India is considering bilateral deals for green hydrogen-linked carbon credits

As per two government officials and one business source cited by Reuters, India is seeking bilateral agreements with nations like Japan that would permit them to utilise carbon credits associated with green hydrogen generation in India in exchange for investment and purchase transactions.

In an effort to reduce carbon dioxide emissions and establish itself as a major exporter in the field, New Delhi this year announced a US$ 2.13 billion (Rs. 174.9 billion) incentive programme to promote green hydrogen.

Reliance Industries, Indian Oil, and Adani Enterprises, among other Indian companies, have big plans for green hydrogen, a fuel produced from renewable energy.

Trading in carbon credits, which are obtained through initiatives to reduce greenhouse gases and are each equal to one tonne of carbon dioxide, can attract additional capital and ensure an offtake to India.

According to the sources, any agreements would result in overseas companies or financial agencies entering into investment and purchase agreements with Indian producers of green hydrogen.

According to a document seen by Reuters, Japan and India inked a preliminary agreement on March 17, 2023 to create a joint crediting system (JCM) for decarbonization under Article 6 of the Paris Agreement, a binding international deal on climate change. Article 6 outlines the transfer of carbon credits between nations and commercial entities. This would enable consumers of green hydrogen to also receive carbon emissions credits for producing green hydrogen, which would typically go to the producers.

Furthermore, the sources also reported that there have been negotiations about the prospective carbon-trading agreements between the Indian ministries of environment, renewable energy, and external affairs.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.