Such agreements are meant to promote low-carbon projects, share emission reductions, and advance the climate targets under the Paris Agreement. For India, these deals promise access to clean technology and climate finance while also strengthening economic and strategic ties.
First deal with Japan
India signed its first such deal, called the Joint Crediting Mechanism (JCM), with Japan on 7 August under the Paris Agreement, which allows countries to cooperate through voluntary carbon markets overseen by the UN climate framework.
The initiative marks a shift from pilot projects to formalized partnerships on climate change mitigation, with the government aiming to position India as an active player in cross-border carbon trading.
“We have signed JCM with Japan in August this year and are in talks with a few countries, such as Singapore, Sweden and South Korea for similar kind of bilateral agreements,” said the first official.
How JCM works
The JCM operates under Article 6.2 of the Paris Agreement, enabling bilateral trading of carbon credits at mutually agreed prices between governments.
“The advantage is that the baselines, standards, and methodologies for emissions reduction can be mutually agreed between the two governments, unlike Article 6.4 channel of the Paris Agreement, where standards of trading units, methodologies, and accounting procedures are more stringent and supervised by the UNFCCC,” said R.R. Rashmi, distinguished fellow, The Energy and Resources Institute (Teri).
According to Rashmi, India may benefit by receiving investment in notified industries such as steel, biogas, hydrogen, power, and CCUS (Carbon Capture and Utilisation Resources), where Japan may be keen to buy credits.
Benefits for India
On the possible gains from similar deals with other countries, Rashmi noted: “India would most likely be a seller of carbon credits at this stage. Hence any country that is willing to buy credits from India and pay the Indian industry for technology upgrades is welcome.”
He pointed out Sweden’s advanced steelmaking technology and Singapore’s large carbon trading platforms as potential advantages. Singapore is home to large and developed carbon trading platforms, which will allow demand for Indian units to go up. India has to be prepared to deduct such credits from its national inventory so as to avoid double counting of traded units, Rashmi added.
“Under the JCM, the country implements and invests in low-carbon technologies in developing countries, and the resulting savings in emissions are credited to the partner country’s account as carbon credits that it can use to meet its national emissions-reduction targets,” said the second official.
An email query to the Ministry of Environment, Forest and Climate Change (MoEFCC) on talks with Singapore, Sweden, and South Korea remained unanswered till press time.
Climate commitments
According to the Environment Ministry, the JCM will help channel investment and technology assistance, including transfer, capacity building, and the development of domestic ecosystems for low-carbon projects. It is also expected to localise high-technology interventions in equipment, systems, and infrastructure, enabling large-scale deployment.
“It will also enable the international trading of carbon credits generated from such projects under Article 6.2 of the Paris Agreement with Japan and other countries,” the second official added.
The development assumes significance as India’s Nationally Determined Contributions (NDCs) commit to reducing its GDP’s emission intensity by 45% by 2030 from 2005 levels, achieving 50% cumulative electric power capacity from non-fossil fuel sources by 2030. India is also targeting to achieve net-zero carbon emissions by 2070. The NDCs are renewable-energy adoption goals set by a country as part of being a signatory to the Paris Agreement – under which countries must regulate their fossil fuel consumption.
On 5 March, Union environment minister Bhupender Yadav highlighted India’s progress, including a 36% reduction in emission intensity between 2005 and 2020, compared with the 45% target for 2030. He also pointed to the Union Budget 2025’s emphasis on energy security, clean energy expansion, and domestic green manufacturing.
AloJapan.com