Content

1. Why Article 6 is a powerful tool for India ?
2. Equality isn’t the Enemy of Growth; High Inequality Erodes Social Trust

Why Article 6 is a powerful tool for India ?

Why in News ?

• Article 6 carbon markets made fully operational at COP29 → marks shift from rule-making to implementation.
• 89 cooperation arrangements under Article 6.2 across 58 Parties → rapid expansion of bilateral/plurilateral carbon trade.
• Adoption of Paris Agreement Crediting Mechanism (PACM) under Article 6.4 → formal transition from Clean Development Mechanism.
• August 2025: India signs Joint Crediting Mechanism (JCM) → operationalises Article 6.2 with Japan.

Relevance

• GS Paper I (Geography – Environment)
  • Climate change mitigation mechanisms
  • Energy transition & decarbonisation pathways
• GS Paper II (Governance & International Relations)
  • Global climate governance (Paris Agreement)
  • India–Japan strategic cooperation
  • International institutions & rule-based order

Practice Question

• “Article 6 of the Paris Agreement represents a shift from climate ambition to climate implementation.” Examine how India can leverage Article 6 to achieve growth-compatible decarbonisation.(250 Words)

What is Article 6?

• Article 6.2:
  • Bilateral / plurilateral transfer of ITMOs (Internationally Transferred Mitigation Outcomes).
  • Requires corresponding adjustments to prevent double counting.
• Article 6.4:
  • Centralised UN-supervised crediting mechanism (successor to CDM).
  • Emphasis on additionality, environmental integrity, transparency.
• Article 6.8:
  • Non-market approaches (capacity building, tech cooperation).

Constitutional Dimension

• Article 48A & 51A(g): Environmental protection → constitutional basis for climate action.
• International law alignment:
  • India exercising CBDR-RC within Paris framework.
• Domestic legal gap:
  • No dedicated Carbon Markets Act yet; reliance on executive rules under Energy Conservation Act (amended).

Governance & Institutional Architecture

• Designated National Authority (DNA) for Article 6 appointed.
• Pending clarity on:
  • Rules for Letters of Authorisation (LoA).
  • Application of corresponding adjustments.
  • Interplay with Indian Carbon Market (ICM).
• Need for Cabinet-level Steering Committee for inter-ministerial coordination (Power, MNRE, Steel, Civil Aviation, MoEFCC).

Economic & Developmental Significance for India

• Climate finance mobilisation:
  • Bridges India’s climate finance gap (India needs ~$170 bn/year till 2030 – various estimates).
• Technology transfer:
  • Offshore wind, green hydrogen, CCUS, SAF, fuel cells.
• Industrial competitiveness:
  • Prepares Indian exports for CBAM-like carbon border measures.
• Growth-compatible decarbonisation:
  • Aligns with India’s developmental state model, not growth sacrifice.

Strategic Significance of India’s Article 6 Participation

• From credit-selling to transformation tool:
  • Focus on industrial & technological leapfrogging, not low-cost offsets alone.
• Bilateral diplomacy:
  • Deepens strategic partnerships beyond trade and defence.
• Resilient trade relationships:
  • Carbon-constrained global economy → carbon credentials become trade currency.

India’s Identified Priority Activities (13 sectors)

High-end, future-facing sectors:

• Renewable energy + storage
• Offshore wind, solar thermal
• Green hydrogen, compressed bio-gas
• Fuel-cell mobility
• Advanced energy efficiency
• Sustainable Aviation Fuel (SAF)
• CCUS in cement & steel
• Marine & emerging energy technologies

Overview:

• Shift away from legacy CDM-style projects (small renewables).
• Direct alignment with Net Zero 2070 and deep decarbonisation pathways.

Environmental & Climate Impact

• Coal-heavy energy mix reality:
  • Article 6 enables energy diversification without abrupt transition shocks.
• Hard-to-abate sectors addressed:
  • Steel, cement, aviation → otherwise outside scope of conventional mitigation.
• Carbon removals potential:
  • Biochar, Enhanced Rock Weathering → long-term negative emissions.

Data & Evidence

• 89 Article 6.2 cooperation arrangements across 58 Parties.
• Voluntary carbon projects in India:
  • AFOLU projects take ~1,600 days to register vs <400 days in rest of Asia (CEEW).
• Global demand for carbon removals projected to rise sharply post-2030 (IPCC AR6 pathways).

Key Challenges

Institutional & Regulatory

• Absence of detailed Article 6 operational rules.
• Risk of policy uncertainty deterring investors.

Administrative

• Multi-layered project approvals.
• Land-intensive projects → federal & local coordination bottlenecks.

Market Design Risks

• Poor-quality credits → reputational risk.
• Weak MRV could undermine environmental integrity.

Equity & Ethics

• Risk of enclave decarbonisation without local co-benefits.
• Community consent & benefit-sharing concerns.

Way Forward

• Enact a Carbon Markets Framework Law:
  • Legal certainty, dispute resolution, investor confidence.
• Single-window clearance system for Article 6 projects.
• Clear LoA & corresponding adjustment rules.
• Integrate Indian Carbon Market with Article 6 cautiously.
• Develop carbon removals ecosystem (R&D + standards).
• Lead South–South cooperation:
  • Shared MRV platforms, pooled finance, technical assistance.
• Align with SDGs 7, 9, 12, 13 and principles of Just Transition.

Prelims Pointers

• Article 6 ≠ carbon tax.
• Article 6.2 = bilateral ITMOs; 6.4 = UN-supervised crediting.
• JCM is Article 6.2, not 6.4.
• Corresponding adjustment prevents double counting, not double claiming.

Equality isn’t the Enemy of Growth; High Inequality Erodes Social Trust

Core Argument 

• Growth without distributive justice weakens social trust, democratic legitimacy, and long-term economic sustainability.

Conceptual Clarity 

• Equality ≠ absolute sameness
  • Refers to fair access, capability enhancement, and dignity, not uniform outcomes.
• Inequality problem:
  • When it becomes structural, persistent, and politically entrenched, it harms growth and democracy.

Relevance

• GS Paper I (Indian Society)
  • Inequality, social cohesion, trust deficit
• GS Paper II (Polity & Governance)
  • Democratic legitimacy
  • Role of the state in welfare
  • Constitutional values

Practice Question

• Why is high inequality considered detrimental to long-term economic growth?Explain with reference to demand, human capital, and innovation.(250 Words)

Economic Dimension

• Inequality is not growth-neutral:
  • Extreme concentration of wealth → lower aggregate demand.
  • Rich save more; poor consume more → inequality depresses demand-led growth.
• Human capital distortion:
  • Unequal access to education, health, nutrition → suboptimal workforce productivity.
• Misallocation of talent:
  • High inequality limits intergenerational mobility → innovation suffers.
• Empirical insight:
  • IMF & World Bank studies: high inequality shortens growth spells and raises volatility.

Social Dimension

• Erosion of social trust:
  • Visible disparities undermine belief in fairness of institutions.
• Perception of rigged systems:
  • Wealth → political influence → policy capture.
• Psychological impact:
  • Inequality fuels resentment, alienation, and social fragmentation.
• Outcome:
  • Rise of populism, identity politics, and social unrest.

Governance & Democratic Dimension

• Democracy depends on legitimacy:
  • Citizens must believe outcomes are not pre-determined by wealth.
• Inequality weakens democratic consent:
  • Policy debates shift from evidence to resentment.
• Elite capture:
  • Regulatory frameworks, taxation, subsidies skewed towards affluent interests.
• Result:
  • Decline in trust in state capacity and democratic institutions.

Ethical & Constitutional Dimension

• Constitutional morality:
  • Articles 14, 15, 38, 39(b)-(c) mandate reduction of inequalities.
• Ethical economy:
  • Growth that excludes large sections violates principles of justice, dignity, and fraternity.
• Equality as enabling condition:
  • Not anti-growth, but pro-growth in the long run.

Political Economy Insight

• False binary exposed:
  • Growth vs equality is a misleading dichotomy.
• Real danger:
  • Inequality reshapes politics by:
    • Turning policy into distributional conflict.
    • Weakening institutional credibility.
• Historical lesson:
  • Stable high-growth societies invested early in broad-based welfare and opportunity.

Indian Context

• India’s growth paradox:
  • High GDP growth with:
    • Persistent wealth concentration.
    • Unequal access to quality public services.
• Visible fault lines:
  • Education quality gaps.
  • Health expenditure burden on poor.
  • Informal sector precarity.
• Risk:
  • Growth loses social legitimacy → reform fatigue and resistance.

Challenges

• Policy focus skewed towards headline growth:
  • Distribution treated as secondary.
• Weak redistributive capacity:
  • Limited tax progressivity.
• Implementation gaps:
  • Welfare leakage, uneven state capacity.
• Narrative problem:
  • Equality framed as populism, not productivity-enhancing.

Way Forward

• Reframe equality as growth enabler:
  • Focus on capability-based equality.
• Strengthen public goods:
  • Health, education, nutrition as productivity investments.
• Progressive but efficient taxation:
  • Wealth and inheritance debates grounded in data.
• Institutional neutrality:
  • Reduce policy capture; ensure rule-based governance.
• Inclusive growth narrative:
  • Growth + fairness as complementary, not competing goals.

Prelims Pointers

• Equality in Indian Constitution includes substantive equality, not just formal.
• Inequality affects social trust, not merely income distribution.
• IMF links inequality with shorter growth durations.