India and Japan are finalizing a Joint Crediting Mechanism (JCM), a bilateral framework that will allow both nations to share emission reduction credits, Policy Circle has reported.
Expected to be formalized within the next two months, this initiative aims to accelerate decarbonization efforts while lowering clean energy costs in India and helping Japan meet its climate commitments.
Under the JCM, Japanese companies will invest in and deploy advanced carbon-reduction technologies in India.
In return, Japan will receive carbon credits that can offset its emissions or be traded within its national carbon market.
The initiative falls under Article 6.2 of the Paris Agreement, ensuring internationally recognized and verifiable emissions reductions.
A wide range of sectors—including solar thermal energy, green hydrogen, and sustainable aviation fuel (SAF)—are expected to benefit from JCM investments.
Relevant: India To Launch Carbon Market In 2026, Says Power Minister
India can strategically direct these funds toward underdeveloped clean energy sectors, leveraging Japanese expertise to accelerate its transition to a low-carbon economy.
Japan has already established similar agreements with 11 other countries, including Indonesia, Kenya, and Vietnam.
However, negotiations with India have been ongoing since 2014, reflecting the complexity of such high-stakes climate agreements.
While the JCM promises significant environmental and economic benefits, challenges remain. Ensuring that emissions reductions are not double-counted will be critical to maintaining the mechanism’s credibility.
Additionally, India must develop the capacity to sustain and expand these technologies independently over time.
