India is aiming to finalize a potential carbon credit deal with Japan early in 2025 and then advance similar negotiations with nations including South Korea and Singapore
The world’s third-largest carbon dioxide emitter wants to attract investment and technology to be deployed on projects that would mitigate pollution and generate credits, according to people familiar with the discussions, who asked not to be identified as the deliberations are private.
A bilateral agreement with Japan is likely to be signed early next year and India will seek to complete pacts with South Korea and Singapore before the end of the fiscal year ending in March 2026, one of the people said.
Talks over prospective future deals also are taking place with Germany and Sweden.
A spokesperson for India’s ministry of environment, forest and climate change didn’t respond to a request for comment.
Pacts are being discussed under Article 6.2 of the Paris Agreement, which is intended to facilitate nation-to-nation trading and allow countries to use credits against their climate targets. Negotiators at the COP29 talks in Azerbaijan on Saturday approved rules to guide the market after almost a decade of deliberations.
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Japan has been in talks with India for a bilateral carbon-credit agreement, the nation’s trade ministry said, without specifying any timeline. The two countries signed an agreement in 2023 to work on building a joint crediting mechanism.
Singapore is in discussions with India on a bilateral implementation agreement aligned with Article 6.2, said the country’s National Climate Change Secretariat. South Korea’s environment ministry confirmed discussions on a potential memorandum of understanding over collaboration on carbon credits.
Germany’s economy ministry is also in talks with India on agreeing a memorandum of understanding, a spokesperson said. “Sweden is in dialogue with many countries” on potential bilateral partnerships, Ola Westberg, spokesman for Sweden’s Energy Agency said, without specifying if talks are taking place with India.
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Countries including Singapore and Switzerland had been striking pacts in advance of Article 6.2 guidelines being finalized at COP29. Agreements between governments to trade emission reductions topped US$1 billion ($1.35 billion) at the summit, according to BloombergNEF.
Some experts have raised concerns that bilateral deals could lead to the trading of junk carbon credits, which promise to reduce emissions on paper but don’t deliver in reality. That’s because the rules are seen as having weak guidance on ensuring environmental integrity.
In some of India’s talks, officials have proposed a joint carbon-crediting mechanism under which partnering nations would provide finance and technology to set up projects. The credits generated would then be shared and the split would vary between developments, the people said.
Officials in India previously identified 13 types of activities to be considered for bilateral carbon trading, including green hydrogen, sustainable-aviation fuel and high-voltage direct current electricity transmission.
