In this exclusive conversion for the ET Now, CleanCarbon.ai CEO and Founder Mr. Nilesh Bhattad speaks to climate journalist Mr. Shubham Thakur, explains all you need to know about CBAM, how it will impact your export business to the European Union and what will be the financial implications of CBAM tax on your businesses.
Introduction & Origins of CleanCarbon.ai
Mr. Shubham Thakur: Can you tell me a bit about CleanCarbon.ai? How did it start, and what was the main idea or inspiration behind launching this platform?
Mr. Nilesh Bhattad: I am a software engineer by background and have worked with companies like Microsoft and Infosys. In 2017, while working with a large Canadian oil and gas company, I got the opportunity to measure their carbon emissions. I was drawn to this space, and in 2022, we started CleanCarbon.ai in India. Our mission is to help companies measure and reduce their carbon emissions. We were very early in the CBAM space and are currently helping over 200 companies generate CBAM reports.
Specializing Strictly in EU CBAM
Mr. Shubham Thakur: What was the idea behind just focusing on CBAM compliance and not touching other areas of sustainability?
Mr. Nilesh Bhattad: We identified that CBAM was the most critical regulation for companies exporting to Europe because it is not optional; it is mandatory. If companies do not comply, they risk losing their business. We want to be world leaders in this niche and provide complete handholding, so we decided to specialize strictly in CBAM.
What is EU CBAM & Who Is Impacted?
Mr. Shubham Thakur: In layman’s terms, what is CBAM and who is going to be impacted the most?
Mr. Nilesh Bhattad: CBAM stands for Carbon Border Adjustment Mechanism. It is an EU policy where companies exporting specific carbon-intensive products—like iron and steel, cement, electricity, hydrogen, and chemicals—must measure and report their emissions. If you are exporting to the EU, whether directly or indirectly (e.g., selling to a supplier whose product eventually goes to the EU), you are impacted.
Carbon Tax Calculations & Cost Absorption
Mr. Shubham Thakur: Who is going to bear the cost of the carbon tax, and how is it calculated?
Mr. Nilesh Bhattad: The financial impact is estimated at 8–12%, which is significant for many exporters. While the regulation holds the importer responsible for paying the tax, in practice, these costs are often negotiated or passed down to the exporter. Ultimately, the company performing the emission is responsible for the tax.
Supply Chain & Data Collection Challenges
Mr. Shubham Thakur: What have been the biggest challenges for suppliers and importers regarding CBAM reporting?
Mr. Nilesh Bhattad: Importers struggle to gather data across their entire supply chain, which can include hundreds of suppliers. For Indian exporters, the primary challenges are a lack of internal expertise and the difficulty of collecting accurate data from their own tiers of suppliers. We solve this by automating data collection and providing a platform that streamlines the process for everyone in the ecosystem.
Enterprise Case Study: Solving Tier-Supplier Data Gaps
Mr. Shubham Thakur: Can you share a case study of how you solve this data collection challenge?
Mr. Nilesh Bhattad: e worked with a company that had 40,000 products and over 700 suppliers. We customized our platform to ingest their bill of materials and automated the data collection from their suppliers. We also integrated verification tools, requiring suppliers to upload bills and certificates to ensure the data is accurate and auditable.
Shift in Buyer Preferences & Vendor Selection
Mr. Shubham Thakur: Is there a shift in how importers choose their suppliers based on their carbon records?
Mr. Nilesh Bhattad: Yes, that shift is happening. As carbon taxes start to impact bottom lines, importers are becoming more conscious of selecting ‘greener’ suppliers. Companies that start their CBAM reporting early and work on reducing their emissions gain a competitive advantage in the European market.
Concluding Thoughts
Mr. Shubham Thakur: What is your concluding thought for everyone?
Mr. Nilesh Bhattad: Look at the bigger goal, which is reducing overall emissions to make the earth more livable for future generations. We can all contribute to this collective effort.
Mr. Shubham Thakur: Thank you sir for speaking to me on EU CBAM.
Mr. Nilesh Bhattad: Thank you, Shubham!