Article 6 of the Paris Agreement – A Complete Guide for Indian Project Developers and Exporters in 2026

Introduction: A New Frontier for Indian Carbon Credits

India's carbon market is no longer just a domestic affair. With the operationalisation of the Carbon Credit Trading Scheme (CCTS) and the growing international demand for high-integrity carbon credits, India is poised to become a major player in the global carbon market under Article 6 of the Paris Agreement.

On June 8, 2026, India and Japan adopted the "Rule of Implementation" for their Joint Crediting Mechanism (JCM) under Article 6.2 of the Paris Agreement. This landmark agreement opens a new frontier for international carbon credit trading, allowing Indian projects to attract Japanese investment and technology while generating internationally transferable carbon credits.

As the International Emissions Trading Association (IETA) notes, India has the potential to position itself as "one of the leading Article 6 supply markets globally." The strategic opportunity is significant: Article 6 can support cost-effective mitigation, mobilise international climate finance, accelerate implementation of India's Nationally Determined Contribution (NDC), and support the country's long-term low-carbon development objectives.

This guide provides a comprehensive overview of Article 6 of the Paris Agreement, what it means for Indian project developers, and how to participate in this growing international carbon market.

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What Is Article 6 of the Paris Agreement?

The Framework

Article 6 of the Paris Agreement provides the framework for international cooperation on climate action through carbon markets. It consists of three key components:

Component	Description
Article 6.2	Enables bilateral and multilateral cooperation through the transfer of Internationally Transferred Mitigation Outcomes (ITMOs)
Article 6.4	Establishes a UN-supervised crediting mechanism for emission reductions
Article 6.8	Provides for non-market approaches to climate cooperation

Why Article 6 Matters

Reason	Explanation
Cost-Effective Mitigation	Enables emission reductions where they are cheapest
International Finance	Mobilises climate finance for developing countries
NDC Achievement	Helps countries meet their climate targets
Market Access	Creates new markets for carbon credits

Article 6.2 vs. Article 6.4

Aspect	Article 6.2	Article 6.4
Nature	Bilateral/multilateral cooperation	UN-supervised mechanism
Credits	Internationally Transferred Mitigation Outcomes (ITMOs)	Article 6.4 Emission Reductions (A6.4ERs)
Governance	Countries establish their own rules	UNFCCC supervises
Flexibility	Higher	Lower

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Article 6.2: Bilateral Cooperation and ITMOs

What Is Article 6.2?

Article 6.2 of the Paris Agreement enables countries to voluntarily cooperate in achieving their climate targets through the transfer of internationally recognised carbon credits, subject to agreed accounting and transparency rules. This provision permits countries to trade emission reductions bilaterally to meet their Nationally Determined Contributions (NDCs).

What Are ITMOs?

Internationally Transferred Mitigation Outcomes (ITMOs) are carbon credits transferred between countries under Article 6.2. They represent verified emission reductions that can be used by one country to meet its NDC commitments.

Key Features of Article 6.2 Cooperation

Feature	Description
Bilateral Agreements	Countries agree on cooperation terms
ITMOs	Credits transferred between countries
NDC Accounting	Credits counted toward NDCs
Transparency	Robust accounting and transparency rules

The Authorisation Requirement

Countries must authorise the transfer of ITMOs. This ensures that credits are not double-counted and that NDC accounting is transparent.

India's Bilateral Engagements

India has been actively exploring Article 6 opportunities. The India-Japan JCM is the first major bilateral arrangement, and more may follow. India is also engaged in discussions with other countries on carbon market cooperation.

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Article 6.4: The UN-Supervised Crediting Mechanism

What Is Article 6.4?

Article 6.4 establishes a UN-supervised crediting mechanism for emission reductions. It is designed to support mitigation activities while contributing to sustainable development.

Key Features

Feature	Description
UN Supervision	Supervised by the UNFCCC
Sustainable Development	Must contribute to sustainable development
Global Applicability	Open to all countries
Quality Standards	High integrity standards

Article 6.4 and the CDM

Article 6.4 builds on the experience of the Clean Development Mechanism (CDM) under the Kyoto Protocol but with strengthened integrity requirements.

The Significance for India

India has extensive experience with the CDM and is well-positioned to participate in the Article 6.4 mechanism. Indian project developers can access international markets through Article 6.4, potentially commanding premium prices for high-quality credits.

Carbon Check (India): A Global First

Carbon Check (India), India's leading Validation & Verification Body (VVB), has become the first Designated Operational Entity (DOE) globally to receive accreditation under Article 6.4 of the Paris Agreement. This is a significant milestone that positions India at the forefront of international carbon market verification.

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The India-Japan Joint Crediting Mechanism (JCM)

The Agreement

On June 8, 2026, India and Japan adopted the "Rule of Implementation" for the Joint Crediting Mechanism under Article 6.2 of the Paris Agreement. The JCM operationalises the Memorandum of Cooperation (MoC) signed between the two countries in 2025.

What the JCM Enables

Aspect	Description
Investment	Japanese investment in Indian climate projects
Technology	Japanese low-carbon technologies to India
Credits	Carbon credits shared between countries
NDC	Supports both countries' NDCs

The Mechanism

Under the JCM, a Japanese company may fund a project in India that cuts or removes greenhouse gas emissions. Those reductions are independently verified and converted into carbon credits, which can then be transferred between the two countries and counted toward their respective climate pledges.

The Governance Structure

Element	Description
Joint Committee	Representatives from both governments
Project Approval	Transparent project approval procedures
Verification	Third-party validation and verification
Safeguards	Sustainable development safeguards
Registries	National registries to track credits

What the Government Says

"The Joint Crediting Mechanism demonstrates India's firm commitment to climate action. It will catalyse investment, technology transfer and capacity-building for projects involving low-carbon technologies in India to support climate change mitigation and sustainable development," the Ministry of Environment, Forest and Climate Change said.

The Delhi Metro Connection

"The Delhi Metro, product of India-Japan partnership, will be eligible for transfer of carbon credits under the joint crediting mechanism," officials noted.

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The IETA Recommendations: Strengthening India's Article 6 Framework

The Position Paper

IETA has released a position paper outlining recommendations to support the development of a credible, robust, and investment-friendly Article 6 framework in India.

Key Recommendations

Recommendation	Details
Bilateral Cooperation	Accelerate bilateral Article 6 cooperation agreements and implementation readiness
Governance Framework	Establish a clear and transparent authorisation and governance framework
Eligible Activities	Expand the list of eligible Article 6 activities, including nature-based solutions and removals
NDC Alignment	Align India's Article 6 framework with NDC implementation and accounting requirements
Institutional Coordination	Strengthen institutional coordination, legal certainty, and stakeholder capacity-building

The Balancing Act

The paper highlights the importance of "balancing international carbon market participation with domestic climate objectives, while ensuring market integrity, long-term competitiveness, and investment certainty for project developers and international buyers."

The Call to Action

IETA noted that "a clear, predictable, and market-aligned framework will be critical to unlocking India's significant potential to attract climate finance, scale mitigation activities, and position itself as a leading supplier of high-integrity carbon credits in global carbon markets."

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The IEEFA Perspective: Sequencing and Safeguards

The Report

The IEEFA report, "The road ahead for India's Carbon Credit Trading Scheme," examines how India should approach Article 6.

The Sequencing Principle

The report cautions that Article 6 opportunities are "best developed once the compliance market has found its footing" . This is a critical insight: India should not rush into international carbon trading before the domestic market is mature.

The Integrity Warning

India must manage Article 6 opportunities "while safeguarding the integrity of India's carbon market and sovereign mitigation goals."

The Lesson from Australia

In Australia, the inclusion of international offset units in the carbon pricing mechanism contributed to a collapse in domestic prices and undermined the credibility of the scheme. India must learn from this experience.

The IEEFA's Four Themes

The analysis is structured around four interconnected themes:

Theme	Description
Financial Market Participation	Building liquidity and depth
Responding to Border Carbon Costs	CBAM and international trade
Sectoral Expansion	Including the power sector
Managing Offsets and Article 6	Article 6 opportunities while safeguarding integrity

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Article 6 and India's NDC

The NDC Context

India's NDC for 2031 to 2035, approved on 25 March 2026, expands the non-fossil power capacity target to 60 percent by 2035, increases the emissions intensity reduction target to 47 percent from 2005 levels, and expands the carbon sink target to 3.5 to 4 billion tonnes of CO₂ equivalent. Article 6 can play a critical role in achieving these targets.

How Article 6 Can Help

Contribution	Description
ITMOs	Internationally transferred mitigation outcomes can help meet NDC targets
Investment	Attracts international climate finance
Technology	Facilitates access to low-carbon technologies
Scale	Enables scaling of climate action

The Article 6 and NDC Connection

Article 6 can support cost-effective mitigation, mobilise international climate finance, accelerate implementation of India's NDC, and support the country's long-term low-carbon development objectives.

India's Revised NDC

India's revised NDCs call for a 45 percent reduction in emissions intensity by 2030 compared to 2005 levels, setting a clear path toward long-term climate targets. These commitments are supported by the launch of the Indian Carbon Market (ICM).

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The CBAM Connection: International Crediting and Export Competitiveness

The CBAM Challenge

India's steel and aluminium exports to the European Union (EU) fell 24.4% in FY 2025, with steel alone down 35.1%, before any Carbon Border Adjustment Mechanism (CBAM) financial obligation had taken effect.

How International Crediting Can Help

Aspect	Benefit
Carbon Compliance	JCM/Article 6 credits demonstrate carbon compliance
CBAM Deduction	Carbon prices paid in India could be offset against CBAM liabilities
Competitiveness	Maintains export competitiveness

The IEEFA Perspective

Irrespective of the ongoing international discussions around CBAM, "what matters now is how the EU's recognition of carbon prices paid in third countries will interact with India's market design, and how the CCTS can be calibrated so that domestic carbon costs are credited at the border."

The Strategic Opportunity

Indian companies that participate in Article 6 mechanisms and generate internationally recognised credits will be better positioned to:

• Meet CBAM requirements
• Maintain export competitiveness
• Access premium markets

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Opportunities for Indian Project Developers

Opportunity 1: Access to Japanese Investment

Aspect	Benefit
Financing	Access to Japanese capital for climate projects
Terms	Potentially favourable financing terms
Scale	Ability to scale projects with Japanese investment

Opportunity 2: Access to Japanese Technology

Aspect	Benefit
Technology Transfer	Access to advanced low-carbon technologies
Capacity Building	Build technical capacity in India
Innovation	Exposure to cutting-edge climate solutions

Opportunity 3: International Carbon Credits

Aspect	Benefit
Market Access	Access to international carbon markets
Price Premium	Potential for premium pricing
Diversification	Diversify revenue sources

Opportunity 4: NDC Contribution

Aspect	Benefit
National Recognition	Contribution to India's NDC targets
Government Support	Potential for government support
Reputation	Enhanced climate leadership reputation

Opportunity 5: Premium Pricing

Aspect	Benefit
High-Integrity Credits	Article 6 credits command premium prices
International Demand	Growing demand from international buyers
Co-Benefits	Projects with co-benefits attract premium pricing

The Market Size

One estimate values the India carbon credit market at USD 5.90 billion in 2026, surging to USD 66.79 billion by 2033 — a CAGR of 41.4%. International linkages under Article 6 will be a key driver of this growth.

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Risks and Challenges

Risk 1: Rushing Article 6

Problem: Introducing international credits too early could flood the market and weaken price signals.

Solution: Sequence Article 6 carefully. As the IEEFA recommends, Article 6 opportunities are "best developed once the compliance market has found its footing".

Risk 2: Double Counting

Problem: Credits could be counted by both countries.

Solution: Robust accounting and transparency rules are essential. National registries must track the issuance and transfer of credits.

Risk 3: Integrity Concerns

Problem: Low-quality credits could undermine market credibility.

Solution: Ensure high integrity standards. Align with the Core Carbon Principles.

Risk 4: NDC Accounting

Problem: ITMOs must be properly accounted for in NDCs.

Solution: Clear authorisation and governance frameworks.

Risk 5: Price Volatility

Problem: International carbon prices can be volatile.

Solution: Hedging strategies and careful timing.

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What Project Developers Must Do Now

Action 1: Understand the Article 6 Framework

Action	Why It Matters
Study Article 6	Understand the requirements of Article 6.2 and 6.4
Understand the JCM	Learn about the India-Japan Joint Crediting Mechanism
Monitor developments	Track Article 6 developments

Action 2: Assess Your Project's Eligibility

Action	Why It Matters
Determine eligibility	Does your project qualify for Article 6?
Identify partners	Identify potential international partners
Assess additionality	Ensure your project is additional

Action 3: Prepare for Verification

Action	Why It Matters
Build MRV systems	Robust monitoring, reporting, and verification
Engage verifiers	Connect with accredited verification bodies
Document everything	Maintain comprehensive records

Action 4: Engage with the JCM

Action	Why It Matters
Identify Japanese partners	Find Japanese companies interested in JCM projects
Prepare project proposals	Develop proposals for JCM approval
Engage with the Joint Committee	Understand approval requirements

Action 5: Seek Expert Guidance

Action	Why It Matters
Engage a carbon advisory firm	Get expert guidance on Article 6
Work with legal experts	Ensure compliance with international rules
Build internal capacity	Develop expertise in international carbon markets

Conclusion: Position India as a Global Carbon Leader

Article 6 of the Paris Agreement represents a significant opportunity for Indian project developers. With the operationalisation of the India-Japan Joint Crediting Mechanism on June 8, 2026, and growing international demand for high-integrity carbon credits, India is poised to become a major player in the global carbon market.

Key Takeaways

Aspect	What You Need to Know
Article 6.2	Bilateral cooperation through ITMOs
Article 6.4	UN-supervised crediting mechanism
India-Japan JCM	Operationalised on June 8, 2026
IETA Recommendations	Framework for strengthening India's Article 6
IEEFA Caution	Sequence Article 6 carefully
India's Potential	Leading Article 6 supply market globally
Market Size	USD 5.90B in 2026, USD 66.79B by 2033

The Choice Is Yours

Option	Outcome
Act now	Access international investment, generate internationally recognised credits, position as a global carbon leader
Wait and see	Miss first-mover advantage, face higher competition later