India and South Korea have signed a cooperation agreement under Article 6.2 of the Paris Agreement. This is a key step for creating cross-border carbon markets between these two major Asian economies.
The deal was signed when the South Korean president visited India. More than a dozen agreements were made about clean energy, trade, and industrial cooperation. It reflects growing global interest in carbon trading as countries seek cost-effective ways to meet climate targets.
The agreement allows both countries to cooperate on emissions reduction projects and exchange carbon credits. This could open up new sources of climate finance and help decarbonize sectors like energy, industry, and transport.
How Article 6.2 Unlocks Cross-Border Carbon Trading
Article 6.2 of the Paris Agreement allows countries to trade emission reductions through bilateral or multilateral deals. These are known as “internationally transferred mitigation outcomes” (ITMOs).
Each ITMO represents one tonne of carbon dioxide equivalent (tCO₂e) reduced or removed. Countries can invest in emissions-cutting projects abroad and count those reductions toward their own climate targets.
A key rule is the “corresponding adjustment.” The host country must add the sold emissions back to its carbon balance. This prevents double-counting and ensures transparency.
This system improves on older carbon markets under the Kyoto Protocol. It links carbon trading directly to national climate targets and strengthens accountability.
Although Article 6.2 is still new, activity is growing quickly.
- Around 58 bilateral Article 6.2 agreements have already been signed globally.
- At least 68 pilot ITMO projects are under development worldwide.
- More than 100 countries have signaled interest in using Article 6 mechanisms.
Here are key examples of these agreements, as shown in the World Bank carbon pricing dashboard:
Most early projects are in developing countries. These nations can supply carbon credits while receiving investment and technology. Buyers are often developed countries with stricter climate targets and higher costs of domestic emissions reduction.
India and South Korea confirmed that their agreement will support:
- Investment-driven mitigation projects,
- Development of carbon markets, and
- Cooperation in renewable energy and low-carbon technologies.
This is a major step because global carbon markets are still in early stages. Many countries are now building bilateral agreements to operationalize Article 6 mechanisms.
The deal also aligns with a broader shift toward market-based climate solutions. These mechanisms are seen as a way to lower the cost of achieving national climate targets.
Net Zero Targets Drive Bilateral Climate Cooperation
The agreement is closely tied to both countries’ long-term climate goals. India has committed to reaching net-zero emissions by 2070. South Korea has set an earlier target of 2050.
These timelines create both challenges and opportunities. South Korea is a developed economy with limited land and resources. So, it may look for cost-effective ways to cut emissions abroad.
India, as a fast-growing economy, offers large-scale opportunities for clean energy and carbon reduction projects. This creates a natural partnership. The two countries also agreed to expand cooperation in:
- Renewable energy,
- Green hydrogen, and
- Low-carbon industrial technologies.
These sectors are critical for reducing emissions in hard-to-abate industries such as steel, cement, and heavy transport. Both countries also reaffirmed their commitment to the Paris Agreement and global climate action.
Carbon Markets Poised for Rapid Global Growth
The India–South Korea deal comes as global carbon markets are expected to expand significantly over the next decade.
Carbon pricing systems already cover about 28% of global emissions, according to the World Bank’s 2025 State and Trends of Carbon Pricing report. At the same time, voluntary carbon markets and compliance markets are evolving rapidly.
Analysts expect carbon markets to grow into a multi-billion-dollar sector by 2030, until 2050, driven by:
- Net-zero commitments from over 140 countries,
- Increasing corporate climate targets, and
- Rising demand for carbon offsets.
Article 6 agreements are expected to play a key role in this growth. They provide a formal framework for cross-border carbon trading, which has been limited in the past.
For emerging economies like India, this could unlock new sources of climate finance. For developed economies like South Korea, it offers flexibility in meeting emissions targets.
Economic Ties Expand Alongside Climate Cooperation
The carbon agreement is part of a broader expansion in India–South Korea relations. The two countries aim to double bilateral trade from about $27 billion today to $50 billion by 2030.
They also signed multiple agreements covering clean energy and critical minerals, shipbuilding and manufacturing, and semiconductors and digital trade. This reflects a wider strategy to align economic growth with sustainability goals.
Both countries are working to build resilient supply chains in key sectors such as batteries, energy, and advanced manufacturing. These industries are essential for the global energy transition.
The partnership also includes efforts to improve energy security. This is especially important as global energy markets face volatility due to geopolitical tensions.
A Strategic Shift in Global Climate Cooperation
The signing of the Article 6.2 agreement marks a broader shift in how countries approach climate action. Instead of relying only on domestic measures, governments are increasingly turning to international cooperation. This allows them to share technology, reduce costs, and accelerate emissions reductions.
For India, the agreement opens new opportunities to attract climate finance and scale up clean energy projects.
For South Korea, it provides access to cost-effective mitigation options and supports its net-zero strategy.
The deal also strengthens the strategic partnership between the two countries. It links climate action with trade, technology, and industrial policy.
As more countries adopt similar agreements, Article 6.2 could become a central pillar of global carbon markets. This would reshape how emissions reductions are financed and delivered worldwide.
The Big Picture: Carbon Markets Move From Concept to Reality
The India–South Korea Article 6.2 agreement is more than a climate deal. It is part of a larger shift toward market-based decarbonization and international cooperation.
With global carbon markets set to expand and net-zero targets tightening, such partnerships are likely to increase.
For both countries, the agreement offers a pathway to balance economic growth with climate goals. It also signals growing momentum behind carbon trading as a key tool in the global energy transition.
As implementation begins, the real impact will depend on how quickly projects are developed and how well carbon markets scale. But the signal is clear: cross-border climate cooperation is moving from theory to practice.
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Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.
EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.
