“Carbon leakage occurs when industries transfer polluting production to other countries with less stringent climate policies or when more carbon-intensive imports replace EU products”, Gangaa C. Sharma, Managing Director & CEO, CETIZION Verifica.

Gangaa C. Sharma serves as the Managing Director and CEO of CETIZION Verifica, a prominent global advisory and audit company. With an extensive career spanning over 27 years, he brings a wealth of experience across diverse sectors and geographies, including India, Asia Pacific, China, the Gulf, and the EU. Sharma's expertise encompasses manufacturing, environmental health and safety, CSR, biodiversity, climate change, social and labour issues, as well as ethics and governance. Notably, he is a distinguished member of the Global Sustainability Standard Board under the auspices of the Global Reporting Initiative (GRI), a leading global sustainability and climate change initiative, and an advocate for ESG reporting frameworks. Recognised as a worldwide expert in Aluminium Sustainability, Sharma has undertaken over 25 engagements, solidifying his position as a thought leader in sustainability and corporate responsibility.

AL Circle: Can you please elaborate on the concept of Carbon Leakage?

Gangaa C Sharma: The European Union (EU) has announced the Carbon Border Adjustment Mechanism (CBAM). This mechanism aimed to tax the producers for the production emission rates for their products at the EU border. The CBAM, which the European Commission adopted on July 14, 2021, will apply to EU imports. It has been recommended in the European Green Deal to cut greenhouse gas (GHG) emissions by at least 55% by 2030 compared to 1990 levels. Because other nations may not have a comparable aim, the EU created this method to avoid carbon leakage.