Article 6 of the Paris Agreement: What It Means for India's Carbon Market

Article 6 of the Paris Agreement is the section that governs international cooperation on climate action — specifically the rules that allow countries to trade carbon credits internationally to help meet their Nationally Determined Contributions (NDCs). For India, which has both significant emissions reduction ambitions and a large potential to generate low-cost carbon credits, Article 6 rules are directly relevant to how its carbon market develops and how Indian companies access international carbon finance.

The Three Pillars of Article 6

Article 6 has three main components. Article 6.2 covers bilateral agreements between countries — allowing one country to transfer emission reductions (called Internationally Transferred Mitigation Outcomes, or ITMOs) to another country, which counts those reductions toward its own NDC. Article 6.4 establishes a centralised UN carbon crediting mechanism — the successor to the Clean Development Mechanism (CDM) under the Kyoto Protocol — where projects are registered and verified by a UN Supervisory Body. Article 6.8 covers non-market approaches such as capacity building, technology transfer, and finance without tradable credits.

Why Article 6 Matters for India

India was one of the most active participants in the CDM — the previous international carbon credit mechanism — hosting hundreds of registered projects in renewable energy, energy efficiency, and methane capture. Under Article 6.4, India could again become a major source of internationally traded carbon credits. However, under the new rules, any emission reductions transferred internationally must be 'corresponding adjusted' — meaning India must remove them from its own NDC accounting when they are transferred to another country. This creates a policy tension that India's government is actively managing as it develops the CCTS.

Implications for Indian Companies Buying Carbon Credits

For Indian companies purchasing voluntary carbon credits, Article 6 introduces a quality consideration: credits that have been 'corresponding adjusted' by the host country are considered higher quality for corporate net zero claims because they avoid the double-counting problem. The Science Based Targets initiative (SBTi) and other frameworks are increasingly requiring companies to use corresponding-adjusted credits for certain types of claims. As India's Article 6 bilateral agreements develop — particularly under 6.2 — the type and quality of credits available in India's market will evolve. Csquare monitors these developments closely to advise clients on credit procurement strategies that will remain credible under evolving international standards.