India inks Article 6.2 deal with South Korea to foster climate finance, tech transfer

India and South Korea signed a memorandum of cooperation under Article 6.2 of the Paris Agreement to advance investment-driven climate mitigation projects and strengthen their strategic partnership on climate action, the two countries said in a joint statement April 20.

The framework under Article 6.2 allows countries to cooperate on mitigation projects and count emissions reductions toward their Nationally Determined Contributions under the Paris Agreement, potentially opening pathways for cross-border clean energy investments and technology transfers between the two nations.

Under the agreement, the two countries would promote cooperation on climate change issues, including the carbon market, the Article 6.2 cooperative approach, renewable energy, and low-carbon technologies, the release said.

For the carbon markets in particular, Article 6.2 allows voluntary trading or emission reductions, avoidance or removal of credits known as Internationally Transferred Mitigated Outcomes and provides a flexible approach that can be tailored to unique national circumstances. This is India's second Article 6 agreement after signing a similar agreement with Japan in August last year, while South Korea has signed Article 6 deals with Peru, Vietnam, Cambodia, and Ghana among other countries so far.

Article 6.2 credits are considered higher in value in the carbon markets given they come with a corresponding adjustment tag, one that is authorized by the host government, signaling that the reduction is permanent, real, and aligns with national climate goals.

Platts assessed Korean Offset Credits, which represent Clean Development Mechanism as well as Article 6.2 eligible credits invested in by South Korea, was assessed at 14,800 Won/mtCO2e April 21, unchanged from the previous session.

The cooperation comes as both countries seek to balance economic growth with emissions reduction targets. India has pledged to reach net-zero emissions by 2070, while South Korea has committed to achieving carbon neutrality by 2050.

However, further details such as recognized methodologies and procedures to get projects registered for transfer of credit under the mechanism are awaited.

"Not sure on the timeline of methodologies that will be approved under the mechanism but it will take time. It is a good development for Indian developers as South Koreais a net buyer of credits," an India-based trader said.

Climate cooperation expanded

The two countries signed a memorandum of understanding on cooperation in climate and environment, formalizing institutional collaboration on environmental matters, including sustainable management of natural resources such as land, air, water, biodiversity and wastes.

India welcomed South Korea's membership in the International Solar Alliance, a coalition of solar-rich countries promoting solar energy deployment, while South Korea welcomed India's membership in the Global Green Growth Institute, an intergovernmental organization supporting green growth policies.

 Beyond climate cooperation, India and South Korea agreed to expand cooperation in marine science, sustainable fisheries, coastal ecosystem protection and marine pollution prevention, the release said.

Both countries also recognized the Arctic as important for understanding climate change and agreed to promote collaboration between their Arctic research institutions, including joint research initiatives, scientific exchanges, and participation in international polar research programs.