NEW DELHI, 31 OCTOBER 2026 — Calls are growing for a more structured international framework to address how carbon-border measures affect trade, industrial competitiveness and developing economies. An Indian climate-policy research institute has proposed strengthening the role of the United Nations climate process in examining these issues, alongside existing mechanisms under the World Trade Organization (WTO).
The Council on Energy, Environment and Water (CEEW) released its policy brief, Climate and Trade: Strengthening Cooperation through the UNFCCC, on 30 October. The study, authored by Simran Sukhija and Ravi Shankar Prasad, examines how governments could use the United Nations Framework Convention on Climate Change (UNFCCC) to address economic consequences linked to climate-related trade restrictions.
CEEW proposal links climate talks with trade restrictions
The brief feeds into an international debate over whether carbon-border mechanisms should be treated solely as environmental and trade tools or also considered alongside climate finance and responsibility for emissions reductions. It focuses on how governments could structure discussion of climate-related trade measures within UN processes rather than relying only on bilateral trade negotiations.
CEEW’s analysis draws on positions expressed during the 64th session of the UNFCCC Subsidiary Bodies in June 2026. The discussions reflected different approaches to how climate-related trade measures should be handled internationally.
Developing countries highlighted equity and the principle of common but differentiated responsibilities, alongside concerns that unilateral trade restrictions could affect industrialisation. European and other developed economies emphasised environmental objectives of carbon pricing and said there was a need to avoid duplicating existing WTO processes.
EU CBAM enters definitive phase for covered imports
The EU’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase on 1 January 2026. Under the scheme, carbon-related obligations apply to specified imports of steel, aluminium, cement, fertilisers, electricity and hydrogen.
The EU describes CBAM as a way to prevent carbon leakage by aligning carbon costs for covered imports with those borne by manufacturers in the European Union. Exporting countries have raised concerns about compliance requirements, including emissions verification and differences between national carbon-pricing systems.
Those concerns also include potential impacts on industrial development. They are considered particularly relevant for India, where steel and aluminium producers supply European manufacturers while operating under production and energy conditions that differ from those in the EU.
UNFCCC forum discussed alongside WTO mechanisms
CEEW argues that these disputes require a more structured international process rather than being handled exclusively through bilateral trade negotiations. The brief proposes making more systematic use of the UNFCCC to consider competing positions on climate-related trade measures.
One option described is a structured institutional mechanism aimed at assessing international effects of climate-related trade policies and enabling technical cooperation between governments. The proposed arrangement could draw expertise from the WTO, UNCTAD and other institutions involved in international trade and development.
The brief also calls for a formal climate-and-trade agenda within the UNFCCC framework. It points to international dialogues scheduled for 2027 and 2028, with a longer-term aim of bringing unilateral climate-related trade measures into more regular discussions.
Emissions verification costs tied to compliance information
For exporters in developing economies, CEEW identifies compliance demonstration costs as a central issue. Manufacturers supplying goods covered by CBAM must provide emissions information when European importers seek to use verified actual-emissions calculations.
The brief notes that firms without established monitoring systems may need additional spending on engineering studies, emissions inventories, software, independent assurance and staff training. It says these requirements can create particular burdens for smaller suppliers.
CEEW links treatment of climate-related trade measures with access to climate finance, industrial technology and technical assistance. It argues that developing economies should have opportunities to improve industrial emissions performance rather than face additional costs when exporting to markets with established carbon-pricing systems.
Carbon credit trading in India does not automatically remove CBAM duties
India is developing its domestic carbon-market framework through the Carbon Credit Trading Scheme. However, CEEW says the existence of a national scheme does not automatically exempt Indian production from EU CBAM requirements.
The brief states that under the EU framework, qualifying carbon costs actually paid in the country of origin may affect calculation of the border-carbon obligation, subject to applicable conditions and rules. It adds that recognition depends on required evidence and eligibility conditions being met.
CEEW distinguishes this from whether two emissions-trading systems are linked or formally recognised as equivalent. For exporters, it says the distinction affects how domestic carbon-pricing payments may be treated and what documentation European buyers may require.
Regional exporters including Serbia face similar institutional questions
The debate extends beyond India to industrial exporters including Türkiye, Ukraine, Serbia and Montenegro. CEEW says many countries across Africa, Asia and Latin America are building emissions-monitoring systems or domestic carbon-pricing arrangements while seeking continued access to European markets.
A stronger international framework is described as potentially supporting more consistent emissions-accounting methodologies, technical cooperation and capacity-building. The brief also states it would not automatically eliminate differences between national carbon prices or remove legal obligations applying to EU importers.
The commercial consequences would depend on whether participating governments agree on concrete measures affecting verification, financing or treatment of carbon costs paid outside the EU. CEEW presents its recommendation as a research proposal rather than an adopted position by the Indian government or an agreed UN negotiating mandate.
CEEW frames CBAM discussions as part of wider climate diplomacy
The brief describes CBAM discussions as extending beyond customs compliance into international climate diplomacy. It notes that the European Union views carbon-border pricing as limiting emissions leakage while maintaining effectiveness of its domestic climate policy.
Certain developing countries are described as viewing CBAM as an additional trade cost imposed by economies with greater financial and technological capacity. CEEW says these positions are increasingly shaping discussions on international governance of industrial decarbonisation.
For now, CEEW characterises its research as providing a policy framework for possible future negotiations without changing the legal status of existing carbon-border charges. It raises a longer-term question about whether the UN climate system can develop a common approach to carbon-border measures that maintains climate objectives while addressing costs and competitiveness concerns of exporting economies.