India and Japan Operationalise Joint Crediting Mechanism to Advance Climate Goals

India and Japan have taken a major stride in their bilateral climate partnership by formally adopting the Rules of Implementation for the Joint Crediting Mechanism (JCM). This development operationalises a collaborative framework under Article 6.2 of the Paris Agreement, paving the way for joint efforts on greenhouse gas emission reductions and removals.

The mechanism is designed to facilitate Japanese investments in advanced low-carbon technologies and projects in India, enabling both countries to generate and share carbon credits that contribute to their respective Nationally Determined Contributions (NDCs). It also emphasises sustainable development alongside climate action.

India and Japan signed the Memorandum of Cooperation (MoC) last year. (X) | Hindustan Times

Background and Timeline

The foundation for this partnership was laid on August 7, 2025, when India and Japan signed a Memorandum of Cooperation (MoC) in New Delhi to establish the JCM. Japan has long used such bilateral mechanisms to promote the deployment of cutting-edge decarbonisation technologies in developing countries. India became the 31st partner in Japan’s JCM network, which now spans 32 countries.

Following the initial agreement, the first Joint Committee meeting was held on September 22, 2025. Through continued discussions and refinements, both sides reached consensus, leading to the official adoption of the Rules of Implementation on June 8, 2026. This milestone marks the full operationalisation of the mechanism, complete with structured governance arrangements.

Key Features of the Mechanism

The adopted rules establish a comprehensive and transparent governance structure for the JCM. A Joint Committee comprising representatives from both governments will oversee project approvals, implementation, and overall functioning of the mechanism.

Projects will undergo mandatory third-party validation and verification to ensure the accuracy of reported emission reductions or removals. National registries will track the issuance and transfer of carbon credits, helping prevent double counting and maintaining environmental integrity. The framework also incorporates safeguards to ensure that projects deliver tangible benefits for sustainable development in India.

Eligible sectors and activities include solar thermal power, offshore wind energy, green hydrogen and ammonia production, compressed biogas, sustainable aviation fuel, carbon capture utilisation and storage (CCUS), and high-efficiency industrial technologies. Projects are expected to demonstrate additionality, often involving innovative technologies that are not yet widely adopted or are more costly to implement in the Indian context.

Mutual Benefits for Both Nations

For India, the JCM offers valuable opportunities to attract foreign investment, accelerate the transfer of advanced clean technologies, and build domestic technical capacity in low-carbon sectors. These outcomes align with India’s broader climate ambitions while supporting economic growth and sustainable development priorities.

Japan, on its part, will be able to quantitatively assess its contributions to global emission reductions, which can support its own NDC targets. The mechanism also complements Japan’s domestic carbon market initiatives, including the Green Transformation Emissions Trading System (GX ETS) that commenced operations in 2026.

Business-to-business engagement has already gained momentum, with public-private forums and project-matching events organised in Delhi and Hyderabad in September 2025 to connect stakeholders from both countries.

Broader Strategic Context

The India-Japan JCM represents an important example of practical international cooperation under the Paris Agreement. It complements India’s emerging domestic carbon market and stands as the country’s first operational bilateral Article 6 agreement. Financial support tools, such as the Asian Development Bank’s Japan Fund for the JCM, are available to further incentivise high-quality projects.

This partnership reflects the deepening strategic ties between the two democracies in the areas of clean energy and climate resilience. As both nations work towards their climate targets, the JCM provides a results-oriented platform that balances ambition with economic and technological realities.

The MGMM Outlook 

The operationalisation of the India-Japan Joint Crediting Mechanism marks a significant advancement in bilateral cooperation on climate action and clean energy. By establishing a transparent framework for carbon credit generation under Article 6.2 of the Paris Agreement, the initiative creates new opportunities for technology transfer, investment, and capacity building in emerging low-carbon sectors. Areas such as green hydrogen, offshore wind, sustainable aviation fuel, and carbon capture are expected to benefit from greater collaboration, supporting India's long-term sustainability objectives while strengthening economic growth.

The initiative also reflects the growing strategic partnership between India and Japan, demonstrating how international cooperation can deliver practical outcomes in addressing climate challenges. With structured governance, third-party verification, and safeguards for sustainable development, the mechanism provides a credible platform for accelerating decarbonisation efforts. As India develops its domestic carbon market, the partnership with Japan is likely to enhance innovation, attract quality investments, and reinforce both countries' commitment to achieving their climate goals.

(Sources: Hindustan Times, DD News, PIB)