Article 6, JCM & International Carbon Linkages for India

Article 6, JCM & International Carbon Linkages for India

As the global carbon market architecture matures under the Paris Agreement, India stands at a pivotal crossroads. With the world’s second-largest portfolio of Clean Development Mechanism (CDM) projects, a newly operational domestic Carbon Credit Trading Scheme (CCTS), and bilateral carbon cooperation agreements with Japan and Switzerland already in force, India’s engagement with Article 6 of the Paris Agreement will shape both the country’s climate diplomacy and the commercial prospects of thousands of project developers, industrial entities, and carbon market intermediaries.

This page provides a comprehensive, practitioner-oriented guide to Article 6 mechanisms as they apply to India — covering bilateral cooperative approaches (Article 6.2), the new centralised crediting mechanism (Article 6.4), CDM project transitions, corresponding adjustments, and the critical question of whether India’s domestic CCTS credits can be sold internationally.

Article 6 Overview: The Two Pathways

Article 6 of the Paris Agreement, finalised at COP26 in Glasgow (November 2021) after six years of negotiation, establishes the rules for international cooperation on carbon markets. It creates two distinct pathways through which countries can trade emission reduction outcomes to help meet their Nationally Determined Contributions (NDCs).

Article 6.2 — Cooperative Approaches (Bilateral/Plurilateral)

Article 6.2 allows two or more countries to directly cooperate on emission reduction activities and transfer the resulting mitigation outcomes between their national accounts. The units transferred are called Internationally Transferred Mitigation Outcomes (ITMOs). Key features of Article 6.2 include:

• Country-driven flexibility: Participating nations design their own bilateral or plurilateral frameworks, methodologies, and governance structures. There is no centralised UN body approving individual projects — the responsibility lies with the cooperating Parties.
• ITMO tracking: Each Party must maintain or participate in a registry that tracks ITMOs. The UNFCCC maintains a centralised accounting platform to which all Parties report their ITMO transactions.
• Corresponding adjustments mandatory: Every ITMO transfer triggers a corresponding adjustment in both the transferring and acquiring country’s emission accounts, preventing double counting (discussed in detail below).
• Broad scope: ITMOs can represent emission reductions, emission removals, or other mitigation outcomes. They can originate from any sector and any type of activity, subject to the bilateral agreement’s scope.
• No share of proceeds: Unlike Article 6.4, there is no mandatory levy for adaptation funding under Article 6.2, though Parties are “strongly encouraged” to contribute.

For India, Article 6.2 is the more immediately relevant pathway. India’s bilateral agreements with Japan (JCM) and Switzerland operate under Article 6.2 principles, enabling Indian project developers to generate carbon credits that count toward the partner country’s NDC while India applies a corresponding adjustment to its own emissions inventory.

Article 6.4 — The Centralised Mechanism (Successor to CDM)

Article 6.4 establishes a new UN-supervised crediting mechanism governed by the Article 6.4 Supervisory Body (A6.4SB). This mechanism is the successor to the Kyoto Protocol’s Clean Development Mechanism and is designed to:

• Generate tradeable credits (A6.4ERs): Article 6.4 Emission Reductions are issued by the Supervisory Body upon verification of emission reductions or removals from registered projects.
• Centralised governance: Unlike Article 6.2, the A6.4SB approves methodologies, registers projects, and oversees issuance. This provides greater standardisation but less flexibility.
• Host country authorisation required: The host country (e.g., India) must formally authorise each project and each issuance of A6.4ERs before they can be transferred internationally.
• Mandatory share of proceeds: 5% of issued A6.4ERs are automatically cancelled for overall mitigation of global emissions (OMGE), and 2% of monetary proceeds from first transfers are directed to the Adaptation Fund.
• CDM transition pathway: Existing CDM projects may transition to the Article 6.4 mechanism subject to conditions set by the Supervisory Body, a matter of enormous consequence for India given its CDM portfolio size.

As of mid-2026, the Article 6.4 mechanism is still in its operationalisation phase. The Supervisory Body has been adopting methodological tools, baseline-setting guidance, and transition rules, but no new projects have yet been registered under the mechanism. India has been an active participant in the negotiations, consistently advocating for the preservation of CDM methodological assets and fair transition terms for existing projects.

India’s Article 6.2 Bilateral Agreements

Japan Joint Crediting Mechanism (JCM)

The Joint Crediting Mechanism (JCM) is the most advanced and operationally mature Article 6.2 framework involving India. Originally established under the Kyoto Protocol era as a bilateral offset crediting programme, the JCM has been repositioned under the Paris Agreement’s Article 6.2 framework.

Bilateral framework: India and Japan signed their JCM bilateral document establishing the institutional framework, including a Joint Committee comprising representatives from both governments that oversees project registration, methodology approval, and credit issuance. The Japanese Ministry of the Environment (MOEJ) and the Ministry of Economy, Trade and Industry (METI) are the lead agencies on the Japanese side, while India’s Ministry of Environment, Forest and Climate Change (MoEFCC) is the designated authority.

Active project areas in India: JCM projects in India span several sectors:

• Renewable energy: Solar photovoltaic installations at commercial and industrial facilities, rooftop solar at manufacturing plants, and solar-wind hybrid projects. These represent the largest share of JCM projects by volume.
• Energy efficiency in industry: Installation of high-efficiency boilers, waste heat recovery systems, variable frequency drives, and energy management systems in steel, cement, textile, and chemical manufacturing facilities.
• Transport: Introduction of energy-efficient transport systems, including electric vehicle charging infrastructure projects and modal shift initiatives.
• Waste management: Methane capture and utilisation at solid waste processing facilities and wastewater treatment plants.

JCM methodology and MRV: Each JCM project type requires an approved JCM methodology. These methodologies specify the baseline scenario, emission factor calculations, monitoring parameters, and quantification approach. Key characteristics include:

• Simplified monitoring compared to CDM — project developers report monitored data to a designated third-party entity (TPE) approved by the Joint Committee
• Default emission factors drawn from IPCC guidelines and national inventories of both countries
• Conservative baseline-setting to ensure environmental integrity
• Crediting periods typically of 8 or 10 years, depending on the methodology

Credit issuance process: The JCM credit issuance follows a defined sequence: (1) project design document preparation; (2) validation by an approved TPE; (3) registration by the Joint Committee; (4) monitoring and reporting by the project participant; (5) verification by a TPE; (6) credit issuance by the Joint Committee. Credits are issued into the JCM registry and allocated between Japan and the project participant according to the agreed ratio. Japan applies a corresponding adjustment to its NDC accounts when using JCM credits.

Financing support: The Japanese government provides significant co-financing for JCM projects through the JCM Model Project programme, JCM Financing Programme (through JICA), and the Global Environment Facility-aligned JCM facilities. This financing — often covering 30-50% of the incremental cost of the low-carbon technology — is a major incentive for Indian project developers and represents a de facto technology transfer mechanism.

Switzerland Bilateral Agreement

India and Switzerland have concluded a bilateral agreement under Article 6.2, facilitated in part by the KliK Foundation (Foundation for Climate Protection and Carbon Offset), the Swiss entity established under Swiss CO2 legislation that is mandated to offset a portion of emissions from imported transport fuels.

Agreement scope: The India-Switzerland bilateral framework covers emission reduction projects across multiple sectors, with a particular focus on:

• Energy efficiency improvements in small and medium enterprises (SMEs)
• Clean cooking solutions — distribution of improved biomass cookstoves and LPG transitions
• Distributed renewable energy — solar home systems and mini-grids in rural areas
• Waste management and methane avoidance projects

Swiss Climate Cent Foundation and KliK: The KliK Foundation acts as the primary buyer of ITMOs generated from projects in India under this bilateral agreement. KliK has a legal obligation to offset approximately 1.5 million tonnes of CO2 equivalent per year from international projects. Indian projects that meet the agreed methodological standards can sell verified ITMOs to KliK, generating revenue streams in Swiss francs while contributing to India’s sustainable development objectives.

Corresponding adjustment commitment: Under the terms of the bilateral agreement, India has agreed to apply corresponding adjustments for all ITMOs transferred to Switzerland, ensuring that the emission reductions are not also counted toward India’s NDC.

Other Negotiations in Progress

India is in various stages of discussion with several other countries regarding Article 6.2 cooperative approaches:

• South Korea: Discussions on linking India’s CCTS offset market with South Korea’s K-ETS have been exploratory. South Korea already has bilateral offset programmes with several Southeast Asian countries and has expressed interest in Indian renewable energy and industrial efficiency projects.
• Singapore: Singapore’s carbon tax regime, which allows for the use of eligible international carbon credits from 2024, creates a potential demand channel for Indian ITMOs. Framework discussions are underway.
• Germany and other EU member states: While the EU’s position on Article 6 has been cautious (given CBAM and the EU ETS), individual member states have explored bilateral arrangements for specific sectors, and Germany’s International Climate Initiative (IKI) has funded readiness activities in India.
• Gulf Cooperation Council (GCC) states: The UAE and Saudi Arabia, both developing voluntary carbon markets and pursuing diversification strategies, have signalled interest in Article 6.2 arrangements with India, particularly for renewable energy and green hydrogen projects.

Corresponding Adjustments: Preventing Double Counting

The corresponding adjustment mechanism is the accounting backbone of Article 6 and arguably the most consequential technical innovation of the Glasgow rulebook. Understanding corresponding adjustments is essential for any Indian entity participating in international carbon markets.

What Is a Corresponding Adjustment?

A corresponding adjustment is an accounting entry in a country’s national emissions inventory that ensures an emission reduction is counted only once — either by the country where the reduction physically occurs (the host country) or by the country that acquires the ITMO (the acquiring country), but never both simultaneously.

When India authorises the transfer of an ITMO to Japan under the JCM, India must add the equivalent quantity of emissions to its reported inventory (or subtract the equivalent from its NDC achievement calculation). Japan, upon receiving the ITMO, subtracts the equivalent from its reported emissions. The net global effect is zero — the emission reduction is counted exactly once.

Why Corresponding Adjustments Matter for India

India’s NDC is expressed in terms of emissions intensity (tonnes of CO2e per unit of GDP) rather than an absolute emissions cap. This creates specific accounting complexities:

• NDC headroom calculation: Every ITMO India authorises for transfer effectively reduces India’s available NDC headroom. If India transfers too many ITMOs, it may find it harder to demonstrate achievement of its own 45% emissions intensity reduction target by 2030.
• Strategic selectivity: India has strong incentives to be selective about which emission reductions it authorises for international transfer and which it retains for domestic NDC compliance. This is reflected in India’s approach to authorisation — requiring case-by-case government approval rather than blanket authorisation.
• Revenue vs. sovereignty trade-off: International ITMO sales generate foreign exchange revenue and technology transfer for Indian project developers. However, each transferred ITMO is a mitigation outcome that India can no longer claim as its own progress toward net-zero by 2070.
• Timing considerations: Corresponding adjustments are applied at the point of first transfer. India must ensure its national inventory and biennial transparency reports accurately reflect all ITMO transfers in the relevant reporting period.

Double Counting Scenarios and Safeguards

The corresponding adjustment framework addresses three types of double counting:

Type of Double Counting	Description	How Corresponding Adjustments Prevent It
Double claiming	Both India and Japan claim the same emission reduction toward their respective NDCs	India’s corresponding adjustment (addition to inventory) offsets the reduction, so only Japan counts it
Double issuance	The same emission reduction generates credits in both the domestic CCTS registry and the JCM registry	Bilateral agreements require registry interoperability and serialisation of credits with unique identifiers
Double use	The same ITMO is used by Japan for NDC compliance and then sold to a corporate buyer for voluntary offset claims	Registry infrastructure must track retirement/cancellation status; once used for NDC compliance, the ITMO is retired and cannot be re-transferred

CDM Project Transition to Article 6.4

India hosts approximately 1,700 registered CDM projects — the second-largest national portfolio after China — spanning renewable energy, energy efficiency, waste management, industrial gases, and forestry. The fate of these projects under the Article 6.4 mechanism is a matter of enormous commercial and strategic significance.

Transition Rules

At COP26 and subsequent sessions, Parties agreed on the following transition framework:

• Eligibility window: CDM projects registered on or after 1 January 2013 are eligible to request transition to the Article 6.4 mechanism. Projects registered before 2013 are not eligible, though their methodologies may still be considered for adoption.
• Host country approval required: The host Party (India) must formally approve the transition of each CDM project. India has not yet published a blanket policy on CDM transitions, suggesting it will take a case-by-case approach.
• Crediting period limits: Transitioned projects may use their remaining CDM crediting period, but the total crediting period (CDM + Article 6.4) cannot exceed the maximum allowed under Article 6.4 rules (currently proposed as 5 years renewable up to a maximum of 15 years for non-renewable crediting periods).
• Methodology alignment: CDM projects transitioning to Article 6.4 must demonstrate that their applied methodology is consistent with Article 6.4 methodological requirements. The A6.4SB has indicated that CDM methodologies will not be automatically accepted — each must be reviewed for alignment with the new mechanism’s baseline-setting, additionality, and permanence requirements.
• CER vintage restrictions: Certified Emission Reductions (CERs) issued under the CDM are not automatically convertible to A6.4ERs. CERs from the first commitment period of the Kyoto Protocol (pre-2013) are explicitly excluded from use in NDC accounting under Article 6.

CDM Methodologies Likely to Be Accepted

The Article 6.4 Supervisory Body has indicated a preference for methodologies that meet updated standards on additionality, baseline setting (using a “best available technology” or performance benchmark approach rather than project-specific baselines), and conservative quantification. CDM methodologies most likely to find alignment include:

• AMS-I.D (Grid-connected renewable electricity generation): Highly relevant for India’s large solar and wind CDM portfolio, though baseline emission factors will need updating to reflect India’s evolving grid mix.
• AMS-III.D (Methane recovery in animal manure management): Strong additionality case; likely to be accepted with minor modifications.
• AM0025 (Avoided emissions from organic waste through alternative waste treatment): Relevant for India’s waste-to-energy and composting projects.
• AMS-II.G (Energy efficiency measures in thermal applications of non-renewable biomass): Relevant for India’s clean cookstove projects, a sector with significant Article 6 demand from buyer countries like Switzerland.
• AR-AM0014 and AR-AMS0007 (Afforestation and reforestation): May face additional scrutiny under Article 6.4’s enhanced permanence requirements, including buffer pool provisions and long-term monitoring obligations.

Implications for Indian Project Developers

Indian CDM project developers face a strategic decision: transition to Article 6.4 (accepting new compliance requirements and corresponding adjustment obligations), seek bilateral deals under Article 6.2, or pivot to the voluntary carbon market. The optimal path depends on the project type, remaining crediting life, buyer relationships, and the price differential between Article 6 credits (which carry corresponding adjustments and therefore sovereign backing) and voluntary market credits (which do not).

Opportunities for Indian Project Developers

India’s combination of rapid economic growth, large industrial base, ambitious NDC targets, and diverse geography creates a rich opportunity landscape for generating internationally transferable mitigation outcomes under Article 6.

Priority Project Types

Project Category	Article 6 Potential	Key Considerations for India
Solar and wind energy	High volume, moderate per-credit value	Grid emission factor declining annually, reducing per-MWh credit volume. Additionality increasingly challenged for commercially viable utility-scale projects. Rooftop and distributed generation have stronger additionality case.
Waste-to-energy and methane avoidance	High value, strong buyer demand	Landfill methane capture, biogas from agricultural waste, and sewage gas recovery projects command premium pricing due to high co-benefit narratives. India’s Swachh Bharat Mission creates enabling policy conditions.
Clean cookstoves	Moderate volume, premium pricing	Strong demand from Swiss and Scandinavian buyers. Must demonstrate real usage rates and fuel switching (not just distribution). SDG co-benefits (health, gender, forest conservation) command significant price premiums in compliance markets.
Industrial energy efficiency	High additionality, complex MRV	Waste heat recovery in cement, iron and steel, and chemicals sectors. JCM financing available for technology deployment. MRV requirements are facility-specific and data-intensive, requiring robust monitoring infrastructure.
Forestry and REDD+	Emerging, regulatory uncertainty	India has significant potential in afforestation/reforestation (A/R) and avoided deforestation under community forestry programmes. Article 6.4 rules on permanence, reversals, and buffer pools are still being finalised. India’s Forest Survey of India data and Joint Forest Management framework provide institutional foundations.
Green hydrogen	Frontier, high future value	India’s National Green Hydrogen Mission targets 5 MT annual production by 2030. Article 6 methodologies for green hydrogen are under development. Early movers may benefit from premium pricing as buyer countries seek to decarbonise hard-to-abate sectors.

What Makes a Project “Article 6-Ready”?

For an Indian project to generate internationally transferable credits under Article 6, it must satisfy several conditions beyond basic emission reduction:

• Government authorisation: India’s designated national authority must formally authorise the project for ITMO generation. This is a sovereign decision and India has indicated it will evaluate each request against NDC headroom considerations.
• Approved methodology: Under Article 6.2, the bilateral agreement’s approved methodology must apply. Under Article 6.4, the Supervisory Body must have approved the relevant methodology.
• Additionality: The project must demonstrate that it would not have occurred in the absence of the Article 6 revenue stream. This is increasingly difficult for commercially mature technologies like utility-scale solar, but remains straightforward for less commercially viable interventions like clean cookstoves or industrial waste heat recovery.
• Robust MRV: Monitoring, Reporting, and Verification must meet the standards specified in the applicable framework. Third-party verification by an accredited entity is mandatory.
• Sustainable development contribution: Article 6.4 requires demonstration of contribution to sustainable development in the host country. Article 6.2 agreements typically include similar requirements.
• No other crediting: The project must not simultaneously generate credits under another mechanism (e.g., domestic CCTS offset, voluntary market registry) for the same emission reductions without corresponding adjustment safeguards.

CCTS and International Linkage

A critical and frequently asked question among Indian market participants is whether Carbon Credit Certificates (CCCs) generated under India’s domestic CCTS can be sold to international buyers or linked to foreign emissions trading systems.

India’s Current Position

As of mid-2026, India has not authorised the international transfer of CCTS compliance credits. The CCTS notification (S.O. 2806(E), 28 June 2023) establishes the domestic market infrastructure but does not include provisions for automatic international linkage. India’s position reflects several strategic considerations:

• NDC protection: Allowing bulk export of CCCs would deplete India’s domestic emission reduction achievements, making it harder to demonstrate NDC progress. India’s Ministry of Environment has repeatedly emphasised that domestic mitigation outcomes should first serve India’s own climate targets.
• Market maturity: The CCTS is still in early operationalisation. India’s priority is establishing a credible domestic carbon price signal, building institutional capacity, and ensuring compliance market liquidity before introducing the complexity of international linkage.
• Price differential risk: If international carbon prices (e.g., EU ETS at EUR 60-80/tonne) significantly exceed domestic CCTS prices, unrestricted linkage could drain supply from the Indian market, raising compliance costs for Indian obligated entities.
• Corresponding adjustment burden: Every CCC transferred internationally would require a corresponding adjustment, creating administrative complexity and reducing India’s ability to count those reductions toward its NDC.

Possible Future Pathways

While full CCC fungibility with international markets is unlikely in the near term, several intermediate pathways are under discussion:

• CCTS offset market linkage: The voluntary/offset segment of the CCTS (as distinct from the compliance segment) could potentially be authorised for international transfer on a project-by-project basis, subject to government approval and corresponding adjustments.
• Sectoral linking: India could authorise ITMO generation from specific CCTS-covered sectors (e.g., excess reductions in the steel sector beyond compliance obligations) without opening the entire market to international buyers.
• CBAM interplay: If the EU recognises a domestic carbon price paid under the CCTS as a deductible against CBAM obligations (which is the direction of current EU legislation), Indian exporters may benefit from CCTS participation without requiring actual credit transfer — the value flows through trade cost reduction rather than carbon market transactions.
• Article 6.2 bilateral channels: India could negotiate bilateral agreements allowing specific categories of CCTS-generated reductions to be transferred to partner countries under Article 6.2, with corresponding adjustments applied at the national level.

NDC Implications

India’s NDC target — a 45% reduction in emissions intensity of GDP by 2030 relative to 2005 — is measured in tonnes of CO2 equivalent per unit of GDP. Any international transfer of mitigation outcomes must be accounted for in India’s biennial transparency reports submitted under the Enhanced Transparency Framework (ETF) of the Paris Agreement. The National Steering Committee for Carbon Markets is the designated body responsible for ensuring that international transfers under Article 6 do not compromise India’s ability to meet its NDC. This governance structure suggests that India will continue to exercise tight control over the volume and type of mitigation outcomes it authorises for international transfer.

How RSustain Carbon Helps

Navigating the intersection of domestic carbon regulation, international Article 6 mechanisms, bilateral agreements, and voluntary carbon markets requires specialised expertise and tools. RSustain provides end-to-end support for organisations operating in India’s carbon market landscape.

Global Carbon Desk

RSustain’s Global Carbon Desk provides advisory services on Article 6.2 bilateral mechanisms, CDM transition strategies, ITMO authorisation processes, and international carbon market access. Whether you are a project developer seeking JCM registration, a corporate buyer evaluating international offset procurement, or a government entity building Article 6 readiness, the Global Desk connects you with the regulatory knowledge and market intelligence you need. Visit the Global Carbon Desk.

Carbon Offset Screener

The RSustain Carbon Offset Screener evaluates carbon credits across integrity dimensions including additionality, permanence, MRV robustness, co-benefits, and registry provenance. For organisations purchasing ITMOs or voluntary credits originating from Indian projects, the Screener provides independent quality assessment aligned with the Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles and Article 6 environmental integrity requirements. Access the Carbon Offset Screener.

GHG Assurance and Verification Readiness

Article 6 projects require robust MRV infrastructure and third-party verification. RSustain’s GHG Assurance practice helps project developers design monitoring plans, prepare verification documentation, and ensure compliance with the applicable standard — whether JCM TPE requirements, Article 6.4 Supervisory Body rules, or bilateral agreement-specific MRV protocols. Learn about GHG Assurance services.

RSustain Academy

RSustain Academy offers structured courses on carbon markets, including modules covering Article 6 mechanisms, CCTS compliance, CDM transition strategy, and international carbon accounting. These courses are designed for sustainability professionals, carbon market consultants, corporate compliance teams, and government officials engaged in NDC implementation and Article 6 readiness. Explore RSustain Academy courses.

CCTS Compliance Tools

For obligated entities under India’s CCTS that are also evaluating international carbon market participation, RSustain provides an integrated suite of tools including the CCTS Explainer, CCC vs REC vs ESCert comparison framework, and CBAM impact assessment. These tools help organisations understand the interaction between domestic compliance obligations and international market opportunities. Start with the CCTS Explainer.