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The Climate Perspective of the India–EU Landmark FTA

The India–EU free trade agreement is more than a market-opening deal. It marks a strategic shift where climate policy, geopolitics, and global trade converge across nearly a third of the world’s population.

Dipin Damodharan

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The Climate Perspective of the India–EU Landmark FTA
European Council President António Costa, Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen

The long-awaited free trade agreement (FTA) between India and the European Union is being billed as a trade breakthrough. But viewed through a climate and geopolitical lens, it is also a signal moment in how two major economic blocs are attempting to stabilise growth, supply chains, and decarbonisation pathways in a fractured global order.

According to a note by Climate Trends, the FTA arrives at a time when tariffs, carbon taxes, and industrial policy are increasingly weaponised, making the deal as much about strategic alignment as about market access.

The scale of the agreement is hard to miss. Together, India and the EU touch the lives of nearly 1.9 billion people — about 1.4 billion in India and close to 500 million in the EU. Combined, they account for around 30 percent of the world’s population and roughly 25 percent of the global economy, making this one of the most consequential bilateral trade pacts in recent years.

India and the EU together account for 11–12 percent of global trade

In trade terms, the partnership is already substantial. India and the EU together account for 11–12 percent of global trade, amounting to nearly $11 trillion out of an estimated $33 trillion global trade volume. Bilateral trade between the two currently stands at €124 billion ($136 billion) and is expected to double within five years.

India’s Commerce Minister Piyush Goyal and Ursula von der Leyen, President of the European Commission, have described the agreement as the “mother of all deals”.

Trade, geopolitics and climate converge

Beyond headline numbers, the agreement reflects a deeper geopolitical recalibration. With renewed uncertainty around US trade policy and rising economic nationalism globally, both India and the EU are seeking predictable, rules-based partnerships.

For India, the FTA provides diversification away from volatility in Western markets while strengthening its role as a manufacturing alternative under “China Plus One” strategies. For the EU, it secures long-term access to one of the world’s fastest-growing major economies at a time when supply chain resilience and strategic autonomy are becoming policy imperatives.

“The deal signifies strategic alignment at a moment of high geopolitical uncertainty,” said Aarti Khosla, Founder-Director of Climate Trends. “The EU has been the reigning power and India is a rising power. Their coming together, especially on climate goals, green industry and clean technology, signals where money and markets are going,” she said, adding that the agreement offers renewed space for multilateralism shaped by strategic choices rather than pure ideology.

Climate quietly embedded in the trade pact

While the FTA is not explicitly framed as a climate treaty, climate considerations run through the broader India–EU relationship. Cooperation under the Clean Energy and Climate Partnership (CECP), signed in 2016, continues across renewable energy, energy efficiency, and clean hydrogen.

Green hydrogen, in particular, has emerged as a key point of convergence. India has positioned itself as a potential exporter to Europe, backed by a growing domestic electrolyser manufacturing ecosystem. India is targeting $10 billion in foreign direct investment for 10 GW of electrolyser capacity by 2030, a scale that could help meet Europe’s future clean fuel import requirements, the Climate Trends note highlighted.

This cooperation is further reinforced through the EU–India Trade and Technology Council (TTC), which focuses on clean-energy technologies, regulatory interoperability, and joint research and development. India’s presence at European Hydrogen Week in Rotterdam last year underscored these ambitions.

Carbon borders and friction points

One of the most sensitive issues shaping the climate-trade interface is the EU’s Carbon Border Adjustment Mechanism (CBAM) — the world’s first carbon tariff on imports. Once fully implemented in 2026, CBAM could impose costs of $2–4 billion annually on Indian exporters in carbon-intensive sectors.

According to the Climate Trends note, while the FTA does not neutralise CBAM, it creates negotiating space. India has secured a most-favoured nation clause, ensuring it will not be treated less favourably than other trading partners under EU carbon rules. The agreement also includes support for Indian exporters to meet climate-related trade requirements, including cooperation on recognising India’s carbon pricing and verification systems, and assistance to cut emissions.

Beyond tariffs

The strategic significance of the deal lies in its long-term implications. From New Delhi’s perspective, the FTA could boost exports by up to $50 billion by 2031, particularly through services and diversified markets. For Brussels, it offers a pathway to build clean-energy industries without creating concentrated dependencies.

“The EU is already India’s largest trading partner. Conclusion of the FTA, long in the making, is a landmark moment,” said Madhura Joshi, Programme Lead – Asia at E3G. “It can be the building block for something more ambitious — a strategic partnership that goes beyond trade, providing a stable anchor for growth, resilience, and energy security,” she said. “A deeper partnership with clean technology as its foundation would strengthen global clean-energy supply chains,” she added.

Backing trade with finance, the European Investment Bank has already committed €2 billion towards climate-resilient infrastructure in India through the Coalition for Disaster Resilient Infrastructure, signalling that the EU is willing to support its trade ambitions with patient capital.

Taken together, the India–EU FTA represents more than a tariff-cutting exercise. As the Climate Trends note argues, it is both a hedge against protectionism and a springboard for climate-integrated growth — one that links nearly a third of humanity and a quarter of the global economy in an era of uncertainty.

Why the India–EU FTA Raises Eyebrows in a Trump World

While the India–EU free trade agreement is not explicitly targeted by Washington, it intersects with several trade and climate positions closely associated with Donald Trump, making it strategically relevant in the event of a second Trump presidency.

1. A powerful bloc outside US leverage

Together, India and the EU represent nearly 30 percent of the world’s population, around 25 percent of the global economy, and over 11 percent of global trade. Large, rules-based economic alignments formed outside US leadership have historically drawn Trump’s opposition, as they dilute Washington’s ability to use bilateral pressure.

2. Reduced impact of US tariff threats

Trump has relied heavily on tariffs as a negotiating and enforcement tool. The India–EU FTA gives both partners greater market diversification, reducing dependence on the US and limiting the effectiveness of future tariff-based pressure.

3. Climate-linked trade rules Trump opposes

The agreement unfolds alongside the EU’s Carbon Border Adjustment Mechanism (CBAM), which links climate policy directly to trade. Trump has consistently criticised carbon pricing and climate regulations, viewing them as economic constraints. India’s willingness to engage with EU climate-linked trade norms signals a shift towards a global trade architecture shaped by climate rules — even without US leadership.

Why it matters

The India–EU FTA reflects a move toward a multipolar, climate-integrated trade order. While Trump may not challenge the deal directly, its underlying logic runs counter to his preference for bilateral, tariff-driven negotiations — and could face friction in a more protectionist global environment.

Dipin is the Co-founder and Editor-in-Chief of EdPublica. A journalist and editor with over 15 years of experience leading and co-founding both print and digital media outlets, he has written extensively on education, politics, and culture. His work has appeared in global publications such as The Huffington Post, The Himalayan Times, DailyO, Education Insider, and others.

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Could Global Warming Make Greenland, Norway and Sweden Much Colder?

A Nordic Council report warns that global warming could make Norway colder if the Atlantic ocean circulation collapses, triggering severe climate impacts.

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Could Global Warming Make Greenland, Norway and Sweden Much Colder? Nordic Report Says Yes
A new Nordic report warns global warming could drive parts of northern Europe into far colder conditions if a major Atlantic ocean current collapses. Hamnøy, Norway. Image credit: Petr Slováček/Pexels.

Global warming is usually associated with rising temperatures—but a new Nordic report warns it could drive parts of northern Europe into far colder conditions if a major Atlantic ocean current collapses.

Greenland, Norway and Sweden could experience significantly colder climates as the planet warms, according to a new report by the Nordic Council of Ministers that examines the risks linked to a possible collapse of the Atlantic Meridional Overturning Circulation (AMOC).

The report, A Nordic Perspective on AMOC Tipping, brings together the latest scientific evidence on how global warming is slowing the AMOC—one of the world’s largest ocean circulation systems, responsible for transporting heat from the tropics to the North Atlantic. While a full collapse is considered unlikely, the authors warn that it remains possible even at relatively low levels of global warming, with potentially disruptive consequences for northern countries.

The Reversal

If the circulation were to weaken rapidly or cross a tipping point, the report notes, northern Europe could cool sharply even as the rest of the world continues to warm. Such a reversal would have wide-ranging effects on food production, energy systems, infrastructure, and livelihoods across the Nordic region.

“The AMOC is a key part of the climate system for the Nordic region. While the future of the AMOC is uncertain, the potential for a rapid weakening or collapse is a risk we need to take seriously,” said Aleksi Nummelin, Research Professor at the Finnish Meteorological Institute, in a media statement. “This report brings together current scientific knowledge and highlights practical actions for mitigation, monitoring and preparedness.”

A climate paradox

The AMOC plays a central role in maintaining the relatively mild climate of Northern Europe. As global temperatures rise, melting ice from Greenland and increased freshwater input into the North Atlantic are expected to weaken this circulation. According to the report, such changes could reduce heat transport northwards, leading to colder regional conditions—particularly during winter—even under a globally warming climate.

Scientists caution that the impacts would not simply mirror gradual climate change trends. Instead, an AMOC collapse could trigger abrupt and uneven shifts, including expanded sea ice, stronger storms, altered rainfall patterns, and rising sea levels along European coastlines. Some of these impacts would occur regardless of when or how quickly the circulation weakens.

The report also highlights global ripple effects. A slowdown of the AMOC could shift the tropical rain belt southwards, with potentially severe consequences for monsoon-dependent regions such as parts of Africa and South Asia, underscoring that AMOC tipping is not a regional concern alone.

Calls for precaution and preparedness

Given the uncertainty surrounding when—or if—the AMOC might cross a critical threshold, the report urges policymakers to adopt a precautionary approach. It stresses that any additional global warming, and prolonged overshoot of the 1.5°C target, increases the risk of triggering a collapse.

Key recommendations include accelerating emissions reductions, securing long-term funding for ocean observation networks, and developing an early warning system that integrates real-world measurements with climate model simulations. The authors argue that such systems should be embedded directly into policymaking to enable rapid responses.

The report also calls for climate adaptation strategies that account for multiple futures—including scenarios in which parts of Northern Europe cool rather than warm. It emphasises that AMOC collapse should be treated as a real and significant risk, requiring comprehensive risk management frameworks across climate, ocean, and disaster governance.

Science driving policy attention

The findings were developed through the Nordic Tipping Week workshop held in October 2025 in Helsinki and Rovaniemi, bringing together physical oceanographers, climate scientists, and social scientists from across Nordic and international institutions. The initiative was partly motivated by an open letter submitted in 2024 by 44 climate scientists, warning Nordic policymakers that the risks associated with AMOC tipping may have been underestimated.

By consolidating current scientific understanding and translating it into policy-relevant recommendations, the report aims to shift AMOC collapse from a theoretical concern to a concrete risk requiring immediate attention.

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Excessive Reliance on Carbon Removal Could Breach Legal Guardrails, Warn Oxford Experts

Oxford study warns excessive reliance on carbon dioxide removal could breach legal climate guardrails and undermine net zero goals

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Excessive Reliance on Carbon Removal Could Breach Legal Guardrails, Warn Oxford Experts
Image credit: Benjamin Eriksen/Pexels

A new interdisciplinary study led by researchers from the University of Oxford has warned that excessive reliance on carbon dioxide removal (CDR) technologies could breach emerging legal guardrails and potentially undermine global net-zero climate goals.

The study examines the international legal framework governing how countries plan to use carbon dioxide removal to meet climate targets. Researchers argue that while CDR will be an essential part of climate action, overdependence on future removal technologies — instead of cutting emissions immediately — could create significant legal and climate risks.

Carbon dioxide removal refers to processes that remove CO₂ from the atmosphere and store it so it no longer contributes to global warming. Methods include nature-based solutions such as tree planting, as well as emerging engineered technologies.

The study analyses how international legal principles, including the harm prevention principle and due diligence obligations clarified by the International Court of Justice’s 2025 Advisory Opinion on Climate Change, apply to national climate strategies. According to the researchers, these legal standards require countries to pursue deep and rapid greenhouse gas reductions while also taking precautionary approaches toward large-scale CDR deployment.

Applying these standards could limit countries’ ability to rely on strategies that risk overshooting the Paris Agreement’s 1.5°C temperature target, which nations are legally obligated to minimise in both magnitude and duration.

“In an uncertain world, some states are gambling on the future deployment of CDR techniques to meet their climate targets in place of more ambitious near-term mitigation measures. This approach risks overshooting the Paris temperature goal and causing serious, pervasive and irreversible climate harms. Our findings emphasise that near-term emissions reductions and feasible CDR strategies are not only ethical imperatives – they are legal requirements,” Professor Lavanya Rajamani said in a media statement.

Researchers also highlighted that many current national climate plans rely on assumptions about future technologies that may not materialise at scale.

“States increasingly plan to meet their climate targets through large-scale removals, yet many of these plans rest on unclear assumptions and technologies that may not materialise. Legal guardrails are essential to avoid passing climate risks on to future generations and to ensure that CDR does not substitute for the emissions reductions urgently needed now,” Dr Rupert Stuart-Smith said.

The study identifies two major types of legal guardrails: substantive and procedural. Substantively, countries must prioritise emissions reductions over removals, ensure CDR strategies are technically and socially feasible, minimise environmental and social harm, and avoid excessive dependence on carbon removals conducted in other countries through international credits.

Procedurally, countries must provide transparent information on projected emissions and removals, clearly distinguish between different CDR methods, and disclose assumptions used in long-term climate planning.

The authors points out that international law already provides a strong framework to assess national climate strategies, and that many existing plans may fall short of these requirements. Strengthening alignment with legal standards will require greater focus on immediate emissions cuts and improved transparency and realism in how carbon removal is integrated into climate strategies.

The study, Legal guardrails on states’ dependence on carbon dioxide removal to meet climate targets, is published in the journal Climate Policy and involves collaboration between researchers from the University of Oxford, Imperial College London, the International Institute for Applied Systems Analysis, Humboldt University of Berlin, and the Potsdam Institute for Climate Impact Research.

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A Green Turn with Gaps: India’s Budget Backs Clean Tech but Skips Climate Adaptation

India’s Budget 2026–27 doesn’t shout climate ambition—but it hardwires it into clean manufacturing, carbon capture and energy supply chains, quietly reshaping the country’s green economy from the inside out.

Dipin Damodharan

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Clean Energy, Carbon Capture—and a Quiet Omission: Reading Budget 2026–27 Through a Climate Lens
India’s Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman along with the Minister of State for Finance, Pankaj Chaudhary as well as her Budget Team of the Ministry of Finance before presentation of the Union Budget-2026 at Parliament House, in New Delhi. Image credit: PIB

India’s Union Budget 2026–27 may not carry a standalone climate chapter, but its green intent runs deep through the fine print. From carbon capture and battery storage to critical minerals and clean manufacturing, the budget signals a strategic shift: climate action is no longer framed as an environmental add-on, but as industrial policy and economic risk management rolled into one.

Presented by Finance Minister Nirmala Sitharaman on February 1, 2026, the budget places clean energy and climate-aligned manufacturing at the heart of India’s growth narrative. With a GDP growth target of around 7 percent and a sharp focus on fiscal discipline, sustainability is being embedded into supply chains, cities, transport and finance—quietly but deliberately.

Carbon Capture Takes Centre Stage

The most striking climate-linked announcement is the Rs 20,000 crore allocation over five years for Carbon Capture, Utilisation and Storage (CCUS), aimed at hard-to-abate sectors such as power, steel, cement, refineries and chemicals. For the first time, industrial decarbonisation is being backed at scale through public finance, signalling recognition that renewables alone cannot carry India’s net-zero journey.

As Arunabha Ghosh of CEEW notes, the budget’s “prioritisation of carbon capture, utilisation and storage across power, steel, cement, refineries, and chemicals” places these sectors squarely at the centre of India’s long-term climate pathway. This marks a decisive move from aspiration to infrastructure.

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Building the Clean Energy Ecosystem

The energy transition is supported by coordinated allocations across key ministries: Rs 32,915 crore for New and Renewable Energy, Rs 29,997 crore for Power, and Rs 24,124 crore for Atomic Energy. Customs duty exemptions have been extended to lithium-ion cells used in battery energy storage systems, inputs for solar glass manufacturing, and nuclear power project imports till 2035.

Aarti Khosla of Climate Trends captures this shift succinctly: “Coupled with the exemption given to battery manufacturing, VGF for BESS and grant to CCUS, the focus of the government is rightly tilting towards building an energy transition ecosystem.” She adds that continued reforms in power distribution could bring “360-degree improvement in India’s green energy supply chain.”

At the household level, the PM Surya Ghar Muft Bijli Yojana receives a major boost, reinforcing decentralised clean energy as a pillar of inclusive growth. Rooftop solar is increasingly being positioned not just as a climate solution, but as a competitiveness tool for small businesses and urban households.

Supply Chains, Not Just Solar Panels

Rather than headline-grabbing renewable capacity targets, Budget 2026–27 leans into industrial resilience. Duty exemptions for critical minerals processing equipment, solar glass inputs, and battery storage components underline a focus on domestic value addition.

Energy analyst Duttatreya Das of Ember observes that while there are “no big-ticket announcements for renewables,” the continued duty exemptions and manufacturing reforms are expected to “quietly strengthen clean energy supply chains.” This reflects a broader policy philosophy: competitiveness before capacity, foundations before scale.

Rare Earth Corridors and incentives for mineral-rich coastal states further indicate a push to secure upstream inputs essential for EVs, batteries, wind turbines and electronics—areas where geopolitical vulnerabilities are growing.

Clean Mobility and Greener Cities

Sustainability also shapes transport and urban planning. The budget proposes 20 new national waterways over five years, aims to double the share of inland and coastal shipping by 2047, and identifies seven high-speed rail corridors as environmentally sustainable growth connectors. Municipal finance incentives—such as Rs 100 crore support for cities issuing large bonds—open space for green urban infrastructure, including pollution control and climate-resilient services.

Labanya Prakash Jena,Director, Climate and Sustainability Initiative, highlights that such incentives can catalyse “green municipal bonds, particularly for pollution control and urban environmental projects,” linking fiscal reform directly with urban sustainability.

The Gaps That Remain

Despite these advances, the budget remains notably silent on climate adaptation. Heat stress, floods, water scarcity and climate-resilient agriculture receive no scaled-up fiscal roadmap. Vibhuti of IEEFA points out that while support for decentralised renewables and bioenergy has increased, spending on transmission and energy storage has stagnated or declined—areas that are “not optional but indispensable” for a high-renewables grid.

The absence of strong EV demand-pull measures and limited risk-sharing instruments for private capital also signal unfinished business in India’s clean transition.

A Budget of Signals, Not Slogans

Budget 2026–27 is not a climate manifesto. Instead, it is a signal budget—one that rewires incentives, de-risks clean manufacturing, and treats decarbonisation as an economic strategy rather than a moral appeal. Its strength lies in industrial tools and fiscal realism; its weakness, in adaptation and social resilience.

Whether this quiet green turn translates into measurable emissions reductions and climate resilience will depend on execution, state capacity, and private investment. But one thing is clear: India’s clean-tech transition has now entered the core of its economic planning.

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