BRICS leaders at the New Delhi Summit backed a BRICS Carbon Markets Partnership to share expertise, build capacity and link carbon markets with climate finance, while firmly opposing unilateral CBAMs by the EU and UK.
India’s CCTS gaining UK recognition highlights both new export competitiveness opportunities and compliance challenges, especially for MSMEs facing demanding measurement and verification rules.
The BRICS countries have backed greater cooperation on carbon markets, including implementation of a BRICS Carbon Markets Partnership, while opposing unilateral carbon border adjustment mechanisms (CBAMs).
This follows India’s Carbon Credit Trading Scheme (CCTS) gaining recognition under the United Kingdom’s emerging border carbon regime.
The New Delhi Declaration, adopted at the 18th BRICS Summit, on September 12, said BRICS countries support cooperation in carbon markets with a focus on capacity building and exchange of experiences. It also said members looked forward to implementing the Memorandum of Understanding on the BRICS Carbon Markets Partnership as a cooperative approach to support national climate strategies, complement mitigation efforts and mobilise resources.
The declaration also welcomed knowledge sharing through a dialogue on aligning carbon markets with adaptation goals, bringing adaptation and climate finance into discussions that have traditionally focused on emissions reduction and carbon pricing.
The development comes as the UK prepares to introduce its CBAM from January 1, 2027, while the European Union’s definitive CBAM regime began on January 1, 2026, covering imports including cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. The UK government has published a list of qualifying overseas carbon pricing schemes to help importers prepare for the mechanism. India’s CCTS is included in that list, allowing qualifying carbon prices paid in India to be taken into account when calculating UK CBAM liability, subject to the UK’s requirements on evidence and verification.
On trade, the bloc has reiterated its objection to climate linked trade measures, expressing opposition to unilateral, punitive, discriminatory and protectionist measures, explicitly naming CBAMs.
“We oppose unilateral, punitive, discriminatory and protectionist measures” that are not in line with international law, the New Delhi Declaration said, specifically citing CBAM. It said such measures could undermine developing countries’ efforts to address climate change and increase their adaptive capacity and resilience.
BRICS has consistently raised concerns over unilateral climate related trade measures, arguing that they could create additional trade barriers and impose disproportionate costs on developing countries.
“The opposition to unilateral climate-linked trade measures must be seen alongside the call for a broader and equitable cooperation between developing countries in global higher value manufacturing,” said Trishant Dev, deputy programme manager at the Centre for Science and Environment (CSE).
According to Li Shuo, director, China Climate Hub, Asia Society Policy Institute, “The bloc’s explicit rejection of carbon border taxes, alongside its insistence that fossil fuels will remain part of the energy mix for emerging economies, signals that these leading Global South countries intend to define the terms of their own energy transition rather than have them imposed by others.”
The UK’s approach creates a more specific link between carbon pricing in an exporting country and the carbon cost imposed at the border. According to the UK government, its list of qualifying overseas carbon pricing schemes is intended to give importers clarity on schemes whose carbon prices may be recognised for the purpose of CBAM.
For India, this means the development of its domestic carbon market could have implications beyond its emissions reduction framework and become relevant to the competitiveness of Indian exports in markets that impose carbon border charges.
However, the immediate financial benefit of the UK recognition is likely to be limited if the effective carbon price paid under India’s CCTS is substantially lower than the carbon price applied in the UK.
“It does reduce CBAM liability, but likely by a very small margin initially. Although this is important in principle because it reduces the risk of Indian exports being charged twice for the same carbon, the actual relief could be limited if the effective carbon price paid in India is significantly lower than the UK carbon price,” said Dev.
He said the significance of the UK’s recognition also extends beyond the immediate financial relief. “UK’s recognition’s value also lies in setting a precedent for wider recognition of India’s carbon pricing framework, giving it greater formal standing within the emerging carbon regime.”
The recognition assumes significance as India develops its carbon compliance market under the CCTS. It does not mean that all carbon credits generated under Indian projects can automatically be deducted from a UK CBAM liability. The UK framework distinguishes between qualifying carbon pricing and other forms of carbon credits or offsets and requires evidence of the carbon price paid and the emissions to which it relates.
For micro, small and medium enterprises (MSMEs), the immediate benefits of the UK recognition are likely to be limited, particularly because the CCTS currently focuses largely on energy intensive and larger installations. “For MSMEs, there is relatively little immediate benefit from this recognition. First, the CCTS is currently focused largely on energy-intensive, larger installations, so its direct coverage of MSMEs is limited,” Dev said.
He added that MSMEs linked to affected supply chains could face a more immediate challenge from compliance requirements. “Second, for those MSMEs that are part of affected supply chains, the bigger constraint is likely to be compliance — the measurement, reporting and verification of data rather than the carbon money.”
The issue is significant because carbon border measures increasingly require exporters to demonstrate the emissions embedded in products and the carbon price already paid in the country of production. For Indian companies seeking to benefit from recognition of domestic carbon pricing, the ability to measure, report and verify emissions could therefore become as important as the carbon price itself.
The BRICS declaration places carbon markets within a broader discussion on climate finance. The BRICS group said high debt burdens were constraining climate and development investment in many developing countries and called for coordinated international action to enhance debt sustainability, expand fiscal space and support sustainable development and climate financing. It encouraged cooperation through the BRICS Contact Group on Climate Change and Sustainable Development.
BRICS explicitly links the Carbon Markets Partnership to mobilising resources and says carbon market cooperation should support members’ climate strategies.
The declaration also called for additional, adequate, predictable and accessible financial resources, capacity building and technology transfer from developed countries to developing countries for adaptation. It highlighted the role of traditional knowledge, local innovation and community experience in strengthening adaptive capacity.