According to a Bloomberg report, India is aiming to finalize a potential carbon credit deal with Japan early in 2025 and then advance similar negotiations with nations including South Korea and Singapore.

The world's third-largest carbon dioxide emitter wants to attract investment and technology to be deployed on projects that would mitigate pollution and generate credits, according to people familiar with the discussions, who asked not to be identified as the deliberations are private. 

A bilateral agreement with Japan is likely to be signed early next year and India will seek to complete pacts with South Korea and Singapore before the end of the fiscal year ending in March 2026, one of the people said. 

Pacts are being discussed under Article 6.2 of the Paris Agreement, which is intended to facilitate nation-to-nation trading and allow countries to use credits against their climate targets. Negotiators at the COP29 talks in Azerbaijan on Saturday approved rules to guide the market after almost a decade of deliberations.

Countries including Singapore and Switzerland have been striking pacts in advance of guidelines being finalised. Agreements between governments to trade emission reductions topped $1 billion at COP29, according to BloombergNEF. 

Japan has been in talks with India for a bilateral carbon-credit agreement, the nation's trade ministry said, without specifying any timeline. The two countries signed an agreement in 2023 to work on building a joint crediting mechanism.

Singapore is in discussions with India on a bilateral implementation agreement aligned with Article 6.2, said the country's National Climate Change Secretariat. South Korea's environment ministry confirmed discussions on a potential memorandum of understanding over collaboration on carbon credits. 

Strategic Importance of the Partners

Japan, South Korea, and Singapore are key partners for India in its pursuit of carbon neutrality. With Japan's advanced clean technology sector, South Korea's experience in green finance, and Singapore's expertise in sustainable urban development, these nations are ideal collaborators for India's emission reduction initiatives.

The carbon credit deals are expected to bring significant economic benefits to India, including access to cutting-edge green technologies, financial investments, and potential job creation in the renewable energy sector. This will not only help India meet its climate targets but also stimulate its economy in the process.

This marks a pivotal moment in the global fight against climate change, with India positioned to play a central role in the evolving carbon market.

 Opportunities and Challenges for India

1. India's commitment to generate 50% of electricity from non-fossil sources by 2030 positions it as a key player in carbon-reduction projects.
2. The iron and steel industries are expected to meet emission standards by 2025, setting the stage for India's formal carbon market launch.
3. India faces challenges such as infrastructure gaps and the need for timely deployment of green technologies.
4. Collaborating with Japan, South Korea, and Singapore presents opportunities to bridge these gaps and accelerate India's transition to a low-carbon economy.