The European Union's carbon border tax has put it on a collision course with developing economies. Here is how the mechanism works and why BRICS opposes it.

CBAM, the Carbon Border Adjustment Mechanism, began operating on January 1, 2026. It charges importers for the carbon dioxide released while making certain goods abroad.

It covers six sectors: iron and steel, aluminium, cement, fertilisers, hydrogen and electricity. From February 2027, importers must buy certificates for the embedded carbon, priced off the EU carbon market at roughly 75 euros a tonne.

The impact is sharp. Making a tonne of steel in India releases 2.54 tonnes of CO2, against a world average of 1.9 tonnes. That puts a paper carbon charge of about 190 euros on each tonne of Indian steel.

India sold $6.3 billion of CBAM-covered goods to the EU in 2024, mostly steel. On September 12, the 11-member BRICS bloc called such measures "unilateral, punitive, discriminatory and protectionist" in its New Delhi Declaration.

BRICS argues the tax ignores the principle that countries have common but differentiated responsibilities on climate, given their different histories of emissions.