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Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer? for CLAT 2025 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CLAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer?.

Solutions for Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free.

Here you can find the meaning of Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Directions: Kindly read the passage carefully and answer the questions given beside.Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules. Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer. The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.The idea here is to avert the possibility of carbon leakage alongside encouraging producers in non-EU countries to green their manufacturing processes. Moreover, it will ensure a level playing field between imports and EU products. This would also form part of the continent’s broader European Green Deal which endeavours to achieve 55% reduction in carbon emissions compared to 1990 levels by 2030 and become a climate neutral continent by 2050.The gradual introduction of the CBAM would be in parallel with the phasing out of the allocation of free allowances given out under the EU Emissions Trading System (ETS), which was also aimed at supporting the decarbonisation of the region’s industries.The ETS had set a cap on the amount of greenhouse gas emissions that can be released from industrial installations in certain sectors. Allowances were to be bought on the open decentralised ETS trading market; however, certain allowances were given out for free to prevent carbon leakage. Though effective in addressing the issue of leakage, the EU concluded it dampened the incentive to invest in greener production at home and abroad. This was because of the tendency to rely on free allowances to meet operational requirements and obligations. Thus, the idea to have an import-based tariff instead.CBAM would initially apply to imports of certain goods and selected precursors, whose production is carbon-intensive and are at risk of ‘leakage’ such as the cement, iron and steel, aluminium, fertilizers, electricity and hydrogen sectors. Eventually, once fully phased in, it would capture more than half of the emissions in ETS covered sectors.In 2021, the United Nations Conference on Trade and Development (UNCTAD) had concluded that Russia, China and Turkey were most exposed to the mechanism. Considering the level of exports to the union in these sectors, it stated India, Brazil and South Africa would be most affected among the developing countries. Mozambique would be the most exposed least-developing country. Important to note, countries in the EU combined represent about 14% of India’s export mix for all products, steel and aluminium included.Q.Which of the following statements questions the effectiveness of granting free allowances under the EU Emissions Trading System (ETS)?a)The ETS trading market ensured a fair distribution of allowances among industries.b)The free allowances prevented carbon leakage and encouraged greener production.c)Relying on free allowances hindered investments in greener production.d)The phasing out of free allowances resulted in an increase in carbon emissions.Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice CLAT tests.