BRICS adopts climate finance framework, condemns carbon border taxes

The BRICS group of nations adopted a new climate finance framework July 7 that prioritizes funding for developing countries and endorses an innovative tropical forest conservation mechanism set to launch at the UN Climate Change Conference in Belem in November.

The five-country alliance also said it will launch a carbon markets partnership with a specific focus on capacity-building and exchange of experiences, as the BRICS Framework Declaration on Climate Finance aims to establish a "fairer and more effective" international system to enhance climate finance.

BRICS leaders also condemned unilateral climate-linked trade measures, including carbon border adjustment mechanisms, as discriminatory protectionism.

"We express concern that such measures, as well as unilateral economic and financial sanctions, may undermine BRICS countries' capacities to invest in their own just transitions and development priorities and risk diverting away critical resources at a time when developing countries face a financial gap to pursue climate action and sustainable development," the countries said in the framework document.

CBAM refers to a carbon tariff introduced by the EU to penalize countries that export emission-intensive commodities to the region but do not have rigorous policies on carbon pricing.

The EU CBAM-liable commodities include aluminum, cement, electricity, fertilizers, hydrogen, iron and steel. The UK and Norway will implement their own CBAMs from 2027, while Australia is also keen to have its own carbon border tax.

Many developing countries have raised concerns and criticisms of carbon border taxes on the sidelines of previous COPs and BRICS summits.

Finance for forest conservation

The declaration specifically recognizes the Brazil-led Tropical Forest Forever Facility as an innovative mechanism designed to mobilize long-term, results-based financing for tropical forest conservation.

The fund represents a shift toward rewarding conservation with predictable, performance-based payments while prioritizing Indigenous Peoples and local communities.

Brazil, which heads the COP30 Presidency, welcomed the development of this framework.

"It offers concrete, synergistic strategies that advance the mainstreaming of climate in investment decisions -- from reforming multilateral development banks to expanding innovative financing mechanisms and aligning financial ecosystems with sustainable development goals," said COP30 President Ambassador André Corrêa do Lago.

"It also recognizes the urgent need to unlock accessible, fair, and large-scale climate finance for developing countries, particularly for just transitions and forest protection."

The global climate talks in Belem are likely to focus on increasing ambition in line with the goals of the Paris Agreement. Countries are due to refresh their climate commitments, known as Nationally Determined Contributions, under the Paris Agreement by September.

At COP29 in Baku, Azerbaijan, countries agreed to triple annual climate finance for vulnerable nations and to adopt critical rules for a first-ever global carbon trading market.

Carbon market growth

Many developing nations have been critical of CBAM because many of their exports go to the EU, leaving their economies exposed.

An analysis by S&P Global Commodity Insights found that Brazil, Canada, South Africa and Turkey will be most exposed to the mechanism, with iron and steel the biggest sectors targeted.

Of the five countries, China has the most developed carbon markets, boasting an emissions trading scheme.

China's national ETS currently covers only power generation, and the Ministry of Ecology and Environment expects seven more sectors -- such as iron and steel, non-ferrous metals, building materials, refining and petrochemicals, chemicals, papermaking and civil aviation -- to be covered by 2030.

But the growth of domestic carbon markets is being led by emerging economies such as Brazil, Argentina, Mexico, Turkey, India, Chile, Colombia, Indonesia and Vietnam.

However, carbon prices vary significantly from country to country due to the differing sectoral scopes of many emissions trading systems globally.

Carbon permits under the EU ETS are around eight times more expensive than compliance prices in China, the industrial powerhouse of the world.

Platts, part of Commodity Insights, assessed EU Allowances for December 2025 at Eur71.19/mtCO2e ($83.56/mtCO2e) on July 7. IN comparison, China's compliance emission allowance was valued at Yuan 74.08/mtCO2e ($10.36/mtCO2e) on July 4, according to the Shanghai Environment and Energy Exchange.