Transitioning from PAT to a Carbon Trading System: Implications for India's Iron & Steel, Aluminium Sectors, and Cement under the EU's CBAM

Saon Ray () and Kuntala Bandyopadhyay ()
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Saon Ray: Indian Council for Research on International Economic Relations (ICRIER)

Indian Council for Research on International Economic Relations (ICRIER) Policy Paper from Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India

Abstract: The policy brief argues that while PAT has delivered incremental efficiency gains, it is insufficient to align industry with India's net-zero pathway or to mitigate CBAM-related trade exposure. Drawing on sectoral emissions data, international experience with carbon markets, and recent industrial decarbonization roadmaps, it highlights the potential of a well-designed CTS – robust monitoring, reporting, and verification (MRV), credible price signals, and alignment with technological transformation are needed to drive decarbonization in hard-to-abate sectors. The analysis underscores the importance of coupling carbon pricing with targeted incentives for low-carbon technologies and ensuring institutional coordination across climate, energy, and industrial policy domains.

Keywords: Carbon Border Adjustment Mechanism (CBAM); Perform; Achieve; and Trade (PAT) scheme; Carbon Trading Scheme (CTS); Trade competitiveness; Industrial decarbonization; Monitoring; Reporting and Verification (MRV); icrier (search for similar items in EconPapers)
Pages: 38 page
Date: 2026-01
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