 Today, our world is experiencing many problems because of global warming. What is the major reason for global warming? It is the greenhouse gas emissions right. Many international forums like UNFCCC, UNEP, EU are keep on trying to limit the greenhouse gas emissions through various initiatives. One among such is carbon border adjustment mechanism of European Union. Now, what is this carbon border adjustment mechanism to know what is this video? Let's understand about carbon border adjustment mechanism. Carbon border adjustment mechanism is a policy proposed by European Union. See, it is nothing but a measure to reduce greenhouse gas emissions. See right now, most of the industries in the European Union are covered by a program known as Emissions Trading System. This system charges polluters for the carbon dioxide they emit. Here, we are specifically talking about carbon dioxide because it is the principal greenhouse gas. This emission trading system is also known as cap and trade system and it originated with a QTOP protocol. Now let's understand how this emission trading system works. See, this system is authorized and regulated by government and it is conducted between companies. Here, each company will be given a maximum carbon pollution allowance and unused allowance can be sold to other companies. The idea behind this is to ensure that companies in aggregate do not exceed a baseline level of pollution. See, this baseline level of pollution will be reduced annually by the European Union countries. Currently, the price of those permits is nearly $60 per ton. So, this gives European companies strong incentive to cut greenhouse gas emissions. This is about emission trading system. Now moving on to see carbon border adjustment mechanism. See, under the carbon border adjustment mechanism, European Union is proposing to tighten the emission gap further. See, this will face out the number of free allowances it has long given to industries exposed to trade competition like steel. So, in simple words, the carbon border adjustment mechanism is a climate measure that is trying to prevent the risk of carbon leakage and it aims to help slash the European Union's overall greenhouse gas emissions 55% below 1990 levels by 2030 and the mechanism will also aims to help European Union to become a climate neutral continent by 2050. See the carbon border adjustment mechanism will also help reduce the risk of carbon leakage by encouraging non-EU producers to green their manufacturing processes. Here the term non-EU producers means the producers belonging to non-EU countries. Now let's see how does this carbon border adjustment mechanism works and how will affect the developing countries. Consider India. Now let's assume this. The European importers are importing steel from India. See to purchase steel from India, the European Union importers under the carbon border adjustment mechanism need to purchase carbon certificates equal to the carbon price. Here the carbon price is the price of carbon that was emitted by Indian steel manufacturing company while producing the steel. Now what is the case with India? India is still relying on traditional methods to produce steel that is it uses more coal in the steel production process. This process emits more carbon right so the European Union importers will have to pay more to purchase carbon certificates in their respective country. This discourages the import from India and obviously it impacts the India's growth. Now in contrast if the Indian steel company can prove that they have already paid a price in India for the carbon which was emitted in the production of steel then the corresponding cost for the European Union importer to purchase carbon certificates can be fully deducted. This encourages import from India. Now what is the problem? See India is not having such fully developed carbon pricing mechanism. So this also creates problem to the developing country like India and because of all these reasons the developing countries like Brazil, India, South Africa and China are opposing the carbon border adjustment mechanism of EU. I hope now you have got an idea about what is carbon border adjustment mechanism and how it is going to work. See these types of environmental topics are very very important for your preliminary examination. So make note of it and to learn more topics like this watch Hindu News Analysis of Shankarai Aceh Academy regularly. Thank you for listening.