New Delhi: The government has begun discussions on whether Indian exporters should track indirect emissions across their supply chains as trade partners tighten green requirements and global value chains become increasingly interconnected.
The finance and commerce & industry ministries have held preliminary discussions on whether Scope 3 emissions should be measured for exports to all countries, rather than only for markets such as the European Union and the UK, which have introduced Carbon Border Adjustment Mechanism (CBAM) measures.
Scope 3 emissions cover indirect emissions across a company's value chain, including those linked to purchased goods and services, capital goods, transportation, waste, business travel, employee commuting, leased assets, raw material extraction and the sourcing of imported raw materials. Measuring them is more complex than tracking emissions directly generated by a company or those associated with the energy it purchases.
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"There is one thought that measurement of Scope 3 emissions can't be done for the EU alone. It would have to do for all countries because the value chains are linked," said an official, adding that the indirect nature of these emissions makes them particularly challenging to measure, report and mitigate. However, no decision has been taken on the issue.
Niti Aayog, in its report titled Scenarios Towards Viksit Bharat And Net Zero: Financing Needs, has said that any inclusion of Scope 3 disclosures should be phased and proportionate, beginning with large entities in high-impact sectors to avoid imposing disproportionate compliance burdens on micro, small and medium enterprises (MSMEs) and smaller suppliers.
The existing CBAM frameworks provide for the determination of direct and indirect greenhouse gas emissions covered under Scopes 1 and 2 of the Greenhouse Gas Protocol. Indian exporters of iron and steel, aluminium, cement, fertilisers, electricity and hydrogen products are already subject to the EU's CBAM.
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"The CBAM is already a challenge for us because we don't have basic data on our raw material emissions. Disclosures on Scope 2 are posing a problem, so adding Scope 3 emissions data on what is my electricity provider and transportation would be unviable," said a steel exporter to the EU. Under the EU CBAM, the central platform will open for the sale of CBAM certificates on February 1, 2027. Importers must submit their first annual CBAM declaration and surrender certificates covering all 2026 imports by September 30, 2027.