While the COP 30 discussions are underway to resolve some of the complex global challenges of climate change, exploiting the international carbon market as a source of climate action is also going to be a key source of climate action. India’s signing of the Memorandum of Cooperation (MoC) with Japan under Article 6.2 of the Paris Agreement marks a pivotal step in India’s engagement with international carbon markets. Article 6.2 provides a broad, decentralised cooperative approach that allows countries to trade Internationally Transferred Mitigation Outcomes (ITMOs), thereby driving technology transfer, climate finance, and innovation. For India, the signing of Article 6.2 has turned out to be a propitious moment in driving the highly desired technology transfer and much-needed climate financing.
A robust institutional framework is in place
India moved early to establish the institutional framework for such cooperation. On May 30, 2022, the Government of India notified the National Designated Authority for Implementation of Article 6 of the Paris Agreement (NDAIAPA), the body responsible for approving projects eligible for ITMO transactions. This was followed, on 17 February 2023, by a public announcement listing the activities India would initially consider eligible for trading under Article 6.2. Most recently, in August 2025, the NDAIAPA was amended to reflect evolved decisions under Articles 6.2 and 6.4.
The eligibility list spans green hydrogen and ammonia, sustainable aviation fuel (SAF), compressed biogas, high-efficiency industrial technologies, renewables with storage (stored component), offshore wind, solar thermal, HVDC lines linked to renewables, ocean energy, and carbon capture, utilisation and storage (CCUS). These activities were strategically chosen to catalyse technology transfer and mobilise much-needed international finance, with an initial three-year scope and provision for revision and expansion.
However, since developing countries already have targets under their NDCs, establishing a robust institutional framework becomes crucial to ensure transparency and integrity in international transfers. Though India has created the institutional framework, the next critical phases involve strengthening processes for project authorisation, monitoring and verification (MRV), as well as the allocation and transfer of ITMOs within agreed timelines. Establishing these mechanisms, supported by a Project Implementation Agency (PIA) and a steering committee to oversee synergies across domestic and international carbon markets, will be essential to ensure readiness for full-scale cooperation and transparent ITMO transfers under Article 6.2.
Besides, speed matters because bilateral pipelines are forming now. Global activity is narrow but deep. Hence, it is an opportune time for India to become an integral part of such evolving bilateral pipelines.
Where do opportunities sit?
India’s eligibility list under Article 6.2 opens distinct avenues for sectors positioned to deliver high-integrity, internationally transferable mitigation outcomes (ITMOs). In clean-energy carriers, green hydrogen and green ammonia can serve as financing bridges to scale electrolyser capacity and decarbonise export-oriented value chains. Developers that align early with partner-country measurement, reporting, and verification (MRV) standards can secure premium pricing and long-term offtake agreements. Sustainable aviation fuel and compressed biogas provide complementary routes, enabling incremental abatement beyond domestic demand by supplying ITMO-linked volumes to countries pursuing aviation decarbonisation targets. For the private sector, this framework presents early-mover advantages. Industries such as steel, cement, chemicals, and refineries can integrate best-available technologies and enter cooperative agreements that de-risk upfront capital expenditure through bilateral ITMO-linked arrangements. Renewable energy players combining storage and HVDC infrastructure can position projects for system-level emission reductions verified by international buyers. Carbon-removal ventures using CCUS technologies offer an additional frontier, where private developers securing storage-site assessments, robust monitoring plans, and long-term buyer commitments can anchor India’s first wave of removal-based ITMOs from industrial clusters.
Beyond technology deployment, each cooperative agreement must be evaluated through four lenses — contribution to India’s Net Zero commitment, promotion of technology transfer along with intellectual property rights, assurance of sustainable climate finance, and acceleration of local sustainable development. These priorities ensure that India’s participation in international carbon markets strengthens both climate and socio-economic objectives.
What lies ahead?
As India moves from readiness to implementation under Article 6.2, the focus must shift to strengthening institutional processes for authorisation, registry, and ITMO transfers, while fostering technology transfer and innovation in sectors like hydrogen, CCUS, and offshore wind. With the NDAIAPA, the Carbon Credit Trading Scheme (CCTS), and the Japan MoC in place, success now depends on how effectively India mobilises regulators, industries, financiers, and project developers to turn readiness into credible international cooperation and measurable climate outcomes. The following areas require strategic policy thrusts to reap optimum benefits from the international carbon market:
- Strengthening governance and institutional architecture: India must operationalise a clear governance structure by constituting Project Implementation Agencies (PIAs) for each bilateral mechanism to oversee project authorisation, MRV, and ITMO transfers. The Article 6.2 registry should be embedded within the CCTS, enabling unified credit tracking and direct transfers to buyer-country registries. This system can maintain a “knowing-basis” link with the international registry for transparency while preserving national control. Countries lacking domestic registries may temporarily rely on the international platform, but India’s design should prioritise sovereignty and traceability.
- Building a pipeline of bankable projects: The NDAIAPA should curate a strong pipeline in sectors where India holds an edge - green hydrogen, compressed biogas, offshore wind, and CCUS. Fast-tracked feasibility studies, pre-approval templates, and a dedicated facilitation cell can help developers meet buyer-country expectations and streamline MRV compliance.
- Catalysing private-sector participation: The private sector shoulders the key responsibility for driving implementation. Early adopters in steel, cement, refineries, fertilisers, and transport should be encouraged to form consortia with financiers and technology providers. A blended-finance or guarantee window under the CCTS can reduce risk, while clear ITMO pricing norms - via benchmarks, auctions, or bilateral formulas - will create predictability and investor confidence.
- Expanding and deepening bilateral partnerships: Beyond Japan, India should deepen partnerships with Switzerland, Singapore, the UAE, and South Korea to broaden market access and technology collaboration. Regular inter-ministerial coordination and proactive negotiation of new MoCs can strengthen India’s position as both a supplier of high-integrity credits and a shaper of global carbon-market norms.
Sebastian is a Research Scholar at the Department of Policy and Management Studies, TERI School of Advanced Studies, New Delhi. Sarangi is an Associate Professor and Head at the TERI School of Advanced Studies, New Delhi; views are personal
