India aims to finalize carbon deals with Japan and Singapore

INDIA aims to finalize a potential carbon credit deal with Japan in early 2025 and then promote similar negotiations with countries such as South Korea and Singapore

The world’s third-largest emitter of carbon dioxide wants to attract investment and technology that could be deployed on projects that would reduce pollution and provide credits, according to people familiar with the discussions who asked not to be identified as deliberations continue be private.

A bilateral deal with Japan is likely to be signed early next year and India will look to finalize the pacts with South Korea and Singapore before the end of the fiscal year ending March 2026, one of the people said.

Discussions are also taking place about possible future deals with Germany and Sweden.

A spokesperson for India’s ministry of environment, forests and climate change did not respond to a request for comment.

Pacts under Article 6.2 of the Paris Agreement are being discussed, which are intended to facilitate trade between countries and allow countries to use credits towards their climate goals. Negotiators at the COP29 talks in Azerbaijan on November 23 approved rules to guide the market after almost a decade of consultations.

A NEWSLETTER FOR YOU

Friday, 12:30 p.m

ESG insights

An exclusive weekly report on the latest environmental, social and governance issues.

Japan is in talks with India on a bilateral carbon credit deal, the country’s commerce ministry said, without specifying a timeline. The two countries signed an agreement in 2023 to work on building a joint credit mechanism.

Singapore is in discussions with India on a bilateral implementation agreement in line with Article 6.2, the country’s National Climate Secretariat said. South Korea’s Environment Ministry confirmed discussions on a possible memorandum of understanding on carbon credit cooperation.

The German Ministry of Economic Affairs is also in talks with India on a memorandum of understanding, a spokesperson said. “Sweden is in dialogue with many countries” about possible bilateral partnerships, Swedish Energy Agency spokesperson Ola Westberg said, without indicating whether talks are taking place with India.

Countries such as Singapore and Switzerland had already made agreements before the Article 6.2 guidelines were finalized at COP29. According to BloombergNEF, agreements between governments to trade emissions cuts topped $1 billion during the summit.

Some experts have expressed concern that bilateral deals could lead to the trade in junk carbon credits, which promise to reduce emissions on paper but deliver nothing in reality. That’s because the rules are seen as weak guidelines for ensuring environmental integrity.

In some Indian talks, officials have proposed a joint carbon credit mechanism under which partner countries would provide financing and technology to set up projects. The credits generated would then be shared and the distribution would vary depending on developments, the people said.

Officials in India have previously identified 13 types of activities eligible for bilateral carbon trading, including green hydrogen, sustainable aviation fuel and high-voltage direct current transmission. BLOOMBERG