India to Finalize Carbon Credit Pact with Japan by 2025, Plans Deals with South Korea, Singapore

India’s trade ministry said that Japan has been in talks with India to negotiate the bilateral carbon credit agreement

India aims to finalize a possible carbon credit agreement with Japan early in 2025 and then plans to have similar talks with countries like South Korea and Singapore.

India, the world’s third-largest carbon dioxide emitter, wants to attract investment and technology to use it on projects that would reduce pollution.

India plans to finalize agreements with South Korea and Singapore before the fiscal year ends in March 2026, and India will also have a bilateral agreement with Japan will be finalized by early next year.

India is also having talks with Germany and Sweden regarding future prospective deals.

A representative of India’s Ministry of Environment, Forests, and Climate Change requested a response, but he did not answer it.

Pacts were being discussed under Article 6.2 of the Paris Agreement. It aims to ease trade between nation to nation and allow countries to apply credits against their climate commitments. After nearly ten years of discussions, negotiators at the COP29 talks in Azerbaijan finalized rules to guide the market.

India’s trade ministry said that Japan has been in talks with India to negotiate the bilateral carbon credit agreement, but he did not specify the timeline. The two countries signed an agreement in 2023 to develop a cooperative credit system.

Previously, the Ministry of New & Renewable Energy (MNRE) announced an offtake deal signed between India and Japan to export green ammonia. The deal was finalized on August 21, 2024. This agreement marks India’s first export of green ammonia to Japan. This deal supports India’s expanding position in the global green energy industry and the value of long-term partnerships in sustainable energy.

Pralhad Joshi, the minister of New & Renewable Energy, stated that the agreement to supply green ammonia from India to Japan would help to establish a robust supply chain from manufacturing in India to consumption in Japan, paving the way for future partnerships in the green energy industry.

He further added that India has already launched a tender for 7.5 lakh tonnes of green ammonia, and an additional 4.5 lakh TPA of capacity is floating.

According to the National Climate Change Secretariat, Singapore is in discussions with India on a bilateral implementation agreement under Article 6.2. South Korea’s environment ministry confirmed that discussions are going on about a possible memorandum of understanding (MoU) for the collaboration on carbon credits.  

According to a spokesperson, Germany’s economy ministry is also negotiating a memorandum of understanding with India. Ola Westberg, the spokesperson for Sweden’s Energy Agency, stated that Sweden is in talks with other countries regarding a potential bilateral partnership, but he did not specify whether discussions are taking place with India.

Countries like Singapore and Switzerland started signing agreements before COP29 finalized the rules for Article 6.2.

Both governments have reached an agreement worth more than $1 billion at the summit to trade emission reductions.

Some experts have raised concerns that the bilateral agreements may result in the trading of junk carbon credits, promising to reduce emissions but in reality would not translate. The reason for this is the regulations have insufficient guidance for maintaining environmental integrity.

During discussions in India, representatives have suggested a joint carbon crediting mechanism where the partnering countries would provide finance and technology to set up projects. The credits generated would be distributed based on its developments.

Officials in India previously highlighted 13 categories of activity for bilateral carbon trading, such as green hydrogen, sustainable aviation fuel, and high-voltage electricity transmission.