Article 6 of the Paris Agreement offers India an opportunity to receive payments from other countries for mitigation outcomes at home, and to channel that revenue towards the vast investment that the low-carbon transition requires. Yet while the country can use international carbon markets to help finance its own decarbonisation, it will need to establish the right framework for approving sales of its Article 6 projects. Without this, there is a risk that India will undermine efforts to hit its near-term climate targets and achieve its 2070 net zero goal.
This report explores how the country can establish such a framework. The author argues that India should decide whether to authorise sales of carbon credits under Article 6 based on calibrated questions about what to sell, when to sell it and at what price.
Core recommendations
The author’s analysis points to six options for India, framed as considerations rather than directives:
- Authorise qualifying, low-burden Prior Consideration Notification projects promptly. These projects are set to lose more than half their value before 2031.
- Calibrate India’s 2028 positive list to include activities in the moderate scenario in this report, using the 2035 net zero safeguard to cut off project-level approvals once a medium or high threshold is reached.
- Hold total authorisation below the price-discipline ceiling and either retain high-burden volumes or sell them only at a premium.
- Condition medium-burden authorisations on a price floor and a commitment to spend the proceeds on domestic decarbonisation.
- Scale up programmes of activities and widen bilateral Article 6.2 partnerships to increase both the qualifying volume and the realised price.
- Provide retained projects in the Article 6 pipeline with a clear route to the voluntary carbon market.
- Set a minimum clearing price for sales under Article 6 relative to the net zero burden and pegged to the prevailing reference price.
DOI: 10.21953/researchonline.lse.ac.uk.00141188