COP29 Article 6.2: Carbon Markets and India’s Opportunity
Why in the news
COP29, held in Baku, Azerbaijan, became known as the Climate Finance COP because negotiators worked on the rules of Article 6 of the Paris Agreement.
Key facts
- Article 6.2 permits cross-border transfer of ITMOs (carbon credits) that countries count towards their NDCs.
- The system can bring developing nations investment, technology transfer and emission cuts.
- India is described as the world’s third largest GHG emitter and aims for a 45% cut in emissions intensity by 2030.
- India sought $1 trillion a year of climate finance from developed countries before the summit.
India’s carbon market readiness
- The Carbon Credit Trading Scheme (CCTS), operational since 2023, seeks a transparent carbon market.
- Experience with REC, ESCerts and CDM prepares India for ITMO deals.
- Likely ITMO sectors: green hydrogen, carbon capture, energy storage, renewables and sustainable aviation fuel.
- Tie-ups with the EU, Japan and South Korea could bring advanced technology and funds.
South-South role with Africa
- Africa has large renewable potential but limited resources, and faces climate risks to agriculture and water.
- India already has strong trade and development ties with Africa.
- Africa gains finance, technology and expertise; India expands its carbon market reach and clean energy leadership.
Concerns
- Rich nations may buy cheap ITMOs from India instead of cutting their own emissions.
- India could sell too many credits and weaken its own targets.
- Weak governance may make trading inefficient or exploitative.
Way forward
- Clear rules, oversight, fair benefit-sharing and smart partnerships to gain without harming long-term climate goals.
Exam angle
- Venue of COP29: Baku, Azerbaijan.
- Full form: ITMO – Internationally Transferred Mitigation Outcomes; NDC – Nationally Determined Contribution.