The operationalisation of carbon markets under Article 6 of the Paris Agreement at COP29 marks a decisive shift in global climate finance architecture. For India, this development goes well beyond the trading of carbon credits. By entering the Joint Crediting Mechanism in August 2025, India has signalled its intent to use international carbon cooperation as a lever for technology access, industrial transformation, and long-term economic resilience in a carbon-constrained world.
Why Article 6 matters in the post-COP29 climate regime
Article 6 of the Paris Agreement provides the rule-based framework for voluntary cooperation between countries to achieve their climate targets. At COP29, carbon markets under Article 6 were made fully operational, giving countries clarity on accounting rules, transparency, and safeguards against double counting.
Two pillars are central:
- Article 6.2: Bilateral or plurilateral cooperation through the transfer of emission reductions, called internationally transferred mitigation outcomes (ITMOs).
- Article 6.4: A centralised crediting mechanism under the Paris Agreement, replacing the earlier Clean Development Mechanism.
According to the A6 Implementation Partnership, 89 cooperation arrangements are already in place across 58 Parties, indicating strong global momentum.
India’s entry through the Joint Crediting Mechanism
India’s decision to sign the Joint Crediting Mechanism with Japan in August 2025 effectively operationalised Article 6.2 for the country. This marks a transition from passive participation in global carbon markets to strategic engagement.
The JCM allows India to:
- Access advanced low-carbon technologies
- Attract international climate finance
- Strengthen bilateral economic and technological cooperation
Crucially, the partnership reflects India’s intent to align climate action with domestic development priorities rather than treating carbon markets as a standalone financial instrument.
Beyond carbon credits: the real promise of Article 6
While carbon credit revenues are important, the larger value of Article 6 lies in accelerating low-carbon industrial transformation. Properly designed A6 cooperation can help India future-proof its economy as global trade becomes increasingly sensitive to carbon intensity.
For a rapidly growing economy, Article 6 mechanisms can:
- Support research, development, and deployment of frontier technologies
- Reduce the cost of transition in hard-to-abate sectors
- Build resilient trade relationships under emerging carbon border regimes
In this sense, climate finance becomes a catalyst for competitiveness rather than a constraint.
India’s strategic choice of eligible activities
To operationalise Articles 6.2 and 6.4, India has identified an initial list of 13 eligible activities that balance climate ambition with economic growth. These focus on high-impact, emerging technologies, including:
- Renewable energy with storage, offshore wind, and solar thermal power
- Green hydrogen and compressed bio-gas
- Advanced mobility solutions such as fuel cells
- High-end energy-efficiency technologies
- Sustainable aviation fuel
This selection reflects a forward-looking strategy aimed at reshaping India’s emissions profile while supporting industrial expansion.
Aligning Article 6 with India’s energy transition realities
India’s continued dependence on coal makes diversification of its energy mix an economic and strategic necessity. Technologies such as offshore wind, large-scale storage, and marine energy can accelerate this shift.
In industrial sectors:
- Green hydrogen offers a pathway to decarbonise steel and fertiliser production.
- Carbon capture, utilisation, and storage can enable deep decarbonisation in cement and other hard-to-abate industries.
Article 6 cooperation can help de-risk these technologies by lowering costs and enabling early deployment at scale.
From intent to implementation: policy gaps to address
To unlock the full potential of Article 6, India must now focus on domestic readiness. Key priorities include:
- Strengthening governance: While a Designated National Authority has been notified, detailed rules on Letters of Authorisation, corresponding adjustments, and carbon trading frameworks are still awaited.
- Streamlining clearances: Research shows that voluntary carbon projects in India face long registration timelines, especially in land-intensive sectors. A single-window clearance system is critical for Article 6 projects.
- Building a removals market: With global demand for carbon removals rising, India can position itself as a supplier of high-quality removal credits through activities like biochar and enhanced rock weathering.
India’s opportunity for South–South leadership
Article 6 also opens space for India to exercise climate leadership among developing countries. By sharing systems, methodologies, and financing models, India can help shape a cooperative carbon market ecosystem that reflects Global South priorities.
This approach strengthens diplomatic ties while ensuring that climate cooperation does not become skewed in favour of only advanced economies.
What to note for Prelims?
- Article 6 provides market and non-market mechanisms under the Paris Agreement.
- Article 6.2 enables bilateral carbon credit transfers; Article 6.4 creates a centralised crediting mechanism.
- The Joint Crediting Mechanism is India’s first operational step under Article 6.2.
What to note for Mains?
- Analyse Article 6 as a tool for low-carbon industrial transformation, not just climate finance.
- Discuss governance and implementation challenges in India’s carbon market framework.
- Examine India’s potential leadership role in shaping equitable global carbon markets.
