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

Author

Listed:
  • Saon Ray

    (Indian Council for Research on International Economic Relations (ICRIER))

  • Kuntala Bandyopadhyay

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.

Suggested Citation

  • Saon Ray & Kuntala Bandyopadhyay, 2026. "Transitioning from PAT to a Carbon Trading System: Implications for India's Iron & Steel, Aluminium Sectors, and Cement under the EU's CBAM," Indian Council for Research on International Economic Relations (ICRIER) Policy Paper 64, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India.
    • Handle: RePEc:bdc:ppaper:64
    as

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    References listed on IDEAS

    as
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    3. Adam Jaffe & Richard Newell & Robert Stavins, 2002. "Environmental Policy and Technological Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 41-70, June.
    4. Easwaran Narassimhan & Kelly S. Gallagher & Stefan Koester & Julio Rivera Alejo, 2018. "Carbon pricing in practice: a review of existing emissions trading systems," Climate Policy, Taylor & Francis Journals, vol. 18(8), pages 967-991, September.
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