Page 138 - CW E-Magazine (26-12-2023)

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POLICY U-TURN EMISSION REDUCTION
Government lifts ban on use of sugarcane juice ‘EU’s CBAM to hurt global trade, not to stop carbon

to produce ethanol leakage’

The government has reversed its deci- tonnes of diversion of sugar. It will be syrup to make ethanol during the ethanol The decision of the European Union of production. CBAM will not reduce to earn considerable revenue to fund its
sion to ban the use of sugarcane juice for up to sugar mills and the oil marketing supply year (November 2023 to October (EU) to impose a carbon tax on certain global emissions, as it does not stop im- budget; and to operationalise the tril-
making ethanol as it allowed utilisation companies (OMCs) to decide the share,” 2024) but permitted using B and C heavy sectors like metals from 2026 will only porting high-emission goods, but merely lion-dollar subsidy initiative.
of the juice as well as B-heavy molasses Union Food Secretary, Mr. Sanjeev molasses and foodgrains subject to a hurt global trade and not help in con- taxes them,” he said adding, “The
to produce the green fuel but capped the Chopra said. monthly review. The government’s deci- taining carbon emissions, according to CBAM will hurt global trade and not “If this disrupts world trade, the
diversion of sugar at 17-lakh tonnes. For sion came after concerns of lower produc- New Delhi-based think-tank, Global stop carbon leakage.” EU is okay. The EU needs this money
now, the capping will be in place for the Soon after the government had banned tion of sugarcane due to erratic weather Trade Research Initiative (GTRI). to continue to provide substantial sub-
2023-24 supply year that ends in October the use of cane juice for ethanol production conditions and rising prices of sugar in the The CBAM seeks to put a “fair” sidies to its fi rms and farmers. For in-
next year. “with immediate effect” on December 7, domestic market. European Commissioner, Mr. Wopke price on carbon emitted during produc- stance, the European Green Deal aims
there were protests in Maharashtra and Hoekstra’s recent statement at the UN tion of carbon intensive items in non- to raise €1-trillion in the next ten years,
The latest decision came a week after even Deputy Chief Minister Ajit Pawar Amid the demand from the industry Climate Summit that the main goal of EU countries, when they are imported with €503-bn coming from the EU
the government prohibited the use of had said that he had taken up the issue to allow diversion of another 13-14-lakh the Carbon Border Adjustment Mecha- into the bloc. Since the EU companies budget. The new regulations can pro-
sugarcane juice and sugar syrup for with Union Home Minister Amit Shah. tonnes of sugar for ethanol production this nism (CBAM) was to stop carbon already face a carbon price for their emis- vide a full share of the EU budget,”
making ethanol, amid the demand from The sugar industry had also raised year, the food secretary said that they will leakage was fl awed, GTRI said. While sions, the CBAM seeks to level the fi eld. Mr. Srivastava said.
the sugar and sugar-based distillery concerns as nearly three dozen distilleries review the situation in a month or two. the CBAM taxes would hit global trade
industries to review the order. were only sugarcane-based. The industry has also sought the revision signifi cantly, emission reduction would While the transition period for The EU regulation imposes a higher
in prices of ethanol made from B-heavy be minimal, the GTRI analysis said. CBAM began on October 1, 2023, tax on products from poor countries,
“The fl exibility has been given for On December 7, the government had and C-heavy molasses, the by-products of wherein importers need to report the the analysis noted. “Let us assume the
using both sugarcane juice and B-heavy directed all mills and distilleries to imme- sugar, to improve the fi nancial health of It added that fossil fuels contribute embedded carbon content in their trading price for a tonne of carbon di-
molasses within an overall cap of 17-lakh diately stop using sugarcane juice or sugar the millers. to 90% of greenhouse and 75% of car- imports on a quarterly basis till the end oxide emission at the EU Emission
bon emissions and if decarbonisation is of 2025, the carbon tax regime will Trading System (ETS) is $90. The
L&T Technology Services and BP ink engineering the goal, the EU should heavily tax fos- kick in from January 2026. price in Australia is $35, China $5, and
India zero. CBAM tax in the EU will
services partnership sil-fuel imports. According to the UNCTAD Trade be the difference between the EU and
“Carbon leakage is the phenomenon and Development Report 2021, CBAM exporting countries’ carbon prices. So
L&T Technology Services Ltd. of companies moving production to is estimated to reduce global carbon Australian exporters will pay the least
(LTTS), a leading provider of digital countries with weaker environmen- emissions by not more than 0.1%, said tax at $55 per tonne. Exporters from
engineering and R&D services, has inked tal regulations to avoid paying carbon Mr. Srivastava. China and India will pay $85 and $90,
a multi-year engineering services partner- prices in the EU. This objective could respectively,” it explained.
ship with UK’s energy giant, BP. have been achieved by merely tax- The think-tank in its report claimed
ing imports from the EU fi rms, which that the real reasons the EU introduced Commerce Minister Piyush Goyal
“The relationship will leverage over have shifted production to other coun- CBAM are to protect uncompetitive had earlier said that, if needed, India
2 decades of LTTS’ experience in engi- tries. However, the EU chose to tax all local industries from cheaper imports; will retaliate against CBAM.
neering, manufacturing services, digital world imports through CBAM,” GTRI
and enterprise data management and co-founder, Mr. Ajay Srivastava said. Tuticorin Alkali Chemicals halts
address some of the most signifi cant chal-
lenges for BP globally. Together, both He argued that a fi rm may relocate operations due to fl oods
the companies intend to focus on im- to another country to access better tech-
proving operational excellence. The en- nology, cheap labour, tax incentives,
gagement areas are expected to include subsidised land and power, and not just Tuticorin Alkali Chemicals and tions were due to fl oods in the Southern
Engineering for Projects, turnarounds, laboration, Mr. Amit Chadha, CEO & through digital enablement. Our proven to evade carbon taxes. Fertilizers Ltd. has said in a regulatory districts of Tamil Nadu.
maintenance improvements, technical Managing Director of LTTS said, “This track record in high-quality engineering fi ling that the company’s manufacturing
writing, engineering data management long-term relationship allows us to pro- services and digital transformation “The EU chose to ignore such key facilities at Tuticorin were temporarily “We shall intimate the stock
& services for sustainability initiatives,” vide services for their global assets, em- solutions underscores our position as a competitive reasons. The EU thus is closed on December 17. The company exchange upon resumption of opera-
LTTS said. Commenting on the col- phasising top-tier operational effi ciency trusted partner for BP.” opposed to the concept of offshoring mentioned that the disruption in opera- tion at the plant,” the company said.

138 Chemical Weekly December 26, 2023 Chemical Weekly December 26, 2023 139

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