTRI, cautioned against viewing CBAM as a narrow carbon levy limited to a handful of sectors. While the current scope covers steel, aluminium, cement, fertilisers, hydrogen and electricity, the EU has stated its intention to expand the mechanism to all industrial products by 2033.

“What most people ignore about CBAM is that it will not only hurt six products,” Srivastava said. “After a few years when CBAM is in full form, then the normal CBAM liability on exports will range anywhere between 20% to 35%, and even 50% or more for products like aluminium.”

India’s average applied tariffs into the EU are currently around 3–3.5%. CBAM, by contrast, could impose carbon-linked charges many times higher. “Instead of 3% custom duties… exporters may pay 20%-40% under CBAM. And in return, all EU goods will be entering India at zero tariffs. Such a deal appears asymmetric,” he added.

From this perspective, CBAM is less a climate safeguard and more a structural replacement of tariffs with carbon-linked entry costs — one that sits outside the formal FTA framework while reshaping its economic value.

Climate Compliance as Market Entry Condition

The broader concern is cumulative compliance. CBAM does not operate in isolation. The EU Deforestation Regulation, supply-chain traceability rules, and ESG-linked disclosure expectations together create what analysts describe as an embedded climate cost for market access.

Colette van der Ven, Founder and Director of Tulip Consulting, noted that CBAM was a key sticking point in EU–India negotiations. “Even if the Indian government’s press statements suggest that there are provisions around MFN treatment, that may, in practice, not have very much value… giving country-specific flexibilities was already off the cards for the EU.”

In effect, climate-linked measures are emerging as non-negotiable features of trade architecture.

Divergent Impact: Large Firms vs MSMEs

The climate-trade shift is not uniform in its impact.

Large integrated producers such as Tata Steel and JSW, according to van der Ven, are relatively insulated. Many operate European subsidiaries, have internal monitoring, reporting and verification (MRV) systems, and possess capital for cleaner technologies. For them, CBAM is a manageable compliance cost.

However, the situation is starkly different for MSMEs.

Ajay Srivastava pointed to early evidence from CBAM’s reporting phase, which began in October 2023. “In FY25, our exports of steel and aluminium to the EU were down by 24%. Why? Because MSMEs could not supply data, and EU-based importers stopped placing orders from them. So, MSMEs will be the hardest hit. It will soon be a game only for large players.”

Van der Ven added that default carbon values under CBAM are punitive. “Even if you have relatively clean production, but you cannot measure it, you are still going to be getting a default value that is a lot higher than the actual carbon emissions… That means that your competitiveness level goes down.”

The key barrier is not necessarily emissions intensity, but data asymmetry and compliance infrastructure.

Trade Policy as Domestic Climate Policy

Suranjali Tandon, Associate Professor at NIPFP, framed the issue more fundamentally: “All matters of trade policy are also matters of domestic economic policy.”

She argued that Indian firms will require domestic carbon pricing, measurement systems, and industrial support mechanisms to respond effectively. “Indian companies need to have their own carbon pricing to be able to respond to such measures… The best thing that can be done is to have measurement systems in place while ensuring that there are domestic policies that support increasing production capacity.”

Without robust domestic support — incentives, certification regimes, transitional demand buffers — exporters may struggle to absorb external carbon costs.

Fragmented Global Carbon Regimes

A central tension lies in fragmentation. EU-bound exports account for roughly 20% of India’s trade. The remaining 80% flows to markets without CBAM-style requirements.

Srivastava highlighted the dilemma: Indian firms may need separate production processes for EU markets, raising costs across their operations. Producing “green” goods for a minority of export destinations could erode competitiveness elsewhere.

This fragmentation complicates investment decisions. Without globally harmonised carbon pricing, unilateral measures risk distorting trade patterns rather than aligning them.

Strategic Choices Ahead

The discussion suggests that FTAs are no longer purely about tariffs and quotas. They increasingly interact with carbon pricing systems, sustainability standards, and domestic regulatory reforms.

Recommendations emerging from the dialogue include:

>> Prioritising measurement and MRV infrastructure, especially for MSMEs

>> Designing selective emissions trading systems, beginning with large emitters

>> Aligning industrial, trade, and climate policies domestically

>> Viewing FTAs as platforms for cooperation, rather than solutions in themselves

Archana Chaudhary of Climate Trends summarised the broader shift: “Trade seems to be forcing domestic climate action and capital is being steered in that direction. These new trade deals and the carbon-linked rules are going to be shaping up India’s real economy.”

Climate Alignment or Competitiveness Risk?

The deeper climate perspective is complex. On one hand, CBAM aligns with long-term decarbonisation goals. On the other, its current design places disproportionate adjustment burdens on developing economies and smaller firms.

Van der Ven suggested that alignment exists beneath the friction. “Beyond the differences, there is alignment between the EU and India in wanting to decarbonize. We must think towards these win-win opportunities along the supply chain.”

The outcome, however, will depend less on individual FTAs and more on whether India can integrate trade, industrial, and climate strategies coherently at home.

As climate-linked trade measures proliferate, India’s FTAs may increasingly serve not just as economic agreements — but as de facto climate policy instruments reshaping the country’s industrial future.

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‘The story of sea-level rise is not a story about water. It is a story about people’

Prof. Dr. Jemilah Mahmood on why the world is dangerously underestimating a gathering health and justice crisis — and what must change.

Dipin Damodharan

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Image credit: Sunwayuniversity

When the Lancet Commission on Sea-Level Rise, Health and Justice published its landmark report Life at the water’s edge on 8 April 2026, it marked the first major effort to examine rising seas through a health-focused lens. Bringing together 26 international experts, the Commission was convened against a backdrop of accelerating coastal displacement, collapsing freshwater systems, and a growing recognition that the world’s most vulnerable populations are paying the price for a crisis they did not cause.

Among the 26 commissioners is Prof. Dr. Jemilah Mahmood, Executive Director of the Sunway Centre for Planetary Health at Sunway University, Malaysia — one of the region’s leading institutions on planetary and public health. A physician, humanitarian, and policy leader with decades of experience across Asia and beyond, Mahmood has been a consistent voice for justice-centred approaches to climate and health. Dipin Damodharan spoke to her about what the Commission’s findings mean for health systems, governments, and the role of science journalism in turning evidence into action.

Sea-level rise is often discussed as an environmental issue. From a health perspective, how should we understand its real impact on human lives?

The framing of sea-level rise as primarily an environmental issue understates what is actually happening. At its core, this is a health and wellbeing crisis. It is already reshaping how people live in the most fundamental ways: what they eat, whether they can access clean water, how they sustain their livelihoods, and whether they can maintain any meaningful sense of mental stability and security.

The consequences run deeper than just the physical. Rising seas accelerate injury, disease, and displacement, but they also produce profound psychological trauma and the erosion of cultural identity, particularly for communities whose health is inseparable from land, coastlines, and the ocean itself. For many coastal and island populations, this is not simply a question of relocating to higher ground; it is the dismantling of entire ways of life that have sustained people for generations.

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Image: Nici Gottstein /Pexels

What makes sea-level rise especially serious as a health challenge is that it does not operate in isolation. It amplifies the effects of storms, intensifies heat, and deepens socio-economic inequality, meaning that existing health vulnerabilities become far worse rather than simply being joined by a new one.

What are the most immediate and long-term public health risks in vulnerable coastal regions?

The immediate risks are already being lived, not merely anticipated. Coastal flooding and storm surges kill, displace, and destroy the health infrastructure communities need to recover. When salt intrudes into freshwater supplies, the consequences for drinking water and basic hygiene outlast the flood itself by months or years. Blood pressure rise in communities affected by saltwater intrusion is well documented, affecting the highest at risk including pregnant women.

The longer-term risks are in some ways harder to address precisely because they accumulate quietly. Disrupted agriculture and fisheries translate into chronic food and nutrition insecurity, particularly for coastal populations whose diets depend directly on the sea. Permanent displacement strips away not just homes but ancestral land, social cohesion, and the intergenerational ties that underpin community health and resilience.

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And then there is the mental health burden, which too often gets treated as secondary. For Indigenous and island communities, eco-anxiety, grief, and the loss of cultural identity are not soft concerns to be addressed once the physical damage is tallied. They are central to what sea-level rise actually does to human lives.

You describe this as a “justice crisis.” Who bears the greatest burden, and why does sea-level rise disproportionately impact those least responsible for climate change?

The communities bearing the greatest burden are those living in Small Island Developing States, low-lying coastal regions, and Indigenous territories, with concentration in the Western Pacific, where populations have contributed minimally to global emissions. In the worst-case scenarios, up to 410 million people are projected to be living below the high-tide line by 2100.

The injustice is not incidental; it is structural. These communities face displacement from their homes, their cultures, and their livelihoods, along with serious and compounding health consequences, without having meaningfully benefited from the fossil-fuel-driven economic growth that caused the crisis.

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Image: Mumtahina Tanni

It is important to be precise about what justice means in this context. The Lancet Commission is explicit that this is not a conversation about charity or humanitarian generosity. It is about accountability, compensation, and rights. Affected communities are not supplicants waiting for wealthier nations to act out of goodwill; they are rights-holders who must be recognised as such, and crucially, they must have a genuine role in shaping the solutions. That shift in framing — from aid to accountability — is one of the most important things health journalists can help their audiences understand.

Are current health systems adequately prepared to respond to these impacts?

The honest answer is no. Health impacts from sea-level rise remain under-recognised, poorly integrated into national health planning, and largely treated as someone else’s problem. Adaptation efforts, where they exist at all, tend to prioritise physical infrastructure. The health, mental wellbeing, and cultural dimensions are consistently treated as secondary concerns, or rendered invisible entirely.

This is precisely why the Commission was formed. The scale of the challenge is being underestimated, and not just by governments. The financial sector and the international institutions specifically designed to hold the world accountable on climate change have been slow to reckon with what rising seas will actually cost in human health terms.

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What policy interventions should governments prioritise?

The starting point is integration. Sea-level rise and its health consequences need to be written explicitly into national health strategies and climate adaptation plans, backed where possible by legislation and regulation. Voluntary commitments have a poor track record; legal and regulatory frameworks create accountability.

Community-led and Indigenous-informed adaptation must be resourced, not just acknowledged in policy documents. Local knowledge and local priorities are not a soft add-on; they are often the most reliable guide to what will work in a given context.

There also needs to be honest policy provision for the hardest cases: legal, financial, and institutional mechanisms to support protection, compensation, and where it becomes unavoidable, managed retreat from the shoreline. This is politically difficult, but pretending it is not necessary helps no one.

Finally, these policies must be fair across generations. The decisions made now will determine the conditions into which children and those not yet born will arrive. That is not a rhetorical flourish; it is a genuine policy obligation that should shape how governments evaluate every intervention they consider.

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Given the transboundary nature of climate impacts, how important is international collaboration?

It is not just important; it is irreplaceable. Migration driven by displacement, disruptions to global food chains, the spread of infectious disease, the destabilisation of regional economies — these are not problems that stop at a coastline or a customs post. They require regional and global responses to match.

We are having this conversation at a moment when nationalism is rising, when multilateral frameworks are under pressure, and when misinformation and disinformation are actively undermining public understanding of the science and the stakes. That combination is dangerous, and it makes the case for strengthening international cooperation more urgent, not less.

The countries and communities most affected by sea-level rise are largely those least responsible for causing it and least equipped to manage it alone. An international architecture that fails to support them is not just morally inadequate; it is strategically shortsighted, because the consequences of inaction will eventually reach everyone.

I want to leave you with one thought. The story of sea-level rise is not a story about water. It is a story about people: about whose lives are considered expendable, whose knowledge is valued, whose children inherit a liveable world, and whose do not. We have the science. We have the solutions. What we have lacked is the sustained, courageous, human-centred storytelling that turns understanding into action. That is where you come in.

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A Warming Pacific Signals the Likely Return of El Niño in 2026

A likely El Niño event in 2026 could push global temperatures higher and disrupt rainfall patterns, says WMO.

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Warming surface waters in the Pacific Ocean—often invisible to the eye—can trigger El Niño events that reshape global weather patterns.
Warming surface waters in the Pacific Ocean—often invisible to the eye—can trigger El Niño events that reshape global weather patterns. Image credit: Ramon Perucho /Pexels

Climate models converge on a familiar disruption—with new uncertainties

A subtle but consequential shift is unfolding across the tropical Pacific. After months of relative calm, ocean surface temperatures are climbing again—an early signal that El Niño may return by mid-2026, according to the World Meteorological Organization.

The agency’s latest seasonal outlook suggests that the climate system is moving decisively away from neutral conditions. By the May–July window, models indicate a strong likelihood of El Niño forming, with further intensification possible as the year progresses.

“Climate models are now strongly aligned,” says Wilfran Moufouma Okia, pointing to growing confidence in forecasts that, just months ago, remained uncertain.

The quiet power of ENSO

At the centre of this shift lies the El Niño–Southern Oscillation (ENSO)—a vast, coupled ocean-atmosphere system that acts as one of Earth’s most powerful climate regulators. Its warm phase, El Niño, is defined by elevated sea-surface temperatures in the central and eastern equatorial Pacific.

Though cyclical, ENSO is far from predictable. Events typically emerge every two to seven years, lasting up to a year. Yet each iteration differs in intensity, spatial structure and downstream effects.

This variability is precisely what makes ENSO both scientifically fascinating and societally critical.

El Niño: A world tilted toward warmth

If El Niño does take hold, it will arrive in a climate system already primed for heat. The WMO projects a near-global prevalence of above-average land temperatures in the coming season, with especially strong signals across parts of North America, Europe and northern Africa.

El Niño tends to nudge global temperatures upward by releasing heat stored in the Pacific Ocean into the atmosphere. When layered onto long-term warming driven by greenhouse gases, the effect can be pronounced—as seen in 2024, which set new global temperature records.

Still, scientists are careful not to overstate the connection. Climate change has not been shown to increase the frequency of El Niño events. What it does appear to do is amplify their consequences—intensifying rainfall extremes, droughts and heatwaves in a warmer, more moisture-laden atmosphere.

Rainfall rearranged

El Niño’s influence extends well beyond temperature. It reorganises atmospheric circulation, shifting rainfall belts and storm tracks across continents.

Historically, El Niño years bring:

  • Wetter conditions in parts of South America, East Africa and the southern United States
  • Drier conditions across Australia, Indonesia and sections of South Asia

At the same time, the Pacific hurricane season often becomes more active, while the Atlantic basin tends to quieten.

Yet these are tendencies, not guarantees. Each event unfolds with its own geographical signature.

The forecasting challenge

Despite improving models, predicting ENSO remains notoriously difficult—particularly during the Northern Hemisphere spring. This period, known as the “spring predictability barrier,” is when forecasts are most prone to error.

“It is a transitional time for the climate system,” Okia explains. “Confidence improves after April, as the signal becomes clearer.”

For now, projections suggest that the developing El Niño could be moderate to strong, though the full trajectory will only become apparent in the months ahead.

Why it matters now

For policymakers, farmers and disaster planners, the implications are immediate. ENSO forecasts inform decisions on crop cycles, water storage, and emergency preparedness months in advance.

But there is a broader scientific significance, too. Each El Niño event offers a natural experiment—an opportunity to observe how a warming world responds to one of its most powerful internal oscillations.

If 2026 does usher in another El Niño, it will not simply be a repeat of past events. It will be a test of how climate variability and climate change now interact in real time.

And increasingly, those two forces are no longer easy to separate.

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Climate Change Could Turn Ocean Food into ‘Fast Food’, MIT Study Warns

MIT study finds climate change could shift phytoplankton to low-nutrient “fast-food” forms, impacting marine food webs and global nutrition.

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A warming ocean could shift phytoplankton from nutrient-rich to carbohydrate-heavy forms, reshaping marine food webs and global nutrition.

From nutrient-rich to energy-dense but less nourishing—climate change is transforming the composition of ocean food at its source.

Climate change could fundamentally alter the nutritional foundation of the ocean, with new research suggesting that warming waters may turn phytoplankton—the base of the marine food web—into a form of “fast food” with reduced nutritional value.

A study by researchers at the Massachusetts Institute of Technology (MIT), published in Nature Climate Change, finds that rising ocean temperatures could shift phytoplankton composition from protein-rich to carbohydrate-heavy, particularly in polar regions. This transformation could have cascading effects across marine ecosystems and ultimately impact human food systems.

A Shift at the Base of the Food Chain

Phytoplankton are microscopic, plant-like organisms that form the primary food source for a wide range of marine life, including krill, small fish, and jellyfish. These organisms, in turn, sustain larger species and top predators, including humans.

The study suggests that under continued greenhouse gas emissions through 2100, ocean warming will significantly alter the nutritional profile of these organisms. According to the researchers’ model, phytoplankton in polar regions could shift their balance of proteins to carbohydrates and lipids by approximately 20 percent.

“We’re moving in the poles toward a sort of fast-food ocean,” said lead author Shlomit Sharoni, an MIT postdoctoral researcher, in a media statement. “Based on this prediction, the nutritional composition of the surface ocean will look very different by the end of the century.”

Why Nutritional Composition Matters

While previous research has largely focused on how climate change affects phytoplankton populations, this study highlights a less explored dimension: their internal composition.

“There’s been an awareness that the nutritional value of phytoplankton can shift with climate change,” Sharoni said in a media statement, “But there has been very little work in directly addressing that question.”

Phytoplankton are composed of essential macromolecules such as proteins, carbohydrates, and lipids. These components determine their nutritional value for the organisms that consume them. Any imbalance at this foundational level can ripple through the entire food chain.

“Nearly all the material in a living organism is in these broad molecular forms, each having a particular physiological function, depending on the circumstances that the organism finds itself in,” said Mick Follows, professor at MIT.

Warming Oceans, Changing Chemistry

Using a combination of laboratory data and advanced ocean models, the researchers simulated how phytoplankton respond to changing environmental conditions such as temperature, light, and nutrient availability.

Under current conditions, phytoplankton cells are composed of slightly more than 50 percent protein. However, in future climate scenarios where global temperatures rise by around 3°C, this balance shifts significantly.

In polar regions, reduced sea ice allows more sunlight to penetrate the ocean surface, decreasing the need for light-harvesting proteins. At the same time, warmer temperatures and reduced ocean circulation limit the availability of nutrients such as nitrogen and iron.

As a result, protein levels in phytoplankton could decline by up to 30 percent, while carbohydrates and lipids increase.

Uneven Global Impacts

The effects of this shift are not uniform across the globe.

While phytoplankton populations in polar regions may increase, their nutritional quality is expected to decline. In contrast, subtropical regions could see a reduction in phytoplankton populations by up to 50 percent due to reduced nutrient availability.

In these regions, phytoplankton may adapt by moving to deeper waters, where they can access both light and nutrients, potentially increasing their protein content slightly.

Overall, however, the global trend points toward a more carbohydrate-heavy and less nutrient-dense ocean ecosystem.

Early Signs Already Visible

The researchers compared their model with real-world observations from Arctic and Antarctic regions. The findings indicate that this shift is already underway.

“In these regions, you can already see climate change, because sea ice is already melting,” Sharoni said in a statement. “And our model shows that proteins in polar plankton have been declining, while carbs and lipids are increasing.”

Follows added that the implications extend beyond marine ecosystems.

“It turns out that climate change is accelerated in the Arctic, and we have data showing that the composition of phytoplankton has already responded,” he said in a media statement. “The main message is: The caloric content at the base of the marine food web is already changing. And it’s not a clear story as to how this change will transmit through the food web.”

Implications for Marine Life and Humans

The long-term consequences of this shift remain uncertain. Some species may struggle with reduced protein availability, while others that rely on lipid storage could adapt more easily.

However, scientists warn that any disruption at the base of the marine food chain could have far-reaching impacts on biodiversity, fisheries, and global food security.

As the study highlights, climate change is not only altering how much food the ocean produces—but also how nutritious that food is.

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