Operationalizing Article 6 of the Paris Agreement
COP29, held in Baku, Azerbaijan, underscored as the ‘Climate Finance COP,’ has significantly advanced the implementation of Article 6 of the Paris Agreement. This article focuses on leveraging market mechanisms to assist countries in transitioning towards a carbon-neutral economy, particularly through cooperative approaches like Article 6.2.
Article 6.2: Key Features and Benefits
- Internationally Transferred Mitigation Outcomes (ITMOs): Article 6.2 facilitates ITMOs between host (developing) and partner (developed) countries, aiding in achieving Nationally Determined Contributions (NDCs).
- Promotes Collaboration: Encourages technology exchange, capacity building, and financial resource flow, supporting low-carbon economy transitions and Sustainable Development Goals (SDGs).
India's Position and Opportunities
As the third largest greenhouse gas emitter, India stands to benefit from Article 6.2, especially given its challenges in balancing developmental goals with climate commitments.
- Financial and Technical Constraints: India's NDCs aim for a 45% emissions intensity reduction by 2030, yet face significant financial and technical hurdles.
- Domestic Initiatives: India's Carbon Credit Trading Scheme (CCTS), launched in 2023, aligns with global market mechanisms, enhancing carbon credit tracking and verification.
- International Collaboration: India has identified 14 key activities, including renewable energy and carbon capture, requiring partnerships with nations like South Korea, EU, and Japan.
South-South Cooperation and ITMO Benefits
India's experience with the Clean Development Mechanism and voluntary carbon markets positions it to lead in South-South cooperation.
- Climate Finance and Investments: ITMOs enable India to access large-scale climate finance, with its renewable energy sector attracting over $10 billion in foreign direct investment in 2022.
- Partnership with Africa: India's collaboration with African nations can aid in technology transfer and capacity building, helping meet NDCs.
Challenges and Risk Management
While ITMO transactions offer opportunities for international cooperation, they also present challenges:
- Potential Over-Reliance: Developed nations might lean on India's low-cost reductions, avoiding domestic efforts.
- Opportunity Costs: ITMO transfers could detract from India's own climate targets and sustainability goals.
- Governance and Transparency: Risks include inefficiencies and inequities due to inadequate transparency in ITMO mechanisms.
India should ensure ITMO agreements include safeguards for equitable benefit-sharing and alignment with national and global climate goals.
