Context

• The operationalisation of carbon markets under Article 6 of the Paris Agreement marks a defining moment in global climate governance.
• The decisions at COP29 made the mechanisms under Article 6 fully functional, enabling countries to cooperate through market-based climate actions that mobilize finance, technology, and capacity at scale.

The Global Shift: Operationalizing Article 6

• At COP29, Parties finalized the two core mechanisms of Article 6:
  • Article 6.2, which allows bilateral and plurilateral trading of Internationally Transferred Mitigation Outcomes (ITMOs), and
  • Article 6.4, which established the Paris Agreement Crediting Mechanism, replacing the Clean Development Mechanism.
• Momentum behind these mechanisms is increasing rapidly. Eighty-nine cooperation arrangements across 58 Parties illustrate a shift toward collaborative pathways for emissions reduction and climate innovation.
• The adoption of the Article 6.4 mechanism introduced a more transparent, accountable, and globally harmonized framework, strengthening environmental integrity and enhancing confidence among market participants. 

India’s Entry into Article 6: Strategic Significance

• India formally entered the global carbon market landscape in August 2025 by signing the Joint Crediting Mechanism (JCM) with Japan, effectively operationalizing Article 6.2.
• This development signalled a new phase in India’s international climate diplomacy and broadened the channels through which it can pursue low-carbon
• India’s participation offers access to advanced technology transfer, climate-aligned investment, research collaboration, and stronger bilateral partnerships.
• Beyond financial gains from credit trading, the deeper value lies in leveraging Article 6 to accelerate industrial modernization and secure competitive advantages in a world increasingly shaped by carbon-constrained trade regimes.
• For an economy balancing rapid growth with sustainability goals, these mechanisms can act as catalysts for structural transformation.

Aligning Article 6 with Domestic Priorities

• Article 6 establishes a framework for cooperation while ensuring rigorous accounting to avoid double counting of emissions reductions.
• India’s initial activities under the JCM demonstrate how such cooperation can align with national development priorities.
• To operationalise Article 6.2 and 6.4, India has identified 13 eligible technologies spanning critical sectors such as renewable energy with storage, offshore wind, solar thermal power, green hydrogen, compressed bio-gas, sustainable aviation fuel, high-efficiency industrial systems, and emerging fuel-cell mobility solutions.
• These technologies are central to reducing emissions in hard-to-abate sectors and to supporting the country’s broader industrial competitiveness.
• As India continues to rely on coal for power generation, diversification through offshore wind, marine energy, and large-scale storage enhances resilience and future-proofs the energy system.
• In carbon-intensive industries such as steelmaking and cement, green hydrogen and carbon capture provide viable pathways for deep decarbonisation.
• Each of these interventions contributes to long-term economic growth while aligning with national climate objectives and global expectations.

From Intent to Implementation: Challenges Ahead

• Strengthening Domestic Governance
  • India has appointed a Designated National Authority for Article 6, but further clarity is needed on authorisation procedures, corresponding adjustments, and the legal and regulatory framework governing carbon crediting and trading.
• Accelerating Project Clearances
  • Current market experience shows that project validation and approval procedures remain lengthy and fragmented, especially for land-based sectors.
  • A single-window clearance system supported by a Cabinet-level steering committee would significantly reduce transaction costs and enhance investor certainty.
• Building a Removals Market
  • Global demand for carbon removals is rising as governments and corporations pursue net-zero
  • Article 6 offers India a platform to scale removal-based credits through activities like biochar and enhanced rock weathering, positioning the country as a competitive supplier of high-quality removals in the medium term.
• Strengthening South–South Collaboration
  • India is well-placed to support developing countries in establishing shared MRV systems, digital infrastructure, and financing models, thereby expanding participation in global carbon markets and enhancing equity.

Conclusion

• India’s engagement under Article 6 represents a strategic move toward accessing advanced technologies, attracting climate-aligned capital, and deepening international partnerships.
• With robust domestic frameworks and accelerated implementation, Article 6 can serve as a lever for industrial upgrading and long-term decarbonisation.
• The true potential of Article 6 lies not merely in transactions of credits, but in reshaping global climate cooperation to enable shared prosperity and resilient development in a rapidly changing world.