India’s Entry into Article 6 Carbon Markets and the Climate Finance Shift

What Article 6 Enables

India’s Entry into Article 6 Carbon Markets and the Climate Finance Shift: Article 6 of the Paris Agreement creates a framework for international cooperation in reducing greenhouse gas emissions. It allows countries to trade verified emissions reductions while maintaining accounting integrity.

This provision aims to lower mitigation costs and mobilise cross-border climate finance. It also introduces market and non-market mechanisms to support national climate targets.

Static GK fact: Article 6 is one of the three cooperative mechanisms under the Paris Agreement, alongside Articles 5 and 7, which focus on sinks and adaptation.

COP29 and the Operational Breakthrough

At COP29, long-pending operational rules for Article 6 were finalised. This included detailed guidance for Article 6.2 (bilateral or plurilateral cooperation) and Article 6.4 (centralised crediting mechanism).

With this, carbon markets moved from negotiation to implementation. Over 80 cooperation arrangements are now active globally, signalling growing confidence in regulated climate markets.

India’s Formal Entry into Article 6

India entered the Article 6.2 framework in August 2025 by signing the Joint Crediting Mechanism (JCM) with Japan. This marked India’s first formal step into regulated international carbon trading.

Rather than acting only as a credit supplier, India positioned itself as a strategic partner in climate cooperation. This aligns climate action with technology transfer and industrial modernisation.

Static GK Tip: India ratified the Paris Agreement in 2016 and committed to achieving net-zero emissions by 2070.

Why India’s Participation Is Strategically Important

India’s economy is energy-intensive and still coal-dependent. Participation in Article 6 enables access to advanced low-carbon technologies and climate-aligned capital.

Beyond trading Internationally Transferred Mitigation Outcomes (ITMOs), the mechanism helps Indian industries prepare for carbon-sensitive global trade regimes. This is crucial as carbon border measures gain momentum globally.

Focus Areas for Initial Article 6 Projects

India has identified 13 eligible activity areas for early Article 6 engagement. Priority sectors include renewable energy with storage, offshore wind, solar thermal power, and green hydrogen.

Advanced energy efficiency, compressed bio-gas, fuel-cell mobility, sustainable aviation fuel, and carbon capture technologies are also included. These sectors directly influence long-term emissions trajectories.

Static GK fact: India is the world’s third-largest producer of renewable energy, after China and the United States.

Institutional and Regulatory Challenges

Effective implementation depends on domestic institutions. India has appointed a Designated National Authority for Article 6, but operational clarity is still evolving.

Delays in project approvals remain a concern. Carbon projects in India often face long registration timelines due to multi-layered clearances, affecting investor confidence.

Carbon Removals and Future Potential

Article 6 also opens pathways for carbon removal activities. Technologies such as biochar and enhanced rock weathering are gaining global attention.

With proper monitoring and verification systems, India could emerge as a credible supplier of removal credits. This would strengthen climate credibility and export-oriented climate finance.

South–South Cooperation as a Leverage Point

India’s engagement under Article 6 creates scope for South–South collaboration. Shared platforms for technology transfer and blended finance can amplify development outcomes.

This approach reduces dependence on fragmented voluntary markets and strengthens collective bargaining power among developing economies.

Strategic Significance Going Forward

India’s entry into Article 6 is not merely procedural. It integrates climate finance with industrial policy, trade preparedness, and diplomacy.

As carbon markets mature, India has the opportunity to evolve from a participant into a rule-shaper in global climate cooperation.

Static Usthadian Current Affairs Table

India’s Entry into Article 6 Carbon Markets and the Climate Finance Shift: