A Case for Joining the Global Carbon Coalition

20 Oct 2026

Tags: Environment   Climate Change   International agreements

Source: The Hindu

Context: Nearly 500 Indian companies across seven industrial sectors submitted their first compliance reports on July 31, operationalising India’s domestic compliance carbon market. First carbon credits were expected in October, followed by trading on power exchanges between November and January.

• Open Coalition on Compliance Carbon Markets (OCCCM): Launched in May by the European Union, China and Brazil in Florence, it promotes cooperation on carbon pricing, monitoring, reporting and verification (MRV), carbon accounting and high-integrity carbon offsets. Germany, New Zealand, Canada, France, Norway, Singapore, Türkiye and the United Kingdom subsequently joined. Its first work plan was adopted on September 14 in Wuhan.
• India’s Position: India has not joined the OCCCM despite operationalising its domestic compliance market. The key question is whether India should help shape international carbon market rules or remain outside these discussions.

India’s Carbon Credit Trading Scheme (CCTS)

• Objective: The CCTS supports India’s Nationally Determined Contribution (NDC) targets under the Paris Agreement and its net-zero emissions target by 2070.
• Current Phase: The compliance mechanism has entered its initial implementation phase, with binding emission-reduction targets, penalties for non-compliance and participating industrial entities.

Carbon Pricing: Significance and Global Trends

• Concept: Carbon pricing assigns a cost to greenhouse gas emissions, incentivising industries to reduce emissions and adopt cleaner technologies.
• Economic Benefits: It can reduce economy-wide mitigation costs, encourage innovation and generate government revenue. Complementary policies can protect vulnerable groups from disproportionate impacts.
• Global Expansion: More than 50 countries have introduced carbon pricing measures. Their adoption is expected to expand as countries pursue net-zero goals.
• Potential Integration: Linking domestic carbon pricing systems can coordinate climate action. Connecting India’s CCTS with other markets could create opportunities to access revenue from jurisdictions with stricter mitigation requirements.

Climate Clubs and Carbon Border Adjustment Mechanism (CBAM)

• Climate Clubs: Coalitions of countries cooperate on climate action through common carbon pricing, incentives for members and potential penalties or trade-related measures against non-members.
• European Union’s CBAM: The Carbon Border Adjustment Mechanism addresses carbon leakage by imposing a carbon cost on specified imports based on embedded emissions, subject to applicable rules and adjustments.
• Emerging Coalitions: With the EU’s CBAM operational and other countries considering similar mechanisms, international carbon-related trade rules could increasingly affect Indian exporters.
• Relevance of OCCCM: Although the coalition does not explicitly focus on CBAM, its work on MRV systems, carbon accounting and compliance markets can help India understand and respond to emerging border carbon taxes.
• Climate Coalition Scenarios: A report prepared in the context of an independent council convened by the COP30 President outlines possible CBAM-centred coalitions involving uniform or differentiated carbon prices, membership incentives and penalties for non-members.

Why India Should Consider Joining the OCCCM

• Influence over Rule-making: Participation would enable India to shape international carbon market standards instead of merely reacting to rules developed by other countries.
• Interoperability of Carbon Markets: Cooperation could improve compatibility between domestic carbon pricing systems and facilitate future market linkages, subject to negotiated rules.
• Preparedness for Carbon-related Trade Measures: Engagement would strengthen India’s understanding of international carbon accounting, emissions verification and border carbon adjustments, helping safeguard its trade interests.
• Representation of Developing-country Interests: Brazil’s founding membership and the participation of other developing countries offer India scope to advance concerns relating to development needs, mitigation costs and equity.

Potential Risks and Institutional Structure of OCCCM

• Limited Immediate Obligations: The coalition promotes cooperation and alignment of domestic compliance markets; it does not seek to impose emission-reduction targets or enforce other climate decisions.
• Future Governance Concerns: Members may influence decisions on carbon accounting, market compatibility and standards. Participation would help India shape these developments.
• Governance Structure: The OCCCM comprises high-level meetings as its highest decision-making body, executive-level meetings, thematic working groups and a Secretariat.
• Risk of Non-participation: Remaining outside could leave India less prepared for emerging international carbon market standards and climate-related trade arrangements.

Broader Global Climate Context

• Geopolitical Fragmentation: Differences among countries continue to complicate negotiations under the United Nations Framework Convention on Climate Change (UNFCCC).
• Growing Role of Carbon Pricing: As more countries adopt carbon pricing to implement climate commitments, cooperation outside formal multilateral negotiations may become increasingly influential.
• Paris Agreement Implementation: Country-backed climate coalitions could advance climate action alongside the Paris Agreement framework.

Way Forward

• Early Engagement: India should consider joining the OCCCM to influence international carbon market rules and strengthen preparedness for border carbon taxes.
• Safeguarding National Interests: Engagement should protect India’s development priorities, policy autonomy and equity concerns, while avoiding commitments inconsistent with its climate objectives.
• Strategic Opportunity: The OCCCM offers India a platform to learn from other carbon markets, influence emerging standards and strengthen its position in an increasingly carbon-conscious global trading system.