India–Japan Joint Crediting Mechanism (JCM): A New Pathway for Low-Carbon Cooperation

Context

During Prime Minister Narendra Modi’s visit to Japan, India’s Environment Ministry announced the signing of a Memorandum of Cooperation (MoC) on a Joint Crediting Mechanism (JCM) with Tokyo. This marks India’s first engagement in such a bilateral carbon crediting mechanism under the Paris Agreement (Article 6.2), opening a new chapter in climate diplomacy and sustainable development.

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What is the Joint Crediting Mechanism (JCM)?

• Japanese Initiative: Japan invests in and implements low-carbon technologies in partner developing countries.

• Carbon Credits: Emission reductions achieved are credited partly to Japan’s account, helping it meet its Nationally Determined Contributions (NDCs).

• Benefits for Partner Countries: Access to advanced technologies, investment, and capacity building, while still contributing to their own climate goals.

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Key Features of the India–Japan MoC

1. Technology Transfer & Investment

   • Promotes flow of low-carbon technologies, equipment, and systems into India.

   • Encourages localisation and large-scale deployment of these technologies.

2. Capacity Building

   • Strengthens domestic ecosystem for carbon markets.

   • Provides training, institutional support, and high-tech interventions.

3. Carbon Credits under Paris Agreement (Article 6.2)

   • Credits generated can be traded internationally.

   • Will not “adversely impact” India’s NDC commitments.

4. Institutional Framework

   • A National Designated Authority (NDA) has been constituted to approve projects, evaluate emission reductions, and regulate the Indian carbon market.

   • Cabinet has authorised the Environment Ministry to finalise implementation rules and sign similar agreements with other countries.

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India’s Climate Commitments (NDCs)

• Emission Intensity Reduction: 45% by 2030 (from 2005 levels).

• Renewable Energy: 50% cumulative electric power capacity from non-fossil fuels by 2030.

• Carbon Sink Creation: Additional 2.5–3 billion tonnes of CO₂ equivalent through afforestation by 2030.

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Significance of the JCM for India

1. Access to Advanced Technology: Provides cutting-edge Japanese innovations in renewable energy, green hydrogen, waste management, and energy efficiency.

2. Green Finance Flow: Attracts foreign investment for climate projects in India.

3. Boost to Indian Carbon Market: Strengthens domestic mechanisms for carbon trading.

4. Sustainable Development: Promotes infrastructure development aligned with climate goals.

5. Strategic Diplomacy: Strengthens India–Japan partnership in the Indo-Pacific, extending cooperation beyond security to climate resilience.

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Challenges Ahead

• Balancing Credits: Ensuring India retains enough emission reductions for its own NDCs while sharing with Japan.

• Institutional Readiness: Effective functioning of the National Designated Authority and robust monitoring systems.

• Technology Localisation: Avoiding over-dependence on imported technologies; ensuring technology absorption in Indian industries.

• Carbon Market Stability: Preventing over-supply or under-valuation of credits in global markets.

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Prelims Pointers

1. Article 6 of the Paris Agreement deals with carbon markets and international cooperation.

   • Article 6.2 → Bilateral/multilateral cooperative approaches (like JCM).

   • Article 6.4 → UN-supervised global carbon market.

2. National Designated Authority (NDA) → Nodal body for approving carbon credit projects in India.

3. India’s NDCs → Emission intensity, non-fossil capacity, afforestation-based carbon sink.

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PYQ Linkage

UPSC Prelims 2020: “The term ‘Intended Nationally Determined Contributions’ is sometimes seen in the news in the context of…”

• (a) Pledges made by the European Union to mitigate climate change

• (b) Pledges made by the US to mitigate climate change

• (c) Pledges made by India to meet its energy demands

• (d) Pledges made by parties to the UNFCCC to mitigate climate change

Answer: (d)

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Mains Practice Question (GS-III)

“Discuss the significance of India–Japan Joint Crediting Mechanism (JCM) in advancing India’s climate goals while balancing developmental needs. How does it align with Article 6 of the Paris Agreement?”