India’s Carbon Market Strategy

Syllabus: Conservation, environmental pollution and degradation, environmental impact assessment

Background: Operationalisation of Article 6

  • Article 6 carbon markets were fully operationalised at COP29 to enhance climate finance efficiency.
  • As per A6 Implementation Partnership, 89 cooperation arrangements exist across 58 Parties.
  • Adoption of Article 6.4 Paris Agreement Crediting Mechanism marked transition from CDM to a robust framework.
  • In August 2025, India signed the Joint Crediting Mechanism (JCM), operationalising Article 6.2.

Significance of Article 6 for India

  • Article 6 enables bilateral and plurilateral cooperation for emissions reduction transfers.
  • It ensures rigorous accounting and prevents double counting of mitigation outcomes.
  • For India, A6 offers access to advanced technologies, R&D support, and climate finance.
  • It strengthens bilateral relations and supports socio-economic transformation aligned with climate goals.
  • Beyond carbon credit revenues, A6 can drive low-carbon industrial and technological transition.

India’s Strategic Sectoral Focus

  • India identified 13 eligible activities balancing developmental needs and climate objectives.
  • Priority sectors include renewable energy with storage, offshore wind, and solar thermal power.
  • Other sectors include green hydrogen, compressed bio-gas, and sustainable aviation fuel.
  • Emerging mobility solutions like fuel cells and high-end energy efficiency technologies are covered.
  • Carbon capture, utilisation and storage (CCUS) targets hard-to-abate sectors like cement.
  • These choices align with deep decarbonisation and long-term sustainable growth objectives.

From Intent to Implementation: Key Challenges

  • India has appointed a Designated National Authority, but detailed operational rules are pending.
  • Clear rules are needed for Letters of Authorisation and corresponding adjustments.
  • Project approvals are slow, with voluntary projects taking over 1,600 days in India.
  • A single-window clearance system is essential for Article 6 projects.

Way Forward

  • Build a domestic removals market for biochar and enhanced rock weathering.
  • Use Article 6 to strengthen South–South cooperation and shared climate systems.
  • Article 6 is a strategic tool for technology access, finance mobilisation, and global partnerships.

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