How COP29 Will Impact India’s Climate Policy, Green Finance, and Clean Energy Future

Key Outcomes of COP29 and Their Impact on India

1. Understanding Article 6.4: A Global Carbon Market Framework

What Article 6.4 Aims to Achieve

Article 6.4 of the Paris Agreement creates a centralized carbon market mechanism monitored by the UN, enabling:

• Generation of carbon credits from emission-reduction projects

• International trading of credits

• Uniform safeguards to avoid double counting

• Transparency through monitoring, reporting, and verification (MRV)

• Strong environmental and social standards

The mechanism encourages investments in climate-positive activities such as renewable energy, reforestation, clean cooking, and energy efficiency.

What COP29 Finalised

COP29 finalised long-pending rules to operationalise Article 6.4, allowing:

• Global carbon registry integration

• Standardised carbon credit methodologies

• Strong MRV systems

• Mandatory social and ecological safeguards

• Transparent tracking of cross-border credit transfers

This marks a major step toward a unified global carbon market.

I. Operationalizing Article 6.4: Unlocking the Carbon Market Potential

Article 6 of the Paris Agreement provides the framework for international cooperation in meeting climate targets, primarily through market and non-market mechanisms. Article 6.4 establishes a centralized, UN-supervised global carbon market, now known as the Paris Agreement Crediting Mechanism (PACM). At COP29, parties successfully finalized the core rules, modalities, and procedures (RMPs) for the PACM, nearly a decade after the Paris Agreement was signed.

A. Direct Benefits for India's Carbon Market

The operationalization of Article 6.4 provides a critical boost to India's burgeoning domestic market, the Indian Carbon Credit Trading Scheme (CCTS), which is set to commence trading operations by 2026.

1. Global Market Integration: The new globally accepted standards for transparency, methodologies, and avoiding double counting finalized at COP29 allow India's CCTS to potentially integrate with the global carbon market registries. This compatibility is essential for India to leverage global demand for high-quality carbon credits.

2. Harmonizing Carbon Credit Pricing: The standardization of the PACM fosters a more predictable and unified global pricing framework. For India, a major global supplier of carbon abatement and removal projects (especially in renewables and nature-based solutions), this ensures:

   • Price Stability: Indian carbon credits will receive competitive and fair pricing, reducing volatility and attracting long-term investment.

   • Enhanced Investor Confidence: A transparent, UN-overseen system attracts private and institutional investors by reducing transaction risks and enhancing market trust.
3. Driving High-Integrity Projects: The global push for robust standards aligns perfectly with India’s focus on deep-tech solutions. India is uniquely positioned to use technologies like Digital MRV (Measurement, Reporting, and Verification) systems, blockchain, AI, and satellite monitoring to ensure its carbon credits are of the highest quality, thereby boosting their value in the newly regulated PACM.

The Indian CCTS, which covers over 740 entities across nine energy-intensive sectors (including aluminum, cement, iron and steel, and textiles), will be an intensity-based baseline-and-credit system. The first compliance period is set to begin in Fiscal Year 2025-26, placing India among the world's largest emissions trading systems.

II. New Collective Quantified Goal (NCQG): The Climate Finance Challenge

The NCQG is the successor to the previous, and often unfulfilled, commitment by developed nations to mobilize $100 billion annually by 2020 for developing countries' climate action. This new target was the central finance theme of COP29.

A. The $300 Billion Compromise and India's Need

1. The New Target: At COP29, parties agreed to a new, collective target for developed nations to mobilize at least $300 billion annually by 2035. This commitment is a significant floor upon which a wider mobilization goal is built.

2. The Reality Gap: While $300 billion represents a threefold increase from the previous goal, it falls drastically short of the $1.3 trillion per year demanded by developing nations to meet their comprehensive mitigation and adaptation needs by 2035. Independent estimates suggest that global climate finance requirements could be between $4 trillion and $7 trillion annually by 2030.
3. Uncertainty of Sources: A critical shortfall of the NCQG is the lack of specific, guaranteed public funding sources. Developed nations are only committed to "taking the lead," with the rest of the target largely relying on the inherently uncertain mobilization of private sector financing.

B. Opportunities for India to Attract Green Finance

Despite the NCQG's limitations, the sheer scale of the finance aims—to work towards mobilizing $1.3 trillion annually by 2035 from all actors—presents significant opportunities for India.

1. Preferred Investment Destination: India's demonstrated leadership in renewable energy (solar, wind), its robust policy framework, and a large, established consumer base make it a prime destination for private and public green finance compared to other developing economies.

2. Focus on Adaptation: The NCQG places a much-needed focus on adaptation finance, which is vital for India given its high climate vulnerabilities (e.g., coastal erosion, extreme weather). India can leverage this push to attract concessional loans and grants for large-scale adaptation projects.

3. Nature-Based Solutions (NbS) Financing: The NCQG can act as a catalyst for funding NbS projects. A key example is India's Mangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI). Under MISHTI, the Indian government has initiated the restoration and conservation of over 22,500 hectares of degraded mangrove areas across 13 States/UTs (as of late 2025). Mangroves are highly effective blue carbon sinks and act as crucial bio-shields against coastal risks. International investment in MISHTI and similar schemes is essential to bridge funding gaps and ensure their long-term sustainability.

III. The Strategic Roadmap: Baku to Belém (COP30)

The path established from Baku (COP29) to Belém, Brazil (COP30 in 2025), incorporates the Global Stocktake 2025, which will critically assess global progress toward the Paris Agreement goals. This roadmap compels India to act strategically on two fronts.

A. Strengthening South-South Cooperation

The persistent finance gap underscores the need for developing nations to strengthen their South-South cooperation. India, as a leading voice of the Global South (evident through its recent G20 presidency), can play a pivotal role in:

• Collective Advocacy: Leading a coalition of like-minded nations to advocate for clearer finance mechanisms, transparent funding sources, and a dedicated share for Loss and Damage compensation.

• Knowledge Sharing: Sharing its successes in scaling renewable energy, building digital public infrastructure for climate monitoring, and implementing robust national climate policies.

B. Innovative Finance and Policy Alignment

India must now align its domestic economic policies to fully capitalize on the new global architecture:

• Blended Finance: Actively promoting and utilizing blended finance models (mixing public and private capital) and innovative instruments like green bonds to supplement traditional funding.

• Showcasing Ambition: India is expected to submit its third round of Nationally Determined Contributions (NDCs 3.0) by February 2025, which should reflect the financial confidence gained from the NCQG and an ambitious roadmap for the CCTS.

Conclusion: Turning Global Challenges into Domestic Opportunities

The outcomes of COP29 represent a mix of incremental progress (Article 6.4 finalization) and persistent disappointment (the NCQG finance target). For India, the conference has set the stage for a dual strategy: external advocacy and internal acceleration.

By leveraging the operationalized carbon market to attract foreign investment into its high-integrity CCTS and nature-based solutions, while simultaneously leading the Global South to push for a more equitable and ambitious climate finance goal, India can transform these global agreements into powerful drivers for sustainable economic growth and a faster, cleaner energy transition.