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COP29 and the Role of Article 6.2 in India’s Climate Strategy
Context:
COP29, held in Baku, Azerbaijan, has been aptly termed the ‘Climate Finance COP’ due to its pivotal role in advancing the operationalisation of Article 6 of the Paris Agreement.
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- This development underscores a renewed emphasis on market mechanisms, aiding resource-constrained nations in their transition towards carbon neutrality.
Significance of Article 6.2
- Article 6 facilitates cooperative approaches to climate action, with Article 6.2 enabling the transfer of Internationally Transferred Mitigation Outcomes (ITMOs) between host and partner nations.
- This mechanism allows developing countries to receive financial and technological support from developed nations while reducing emissions.
- By fostering capacity building and technology exchange, Article 6.2 supports the global shift towards a low-carbon economy and the achievement of Sustainable Development Goals (SDGs).
India’s Climate Commitments
- Dual Challenge: As the third-largest emitter of greenhouse gases in absolute terms, India faces a dual challenge: balancing its developmental aspirations with climate commitments.
- Constraints: Despite setting ambitious Nationally Determined Contributions (NDCs), including a 45% reduction in emissions intensity by 2030, India continues to grapple with financial and technical constraints.
- Ahead of COP29, India reiterated its demand for developed nations to mobilise at least $1 trillion annually to support developing countries in tackling climate change.
- Integrating Market Mechanism: India’s transition towards a domestic emissions trading scheme (ETS), initiated in 2023 as the Carbon Credit Trading Scheme (CCTS), aligns with its commitment to integrating market mechanisms into national policy.
- Though not directly linked to Article 6.2, the CCTS enhances institutional frameworks for carbon credit verification and tracking.
- Solid Foundation: Moreover, India’s experience with the Clean Development Mechanism (CDM), voluntary carbon markets (VCM), Energy Saving Certificates (ESCerts), and Renewable Energy Certificates (RECs) provides a solid foundation for engaging with international carbon markets.
Opportunities for India
- Key Areas: India has identified 14 key areas for international collaboration under Article 6.2, including renewable energy, energy storage, and carbon capture, utilisation, and storage (CCUS).
- Partnerships: Advanced technologies such as green hydrogen and sustainable aviation fuel require substantial investment and expertise, which India seeks through partnerships with countries like South Korea, the European Union, and Japan.
- Leverage Surplus Emissions Reductions: By engaging in ITMO transactions, India can leverage its surplus emissions reductions to secure financial resources while simultaneously advancing its SDG commitments.
- The benefits extend beyond emissions reduction, encompassing improved public health, job creation, and economic growth through sustainable projects.
- South-South Cooperation: Additionally, fostering South-South cooperation positions India as a leader in climate finance and technology transfer, particularly with African nations.
Strengthening South-South Cooperation
- Article 6.2 presents a unique opportunity for India to expand South-South cooperation by engaging with African nations, which possess vast renewable energy potential but face significant climate vulnerabilities.
- India’s longstanding engagement with Africa, encompassing trade, investment, and development projects, strengthens the case for collaboration.
- Under Prime Minister Narendra Modi’s ten principles for India-Africa engagement, economic cooperation plays a central role, with a focus on building local capabilities, enhancing agricultural productivity, and addressing climate challenges.
Challenges and Considerations
- Developed Nations’ Uncertainty: Developed nations might exploit low-cost emissions reductions from India without implementing substantial domestic decarbonisation efforts.
- This could shift the financial and mitigation burden onto India, limiting its ability to meet its own climate targets.
- Lack of Transparency: Additionally, inadequate transparency and governance in ITMO mechanisms could lead to inefficiencies and inequities, potentially undermining India’s interests.
- Ignoring Domestic Priorities: Over-reliance on ITMO transfers by partner nations might also detract from India’s broader priorities, such as domestic capacity building and the deployment of green technologies.
To mitigate these risks, India must ensure that ITMO agreements incorporate safeguards for equitable benefit-sharing, robust transparency measures, and alignment with national and global climate ambitions.
