Developing countries question whether such measures by rich nations are designed equitably and if they violate global anti-protectionist trade rules
In April this year, the Indian government spoke to its industries about how it is strategising to tackle an impending ‘carbon border tax’ on its exports to the EU, including iron ore and steel.
After two years of negotiating, the EU member states approved the Carbon Border Adjustment Mechanism (CBAM). The world’s first carbon border tax, that aims to equalise the price of carbon paid for EU products operating under its compliance-based carbon market, the EU Emissions Trading System (EU ETS) and the one for imported goods.
Importers in the EU will have to purchase so-called CBAM certificates to pay the difference between the carbon price paid in the country of production and the price of carbon allowances in the EU ETS. In the absence of a carbon price in the production country, the cost of certificates is likely to be decided by the carbon emitted beyond a threshold set by the EU. The country-group believes that the law will incentivise non-EU countries to increase their climate ambition and ensure that EU and global climate efforts are not undermined by production being relocated from the EU to countries with less ambitious policies.
In the beginning, the EU carbon border tax will only apply to imports of a few goods with a high-carbon impact, including cement, iron, fertilisers and steel. The tax will be gradually expanded to cover lower-carbon goods. Although the carbon border tax will begin in 2026, businesses, however, will need to produce an annual report detailing the goods imported in the previous year from October 1 2023. This means all manufacturers across all countries exporting their products to the EU will be expected to assess their production emissions.
The EU’s carbon border tax is not an isolated case. A flurry of announcements by developed countries has come to light in the recent past using climate change as a pretext to weaponise trade as an emission reduction tool. The US, Japan and China are also considering similar border taxes on trade. The latest, and perhaps clearest, indication that developed economies are closing ranks around a cross-border carbon taxation strategy came in the recently concluded G7 ministers meeting in Japan. The communique issued at the end of the meeting signals broad agreement in group around the legitimacy of trade policy instruments such as carbon taxes to facilitate emission reductions.
Beyond border taxes, the EU and US find themselves in competition with each other—the US through its Inflation Reduction Act is offering billions of dollars of subsidies to industries to lure them into doing business within the US. The EU fears that this could lead to industries shifting their base from the EU to the US. In response, the EU came up with their own green subsidies. While the two developed nations locked horns on the green subsidies, both the US and EU are also considering the imposition of new import tariffs on Chinese steel and aluminium on climate grounds, reigniting the talks of a global carbon club, a “carbon-based sectoral arrangement on steel and aluminium trade”. Target at China at the moment this tariff is likely to be imposed on all major steel producers.
States increasingly using climate change as a pretext for imposing new trade measures, have developing countries worried about their economies. While their potential positive impacts on the climate may be thin, developing countries are questioning whether these measures are legitimate and will achieve the stated goal of cutting global emissions, are designed equitably and whether they violate global anti-protectionist trade rules.
For instance, in the case of the EU carbon border tax, United Nations Conference on Trade and Development’s (UNCTAD) report states that the principle of the EU carbon border tax is “to impose on developing countries the environmental standards that developed countries are choosing”.
Not only does this go against the principle of common but differentiated responsibility (CBDR) enshrined in the Paris Agreement, the report says, “should the revenues from these mechanisms be used in developed countries, rather than be invested in climate adaption in developing countries, they would turn basic principles of climate finance on their head.”
One thing is clear, the impacts of these trade measures will be multi-pronged, which countries are in the process to assess. CarbonCopy looked at some of the larger debates around the scheme:
Impact on India and other developing countries
All countries are in the process of assessing how much of their exports would face carbon border tax and how much that tariff could be since the EU has proposed different mechanisms for taxation. For example, in steel, different furnace technologies used to produce it might attract different levels of taxation.
India’s total annual export to the EU in 2022 was about $8.2 billion for the products categorised for the carbon tax, mostly steel, aluminium and iron. Largely, this is the quantum of export that might be hit by the EU’s carbon tax.
While the Indian government is trying to figure out specific numbers, it believes the carbon tax, for now, will impact 2% of India’s total exports and the tariff could be between 25-35%, trade experts told CarbonCopy.
The carbon border tax on Indian imports could significantly impact the prices of Indian-made goods in the EU markets, thereby upsetting demand, two senior trade lawyers wrote in an Economic Times op-ed.
“It could heavily bear up the supply chain portion of industrial sectors such as automotive, construction, cement, packaging, and consumer appliances as costs for key inputs such as steel and aluminium may rise by 15-30% leading to a change in purchasing behaviour of end customers,” they wrote, forcing companies to take actions to maintain competitiveness.
The direct implications of EU’s proposed CBAM, however, marks only the beginning of a challenging trade regime for India’s government and export-oriented industry. Much more significant is the precedent it sets. More evidence of broad alignment among developed economies on the issue of cross-border carbon taxation came in the G7 Clean Energy Economy Action Plan, released relatively quietly as a sort of unofficial addendum to the G7 communique. The action plan expounds on the broad agreement among developed economies to work together on trade policy instruments that reflect the price of carbon in global supply chains (read: cross-border taxes), in effect highlighting the possibility of legislation similar to EU’s CBAM in other developed economies. Under this eventuality, one can expect the portion of India’s exports affected to skyrocket. Further, the implications are likely to disproportionately burden India’s export-oriented MSME sector. Meanwhile, any positive prospects from such interventions are likely to be concentrated among the fat cats of Indian industry. Those with requisite capital or the ability to raise capital to undertake emission reductions will implicitly enjoy better access to markets overseas.
At the time of writing, the Indian government is engaged in talks with the EU counterpart to eke out a resolution. Both parties discussed the issue in ministerial-level meetings in Brussels in May.
In the same month, the Indian government held a consultation with the affected industries to signal them to be ready for the carbon tax. The government told the industries that it will use bilateral channels to make the transition smooth as well as figure out if a waiver is possible for a section of the industries, likely small and medium enterprises which have little capacity to adopt newer technologies of production.
The Indian government’s stand is that the carbon tax is largely a trade issue and not an environmental one. It has openly talked about these measures being protectionist in nature.
In February this year, the Indian government in a written statement to the World Trade Organisation (WTO) raised an issue against nations using carbon border taxes to hamper export, the Business Standard reported. Calling these initiatives discriminatory and protectionist, India pointed to the concerns over the selective application of carbon border rules to “trade-exposed industries” like steel, aluminium, chemicals, plastics, polymers, chemicals and fertilisers. Which, the country said in its statement, reflects the underlying competitiveness concerns driving such measures.
India said that “carbon border measures that are being considered (by the European Union and the United States) for imposition on imported products, effectively amount to prioritising a singular policy of the importing country over those of exporting countries and will amount to imposing a unilateral vision of how to combat climate change.”
According to the WTO rules, it is mandatory that there is non-discriminatory treatment for the same products, irrespective of their production methods and such border measures can lead to “behind-the-border” protectionist practices, India said.
“Any measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade,” India’s submission to WTO said.
Not only India, but most developing and least developed nations that export their products to the EU are threatened by the carbon border tax. They believe that a blanket imposition of tax could mean that weaker nations have to share the mitigation burden of industrialised nations.
Ministers of Brazil, South Africa, India and China, representing the “BASIC” group, released a joint statement on November 15, 2022, and retaliated against the proposed carbon border tax. “Unilateral measures and discriminatory practices, such as carbon border taxes, that could result in market distortion and aggravate the trust deficit amongst parties must be avoided,” the statement said. BASIC countries, in the statement, called for a united solidarity response by developing countries to any unfair shifting of responsibility..from developed to developing countries.
“While all the BASIC countries have put in place their strategies to reduce carbon emissions in a phased manner, developing nations require predictable and appropriate support, including climate finance and access to technology and markets from developed nations to ensure and enable their sustainable development,” said the statement.
Trade offers an interesting and important avenue to pursue a climate agenda, and potentially it could be effective if measures are fairly and meaningfully designed to address the true drivers of climate change and not guised as protectionism, Olivia Rumble and Andrew Gilder, both trade policy experts, said about the EU and the US news of carbon border taxes, focusing on its impact on African nations.
The process of designing these measures needs to take into account the needs of developing countries, not impose unfair procedural burdens and associated costs on exporting states, follow a meaningful engagement process where developing country inputs are taken into account in the design, and where revenues and financial benefits are not used in a way that provides an unfair benefit to importing states at the expense of developing countries, they said.
However, little consultation or engagement has preceded these planned measures, and the initial designs suggest that they predominantly stand to benefit the EU and US.
Least Developed Countries (LDCs), especially African nations, are of the view that a blanket tax on carbon-intensive industries will most likely affect weaker economies and reduce their profit margins associated with goods from such industries. They suggest that the EU grant a delay in implementation for African countries given the unlikeliness of carbon leakage to Africa, and that CBAM proceeds should be used to foster low-carbon growth in LDCs.
The European Union, however, says that the carbon tax is designed in a way that it promotes cleaner and more efficient production in countries outside its boundaries. And that its tax is in full compliance with the WTO rules. “…We were of course very careful to ensure WTO compatibility of the initiative. And a keyword for this is ‘non-discrimination’. So we apply the same price of carbon to imported goods that we are going to apply also on our domestic producers,” Valdis Dombrovskis, the EU trade commissioner said after the ministerial meeting with the Indian counterpart.
Claiming WTO Rules, they have argued that it will not be possible to give an exemption to LDCs. In October this year, the EU Parliament pushed for all the revenue generated from certificate sales to be used to support LDC efforts to decarbonise, however, the latest EU Council and Parliament announcement makes no mention of the position on the use of revenues.
Negligible emission cuts but a fall in real incomes of poorer countries
The larger reason why developing countries are unsure of the EU’s carbon border tax making a dent in global warming causing emissions is the underlying numbers of its benefits and the underlying cost that the world, especially weaker nations, will have to pay.
A UNCTAD report that analysed the EU’s carbon border tax and its gains for the world at large said at $44 per tonne of CO2, the carbon border tax reduces global emissions further by only 0.1%. The EU’s own emissions reduce by only 0.9%. While achieving these meagre cuts, the carbon border tax forces the global real income to fall by $3.4 billion.
The benefits of the carbon border tax are also skewed in rich countries’ favour. Through the implementation of the tax, developed countries’ incomes rise by $2.48 billion while developing countries’ incomes fall by $5.86 billion.
EU’s freebies to its industries in the fight against the US’s green subsidies
The passage of the US Inflation Reduction Act (IRA) has had an impact on the final contours of the EU ETS and CBAM, especially on the slow phasing out of the free allocation of pollution permits. Together with the energy price crunch caused by the Russian war in Ukraine, it was frequently cited as a reason by the EU as to why these two specific pieces of legislation could not go ahead as originally envisaged.
Experts who have been studying the EU’s policies for decades worry that in the face of the US Inflation Reduction Act, the EU’s moves regarding the free emission allocations to its large industries, especially steel, under its ETS continuing till late this decade and slow introduction of CBAM could hurt global fight of slashing emissions rapidly for staying within 1.5°C limit.
For example, under the reformed Emissions Trading System (EU ETS) agreed at the end of 2022, heavy industries are required to slash their emissions more than in the past decade but remain nevertheless shielded from the price signal. These energy-intensive sectors–which have received about €200 billion in free pollution permits since the ETS was established–will continue to receive large amounts of their emission allowances for free until at least 2030 to the tune of over €400 billion, according to Carbon Market Watch (CMW), a global non-profit.
This is not it. The EU Innovation Fund is endowed with more than €38 billion financed from the auctioning of EU ETS allowances, and to be used to help companies decarbonise and transition to the green economy. In addition, a significant share of the EU’s €800-billion COVID-19 recovery package and the €300-billion RePowerEU package has gone or will go to EU-heavy industry. “Then, there is the protection against the bogeyman of carbon leakage afforded by the CBAM,” CMW said.
The EU sees the slow phase-out of free allocation together with the slow phase-in of CBAM, as a “breathing space for industry”.
What is in the making now with the industrial policy package will rather be an additional supply of oxygen to industry, as per the CMW. However, whether the industry will soon after that be able to breathe naturally and exhale something that is good for the climate is doubtful, the non-profit added.
The India Meteorological Department (IMD) had initially predicted the arrival of monsoon in Kerala by June 4 with an error margin of +/- 4 days. While the monsoon declared as having arrived to the Indian mainland on June 8, progress has been sketchy.
The westerly wind patterns made onset conditions conducive but cyclone Biparjoy, which has intensified over the Arabian Sea in the past week has hindered effective progress. The weak start to the monsoon has left around 80% of the districts in India with deficient or no rain in the first two weeks of the conventional monsoon period. Although the IMD has stuck with its “normal monsoon” forecast following the sluggish start, private forecaster Skymet Weather has cautioned that the monsoon is likely to remain weak over the next month.
The cyclone Biparjoy, which was originally expected to travel northwestwards towards Yemen and Oman, surprised observers by moving north-northeastwards, along India’s west coast. The cyclone, only the third in the last 60 years to hit India’s west coast, now lies close off the coast of Gujarat and is expected to hit on Thursday. With high wind speeds and lashing rains, the state is currently bracing for impact, with 37,000 people reportedly evacuated.
Southeast Asia swelters under relentless heat, power grids & water supply at risk
The record heat in Southeast Asia has led to disruptions in the crucial Hindu Kush-Himalayan water system. This new development poses a risk to economic development and energy security in 16 Asian countries. Home to 1.9 billion people, the basins of the 10 major rivers that flow from the Hindu Kush-Himalayan water towers support almost three-quarters of hydropower and 44% of coal-fired power in the 16 countries, which also include Afghanistan, Nepal and Southeast Asia. The heatwaves are expected to persist through June, putting power grids under strain, too. On May 29, Shanghai, China, endured its hottest day in May in 100 years at 36.7°C. Demand for electricity has surged in recent days, with China Southern Power Grid, one of the country’s two grid operators, seeing peak power load exceeding 200 million kilowatts.
Resilience of Earth system compromised, failing in seven out of eight key measures
A new study by the Earth Commission group of scientists has found that our planet, going forward, will face a growing crisis of water availability, nutrient loading, ecosystem maintenance and aerosol pollution. Climate change has pushed the world into the danger zone in seven out of eight newly demarcated indicators of planetary safety and justice. According to one of the lead authors, the earth is approaching tipping points, and we are getting to see increasing permanent damage to life-support systems on a global scale. For instance, a safe and just climate target is 1°C, but we have already adopted a target to keep global warming between 1.5-2°C above pre-industrial levels.
WMO approves global tracker for greenhouse gas emissions
In a landmark decision, the World Meteorological Congress approved a new greenhouse gas (GHG) monitoring initiative. The Global Greenhouse Gas Watch will fill critical information gaps and provide an integrated, operational framework to reduce heat-trapping gases that are fuelling temperature increases. In a press statement, the WMO said that it recognises, “the growing societal importance of greenhouse gas monitoring in support of improving our scientific understanding of the Earth System, and the urgent need to strengthen the scientific underpinning of mitigation actions taken by the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement.”
This year’s Bonn Climate Change Conference (SB58) didn’t get off to a good start as countries failed to reach a consensus on an agenda for the conference. Among the issues that were contentious were Global Stocktake (GST), mitigation and adaptation. This will be the first climate negotiation after the IPCC’s latest report warning governments to radically accelerate the reduction of oil, gas and coal use by 2030 and increase investments in renewable energy.
COP28 president Sultan Ahmed al-Jaber, however, made a strong statement at Bonn by declaring the “phase-down of fossil fuels is inevitable”. This is an upgrade from his previous statements calling for a scaling down of fossil fuel emissions and not the fuels themselves.
The conference will also see the first negotiations on the Just Transition Work Program agreed to at COP27. Around 2.1 million workers from the informal economy are demanding a just transition to a low carbon future at these formal discussions.
During a discussion on GST, India intervened to say it will not accept “prescriptive messages” on what should be included in nationally determined contributions. India, along with other developing countries, demanded the GST follow the principles of equity and historic responsibility. The first week saw disagreements between country delegations over the framing of mitigation and emission reduction responsibilities, and the inclusion of gaps in implementing climate action from the pre-2020 period, when the Paris Agreement came into force. In all, COP28, scheduled for the end of the year, is likely to be a fraught affair, if signs from the inter-sessional conference in Bonn are any indication.
EU formally notifies its carbon border tax at WTO
The implementation of the Carbon Border Adjustment Mechanism (CBAM) has been formally notified by the European Union at the World Trade Organisation (WTO). The EU told the WTO that it will now begin an information campaign, in which it will host online seminars, physical events and distribute guidance documents, among other initiatives. It has promised to offer direct assistance to third country operators and importers to ensure CBAM is followed.
This is bad news for India and its $8 billion worth of exports, especially in the aluminium and steel sectors. India is likely to discuss this impact at the next negotiating group meeting for the India-EU Free Trade Agreement (FTA) later this month. CBAM is likely to result in 20-35% additional tax on select Indian goods exported to the EU. India is keen to discuss ways to mitigate this impact at the FTA meet.
IMD chief elected as one of the vice-presidents of WMO
The director general of the India Meteorological Department (IMD) M Mohapatra was elected as one of the three vice-presidents in the World Meteorological Organization (WMO). The position is significant because the WMO monitors climate change, and mitigation measures such as early warnings and disaster preparedness. The post is part of the WMO’s Executive Council, which includes a general secretary, and a president, along with three vice-presidents. Mohapatra received 113 of the 148 votes during the elections held at the World Meteorological Congress in Geneva this week.
The Congress, meanwhile, agreed that climate change threatens human health. It endorsed a plan to upgrade health services in the next 10 years. The 2023-2033 Implementation Plan for Advancing Climate, Environment and Health Science and Services aims to effectively integrate climate, environment and health science and services across the world for the well being of those affected by extreme weather and other environmental risks.
Youth vs State climate case goes to trial for the first time in the US
Among the many climate cases brought by youth against US states, the first one to go to trial comes from the state of Montana. The 16 litigants, who were all between ages 2 and 18 when the lawsuit was filed in 2020, are looking to fix the accountability of the state in promoting fossil-fuel friendly policies and exacerbating the climate crisis. According to the plaintiffs, the state’s “systemic authorization, permitting, encouragement and facilitation” of fossil fuels contravenes a 1972 amendment to the Montana Constitution which ensures the protection and improvement of the environment.
The Centre Pollution Control Board (CPCB) published new guidelines for stone crushers, who are responsible for significant dust emissions leading to air pollution. The document outlines ways to measure emissions, control pollution as well as financial aspects of implementation. The proposed measures have been shared with state pollution control boards, too, which include installing telescopic chutes at the end of conveyor belts. Covering of materials during transportation and wetting of roads to suppress dust has been given prime importance. Water consumption must be sustainable and should be reused and recycled whenever possible. Consent to Establish (CTE) and Consent to Operate (CTO) are compulsory to minimise illegal crushers. The stone crushers’ unit must comply with emission norms under the Environment Protection Act, 1986. These units should obtain green belt development plan. Surprise inspections and health survey for workers on a half yearly basis conclude the proposal.
Smoke from Canada wild fires chokes New York, Massachusetts and Connecticut
More than 400 wildfires have led to mass evacuation across Canada. Persistent hot and dry conditions are fanning the flames of Canadian wildfires, which have scorched an area over 10 times larger than average, NASA tweeted. Scientists agreed that the key finding is the massive scale and persistence of the fires in general, which occur in Canada during May and early June, but not at the scale, which is across seven provinces, for over a month now. According to the Canada Drought Monitor, nearly all of the country’s 10 provinces have reported an abnormal level of dryness.
The states of New York, Massachusetts and Connecticut issued air quality alerts, with officials recommending that people limit outdoor activity as smoke from Canadian wildfires drifted south, turning the sky in some of the country’s biggest cities a murky brown and saturating the air with harmful pollution, reported the Guardian. New York City had the worst air quality of any big city in the world on Wednesday. Second-worst was Lahore. Delhi, which consistently ranks among the worst cities for air pollution, was sixth-worst, reported the Guardian.
Stock prices of major polluters fell after negative court verdicts: Study
A new study found that company share prices dropped after a fresh climate lawsuit or a negative court verdict, DTE wrote, citing The Guardian report. The researchers looked at how the market and the investors reacted to 108 lawsuit filings and verdicts against 98 companies listed in the United States and Europe from 2005 and 2021. They found that climate cases with unfavourable court verdicts reduced firm value by -0.41% on average. Companies that emit the most, termed ‘Carbon Majors’ in the study, were affected the most, the findings showed. Their value dropped by -0.57% following a new lawsuit against them and by -1.50% after an unfavourable judgment. These companies include those operating in energy, utilities and materials sectors.
Karnataka, Maharashtra, and Tamil Nadu led the way in open access installations as India added 518 MW of solar open access in the first quarter (Q1) of 2023. That’s over 68% more compared to the 308 MW installed in Q4 2022. However, on a year-over-year (YoY) basis, the installations declined by 37%.. The demand for open access in Karnataka remains high as the state’s IT sector and data centers constantly seek cost-effective energy sources, reported Mercom, adding that In Maharashtra, the country’s economic hub, open access solar is more viable since the retail tariff is among the highest. By March 2023, the cumulative installed solar open access capacity reached 8.3 GW.
The latest National Electricity Plan for 2022-32 (NEP) was released May 31 by Union Ministry of Power (MoP). The MoP revisits the NEP every five years to forecast the country’s power generation, transmission and demand trajectory for the coming decade.
The NEP announced plans to increase the overall contribution of non-fossil power generation. Its capacity will be hiked to 68.4% from 40% at present by 2031-32.
The NEP includes a review of the period 2017-22, detailed capacity addition requirements during the years 2022-27, and perspective plan projections for the years 2027-32.
India may cut import tax to meet domestic demand of solar panels
Reuters reported that India may slash its import tax on solar panels by half and is seeking a rollback in goods and services taxes on the devices to make up a shortfall in local output amid rising demand for renewable energy. Quoting unnamed sources, the newswire added that India’s renewable energy ministry has held talks with the finance ministry to approve its request to cut the import tax on solar panels from 40% to 20%. The report also said the government may make a recommendation to India’s Good and Services Tax (GST) Council to lower the GST on solar panels to 5%, from the 12% imposed in 2021.
India may add 5GW pumped hydro energy storage by 2028
The latest guidelines can be a shot in the arm for pumped hydro energy storage (PHES) projects, and kickstart around 5 GW of capacity addition over the next five fiscals. A Mercom report cited a CRISIL study that stated 2.8 GW is under construction and the rest may come up at potential sites, cumulating to 29.9 GW marked by the Centre.
The rising capacity share of renewable energy produced during non-peak hours is making investments in storage infrastructure an imperative. For instance, solar, which at present forms half of renewable generation, is produced during the daytime, while peak power requirement is during the evening (5-8 PM), which is when the solar power stored in hydro energy storage would fulfill the demand.
EU distributes $2-6 billion to back RE in 7 member countries
The European Union disbursed €2.4 billion (~$2.6 billion) to finance 31 projects in seven beneficiary member countries to support the modernisation of energy systems, reduction of greenhouse gas emissions in energy, industry, and transport, and improvement of energy efficiency, reported Mercom. The funds were generated through the European Emissions Trading System.
Romania received €1.1 billion (~$1.2 billion) to support the development of new renewable electricity production capacities, district heating systems, and replacing coal-powered energy with cleaner gas infrastructure. Czechia’s ENERGov Program, secured €1 billion (~$1.1 billion) to improve energy efficiency and savings in new public buildings. Bulgaria received €197 million (~$212 million) to modernise its electricity distribution grid. Croatia secured €88 million (~$95 million) to deploy photovoltaic and energy storage capacities to specifically serve public water service providers and Poland received €47 million (~$51 million) to support cogeneration for district heating.
Record solar-cell efficiency achieved at 32.5 %
The solar-cell technology institute Helmholtz Zentrum Berlin (HZB) developed a tandem solar cell that converts 32.5% of incident solar radiation into electrical energy—a world record. Tandem solar cells increase the efficiency of a solar cell by splitting the spectrum and optimizing each section of the spectrum, reports Electrek. The researchers used “an advanced perovskite composition with a very smart interface modification.”
Silicon is currently the standard material in solar cells, and perovskite and silicon have been developed separately as semiconductor materials for solar panels. Scientists see perovskite as having untapped potential, and they experiment with it by combining it with other materials.
On account of pre-buying before price rise from 1st June, the electric 2-wheeler high-speed scooter registrations in May 2023 surged 148% year-on-year and 57% month-on-month to 1,04,771 units while overall e-2W grew 11% year-on-year and 21% month-on-month. According to the Economic Times, compared to April 2023, when EV 2W penetration stood at 5.4%, the figure rose to 7% in May. The newspaper further reported that Ola Electric kept the top rank with 28,438 registrations in May 2023, holding a 27.1% market share. TVS Motors came in second with 19.3%, Ather Energy third with 14.6%, Bajaj Auto fourth with 9.5%, and Ampere fifth with 9.2%.
With new lowered subsidy standards set to take effect on June 1, 2023, the majority of EV OEMs anticipate raising prices by between ₹15,000 – ₹30,000 (about 10-15%). According to a statement from TVS Motor Company, depending on the model, the price of the iQube has increased by between ₹17,000 – ₹22,000. Numerous other businesses, including Ather, Ola, and Ampere, have also raised their pricing, but Hero Electric has made it clear that it will not do so.
Auto industry awaits clarity on PLI subsidy launched over a year ago
Auto players in the country are awaiting information on whether they would receive incentive funds for the first year of the ₹25,938 crore production-linked incentive (PLI) scheme, the Economic Times reported. Even though the scheme has been in effect for over a year, the delayed release of the standard operating procedure (SOP) for the scheme on April 27, 2023, which is required for products to be certified, has caused the issue. It’s only after the manufacturers get their products certified for the scheme after calculating the domestic value addition (DVA) as per the SOP, they will receive the incentive. Businesses are concerned that key changes agreed upon by the industry and government have not been incorporated into the final draft of the SOP.
Kerala to have special zone for EV industry
In Kerala, a special economic zone will be established for the electric vehicle (EV) industry. Minister for Law, Industries and Coir for the state, P Rajeeve, stated that the special zone will accommodate enterprises related to battery manufacture, technology development, and other related fields when he opened the annual summit of Electric Vehicle Owners Kerala (EVOK) in Kochi. Initially, there are 30 charging stations included in the first phase and eventually, there will be 100. He added that the government supports the establishment of more fast charging stations in the state by the Kerala State Electricity Board (KSEB) and private businesses. 30 fast charging stations will be installed by EVOK at various locations around Kerala. To ensure that EV owners may easily access the charging stations, a mobile application was also launched during the event.
Tata Group to build a lithium-ion cell factory in Gujarat
One of the biggest EV makers in the country, the Tata Group signed a deal to build a lithium-ion cell factory in Ahmedabad, Gujarat, with an estimated investment of about ₹130 billion ($1.58 billion). A joint statement on the MOU between Tata’s unit Agratas Energy Storage Solutions and Gujarat govt said that work on the plant could start in less than three years. The plant will be based in Sanand, a municipality in Ahmedabad. Initially, the manufacturing capacity will be 20 Gigawatt hours (GWh), which could be doubled in a second phase of expansion, the statement said.
Delhi highest electricity consumer at EV charging stations
According to data provided by the Central Electricity Authority (CEA), Delhi NCR accounted for over 55% of the country’s electricity consumption at the electricity vehicle charging stations. In 2022–2023, the NCR used 113.43 million kWhr of electricity, or more over half of the 205 million units (mu) used nationwide. Over 96% of India’s electricity consumption at EV charging stations happens at three regions —Delhi (NCR), Rajasthan (57.28 mu) and Gujarat (24.10 mu). Apart from Delhi, Rajasthan, and Gujarat, only two other states crossed 1 million units in consumption at EV stations, with West Bengal consuming 3 mu and Bihar, 2.55 mu.
US: EPA to scrap planned EV volumes from biofuel blending rule
According to Reuters, the Biden administration will drop a plan to include the electric vehicle industry in the U.S. biofuel blending programme and withdraw trade credits that could have been worth billions of dollars. The Environmental Protection Agency (EPA) — an independent executive agency of the US govt tasked with environmental protection matters — was earlier considering delaying the EV program. The White House is yet to release a final rule on the matter, slated for later this month. By abandoning the proposal, the administration moves further away from the goal that businesses like Tesla Inc. have advocated for, which would have permitted electric vehicles to earn approximately 2 billion credits under the U.S. Renewable Fuel Standard over the next two years. The EV programme would have helped President Joe Biden achieve his objective of electrifying the automotive sector in order to combat climate change.
Coal India Ltd (CIL), the world’s largest coal-producing company, raised the prices of its high-grade (G2 to G10) non-coking coal by 8% for the first time since 2018. With effect from May 31, the revised coal prices will be applicable for all its subsidiaries as well. “The Board has approved the price increase of 8 per cent over the existing notified prices for high-grade coal of grade G2 to G10. This will be applicable to all subsidiaries of CIL, including NEC for regulated and non-regulated sectors”, CIL said in a regulatory filing. The state-owned company is expecting to earn an incremental revenue of Rs 2703 crore for the balance period of FY2023-24. Shares of CIL slipped 2% in early trade on May 31 after the announcement.
Govt proposes to sell 3% stake in Coal India worth around ₹4,400 crore
In a regulatory filing on May 31, Coal India Ltd (CIL) announced that the Indian government is proposing to sell up to a 3% stake in CIL at a floor price of 225 rupees per share. The Offer for Sale (OFS) which was open for retail and non-retail investors on June 1 and 2, aimed to offload 9.24 crore shares representing a stake of 1.5 per cent in the company. At the closing price of ₹241.20 apiece on BSE on May 31, the sale of a 3% stake in Coal India would be worth around ₹4,400 crore.
India’s imports of Russian crude oil hit a new record: Data
India’s imports of Russian crude oil in May hit an all-time high as buyers stepped up to profit from discounted supplies. According to data from energy cargo tracker Vortexa, India took in 1.96 million barrels per day (bpd) of crude from Russia, accounting for almost 42% of the country’s total oil imports during May. India imported more oil from Russia (higher than the 1.74 million bpd) than it did from Iraq, Saudi Arabia, the UAE, and the U.S. combined. An Indian agency has stepped in to provide safety certification for most of Gatik Ship Management’s fleet, a major player in Russian oil transport.
Shale producers can now double crude output with this new technology
U.S. shale producers have been struggling to ramp up production in 2023 but oil major ExxonMobil believes that producers can manage to double crude output from their existing wells with the novel fracking technology. As per a report, Exxon Chief Executive Officer Darren Woods says, “Fracking’s been around for a really long time, but the science of fracking is not well understood.” The oil giant is currently working on two specific areas to improve fracking: 1) to frack more precisely along the well so that more oil-soaked rock gets drained, and 2) ways to keep the fracked cracks open longer so as to boost the flow of oil.
TotalEnergies renews production license for deep offshore block in Nigeria
Global oil and gas major TotalEnergies, operator of OML130 in Nigeria, has renewed its production license for deep offshore block with an additional 20 years. The OML130 block contains Akpo and Egina fields, which came into production in 2009 and 2018 respectively. The renewal is believed to enable the firm to improve its contribution towards the development of the West African country’s hydrocarbon resources for energy security.
In related news, the company has announced a new oil and gas discovery off the Nigerian coast.
QatarEnergy signs 15-year LNG supply deal with PetroBangla
QatarEnergy’s LNG trading arm, QatarEnergy Trading has signed a 15-year supply deal for liquefied natural gas (LNG) with Bangladesh’s state-owned PetroBangla for 1.8 million tonnes per annum (MTPA) starting in 2026. It currently delivers more than 3.5 million tons per annum of LNG to Bangladesh. The expansion will raise Qatar’s liquefaction capacity to 126 million tonnes per year by 2027, from 77 million at present.
Saudi Arabia to make deep cuts to oil outputs in July
OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, was in discussion to consider oil production cuts. Saudi Arabia has said that it will make a deep cut to its output in July by one million barrels per day (bpd), in addition to a broader OPEC+ deal to limit supply to the end of 2024. The production cuts will be made in July to support the depleting cost of crude after two earlier production cuts by members failed to push prices higher. OPEC+ already had in place oil output cuts of 3.66 million barrels per day, amounting to 3.6% of global demand.
Turkmenistan accepts US help to clean up methane leaks
The revelations of huge methane emissions from Turkmenistan’s oil and gas infrastructure and the international indignation that has followed has persuaded the country to ascent to international assistance to modernise and clean up its ageing energy infrastructure. After a conversation with American climate envoy, John Kerry, Ashgabat now seems set to join the Global Methane Pledge, with reports suggesting that bilateral funding from the US is on the table. The development came less than a week after the creation of Turkmenistan’s Intersectoral Commission for the Reduction of Methane Emissions and a deal is expected to be wrapped up before COP28.