Capital encounters carbon: an exploration of their interaction
In a significant move towards combating climate change, India and Japan have signed a Memorandum of Cooperation (MoC) under Article 6.2 of the Paris Agreement. This marks India's entry into international carbon credit trading, potentially catalyzing a genuine transformation of economies, ecosystems, and livelihoods.
The agreement, published on September 19, 2025, opens a pathway for project developers, industries, and investors to generate and trade emission reduction credits across borders. The MoC could become a model for other bilateral partnerships under Article 6, as global demand for high-quality carbon credits rises, particularly as advanced economies tighten their net zero compliance regimes.
The Ministry of Environment, Forest and Climate Change (MoEFCC) has finalised a detailed list of eligible activities for carbon credit generation. These include renewable energy, carbon capture, green hydrogen, and biodegradable alternatives. The establishment of India's National Designated Authority for Article 6 ensures environmental integrity is not compromised in the pursuit of carbon finance, signaling a credible, transparent, and scalable carbon market.
For India, the partnership provides finance, technology, and global market access. The agreement lowers the cost of green technology deployment in India due to Japanese financial support, technology transfer, and capacity building. This partnership aligns with India's Net Zero 2070 pledge and NDC targets under the Paris Agreement, while strengthening Japan's GX-ETS carbon trading system.
Trigunayat and Singh are associated with the agreement. Trigunayat is a retired IFS officer and former trade commissioner in New York, while Singh is the CEO & Director of Earthood. The India-Japan Joint Crediting Mechanism (JCM) could secure a reliable pipeline of credits for Japan.
However, prolonged negotiations over revenue-sharing formulas and credit distribution could slow momentum. It is also worth noting that the specific mandate of the 21 ministries represented in India's National Designated Authority for Article 6 could not be confirmed from the provided sources.
This is Japan's thirty-first JCM partnership. The opportunity presented by the India-Japan JCM is immense, but seizing it requires speed, clarity, and uncompromising environmental integrity. The operational complexity of Article 6 reporting requires a robust monitoring, verification, and transparency framework.
The India-Japan partnership is part of a broader Indo-Japan economic corridor, covering infrastructure, digital transformation, and skill development. This partnership underscores the growing cooperation between India and Japan in various sectors, particularly in the fight against climate change.
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