By Nitin Bajpai, Consultant, and Venugopal Mothkoor, Senior Specialist, NITI Aayog
The recently concluded COP29 has largely been a failure in mobilising the $1.3 trillion demanded by the Global South to address the challenges of mitigation, adaptation, and loss and damage. It mobilised less than one-fourth of the requested amount – $300 billion annually starting in 2035 – thereby creating a significant funding gap. However, the silver lining of COP29 is the progress made on Article 6 of the Paris Agreement, which allows countries to exchange emission reductions to achieve climate goals outlined under their Nationally Determined Contributions.
COP29 emphasised the importance of standards, transparency, and real and measurable emission reductions in the operationalisation of Article 6. In this context, we will discuss an emerging theme, product carbon footprint (PCF), which involves calculating and reporting the greenhouse gas (GHG) emissions associated with a product’s life cycle.
Global push towards PCF
PCF quantifies emissions across the life cycle of a product, from raw material extraction to manufacturing, distribution, use and end-of-life disposal. PCF helps consumers make informed decisions about switching to products with lower life cycle emissions.
The much-debated Carbon Border Adjustment Mechanism (CBAM) direct links global trade with PCF. Under this mechanism, products with a higher carbon footprint incur higher tariffs compared to those with a lower footprint. The European Union’s (EU) CBAM regulations, to take effect in 2026, will impose carbon-related tariffs on imports from countries without equivalent carbon pricing mechanisms. For India, which exported goods worth $65 billion to the EU in 2022-23 (12 per cent of total exports), compliance with such regulations is critical. However, in the current form, the EU’s CBAM regulations focus only on Scope 1 and Scope 2 emissions of imported goods, rather than their full life cycle emissions.
Similarly, Digital Product Passports under the EU’s Ecodesign for Sustainable Products Regulation demand life cycle emissions data, including PCF, for consumer products such as textiles, electronics and packaging. With India’s textile exports alone contributing $44.4 billion in 2022-23, adopting PCF is a necessity for maintaining market access.
Other countries have also started their PCF journey. Japan’s Carbon Footprint of Products (CFP) programme requires companies to measure and disclose their carbon emissions, and products with verified PCF data to display the Japanese Carbon Footprint Label, a practice followed in the UK. The US focuses on green procurement, embedding PCF considerations in supply chain laws such as the Uyghur Forced Labor Prevention Act. In China, carbon labelling is being promoted for products, especially in industries such as consumer goods, food and electronics.
Relevance for India
Today, India is the fifth-largest economy in the world and the third-largest energy consumer. However, on a per capita income basis, there is a significant development gap compared to advanced economies. To realise the prime minister’s vision of becoming a developed nation, India’s energy demand is set to increase significantly. Ensuring that this demand is met sustainably is crucial for achieving the nation’s developmental goals and fulfilling its climate commitments.
A strategic focus on PCF offers India a transformative pathway to meet these dual objectives. By integrating PCF into its development strategy, India can incentivise industrial decarbonisation, decouple economic growth from emissions and boost its competitiveness in global markets. Furthermore, PCF strengthens Mission LiFE by fostering a bottom-up movement for sustainable consumption.
While carbon reporting might seem like a challenge for industries in the Global South due to perceived costs, complexities and data collection hurdles, other countries have turned it into an opportunity. For example:
China’s “100 Products” initiative: It aims to establish a carbon footprint management system by 2027, standardising calculations for selected products to enhance transparency and competitiveness.
Coffee cooperatives in Costa Rica: These cooperatives use carbon footprint tools to improve the marketability of their coffee in regions where sustainability is prioritised.
Indian textile industry: Leading manufacturers such as Arvind Limited are incorporating PCF assessments into their operations, particularly for denim and other textile products.
These examples demonstrate that, with the right strategies, PCF can drive innovation, unlock new markets and enhance competitiveness rather than acting as a barrier.
PCF and Mission LiFE: A symbiotic relationship
Mission LiFE (Lifestyle for Environment), introduced by the prime minister at COP26, promotes sustainable consumption behaviours among individuals and communities. As India progresses on its developmental journey, rising per capita income and consumer spending are expected to increase carbon footprints. Research indicates that an income increase of Rs 1,000 raises household carbon emissions by 8.38 kg of CO2 equivalent in the absence of eco-friendly practices.
However, growing awareness among Indian consumers and their willingness to pay a premium for sustainable products offer a unique opportunity. Manufacturers can capitalise on this trend by introducing PCF-labelled products, aligning market preferences with sustainability goals.
This consumer-driven shift reduces the burden on government-led industrial change. Market dynamics act as a catalyst for sustainability, where eco-conscious consumers favour low-carbon products, compelling industries to innovate and compete on environmental performance. This self-reinforcing mechanism minimises the need for extensive government intervention, allowing resources to focus on systemic challenges such as renewable energy infrastructure and green financing.
Essential measures for setting up a PCF ecosystem in India
Although essential and disruptive, the true transformative potential of PCF lies in the development and implementation of reporting and disclosure frameworks. By drawing lessons from international programmes, India can devise a tailored PCF strategy:
Standardised methodology: A standardised PCF framework is crucial to ensure consistency across industries. India can emulate the EU’s Product Environmental Footprint (PEF), which has harmonised life cycle assessment practices with sector-specific rules such as PEF Category Rules. India should prioritise products with high-export potential.
Localised data sets: The availability and quality of data significantly impact the accuracy of life cycle assessments. India currently faces limitations in data availability for certain industries and processes, potentially affecting the precision of PCF calculations. In contrast, regions such as the EU and the US benefit from well-established databases such as the US Life Cycle Inventory and PEF. India must develop indigenous life cycle inventory databases that reflect its industrial practices, emission factors and material efficiencies. This will enable more accurate, context-specific PCF calculations.
Capacity building: For successful PCF adoption, industries need access to the right knowledge, infrastructure and support systems. Capacity building programmes, modelled after Japan’s CFP workshops, can educate industries on PCF methodologies and practical implementation strategies. To ensure inclusivity, targeted financial and technical support for small and medium enterprises (SMEs) is essential. SMEs, often resource-constrained, play a key role in widespread adoption.
Phased regulatory requirements: Regulatory mandates for PCF reporting will eventually be necessary, but India should first establish a robust foundational framework and encourage voluntary adoption. Once adoption gains momentum, phased regulations can be introduced, starting with export-oriented, high-emission sectors. This approach can align with global trade standards such as the EU’s CBAM. Gradual expansion of regulatory scope can minimise industry resistance, build trust among stakeholders and ensure smoother compliance transitions. Additionally, India’s EcoMark scheme, initiated in 1991 and revamped in 2024, can play a pivotal role in promoting PCF adoption. As the country’s Type I environmental labelling programme, EcoMark can be expanded to include quantifiable metrics such as PCF, reinforcing its relevance in the sustainability landscape.
Conclusion
The Indian government has identified “green growth” as a key priority and is promoting a unique model of SDG localisation, guided by the mantra “Sabka Saath, Sabka Vikas, Sabka Vishvaas, Sabka Prayas” (collective efforts, inclusive growth, trust, and participation). By strategically integrating PCF into its industrial and export strategies, India can serve as a sustainable growth model. The $533 billion Indian manufacturing sector stands to gain substantially by aligning with global sustainability norms, thereby opening up new opportunities in the EU, US and other markets. n
(The views and opinions expressed in this article are solely those of the authors.)
