On August 7, 2025, India and Japan formalized bilateral cooperation under Article 6.2 by signing the Joint Crediting Mechanism (JCM) on August 7, 2025, making India the 31st country to join Japan's JCM partnership and marking India's first bilateral carbon market mechanism under the Paris framework. For Indian P2X projects, the agreement shifts the model from pure commodity arbitrage to a dual-revenue structure combining hydrogen exports with ITMO (Internationally Transferred Mitigation Outcomes) monetization.
The JCM Architecture: Beyond Traditional Carbon Credits
Unlike Article 6.4's multilateral crediting mechanism, Article 6.2 operates through Internationally Transferred Mitigation Outcomes (ITMOs)—bilaterally negotiated emissions reductions that carry corresponding adjustments in both countries' Nationally Determined Contributions (NDCs). The critical distinction: ITMOs require explicit governmental authorization from the host country, which must declare that the credited reductions will not be counted toward its own NDC targets.
Figure 1 below showcases how the ITMO Generation Under the India-Japan JCM Framework would work out.
Figure 1: Flowchart Showcasing India-Japan JCM Framework
Japan's Hydrogen Import Thresholds: Well-to-Gate Carbon Intensity Gatekeepers
Japan's subsidy architecture, managed by JOGMEC and overseen by METI, enforces strict lifecycle carbon intensity thresholds that will govern Indian P2X export eligibility:
Critical Thresholds under JCM are showcased via Table 1 below:
Parameter | Threshold | Methodology | Compliance Requirement |
Green Hydrogen | ≤ 3.4 kgCO2/kg H2 | Well-to-Gate (IPHE basis) | Mandatory for subsidy access |
Green Ammonia | ≤ 0.84 kgCO2/kg NH3 | Gate-to-Gate | Derivative products qualification |
Minimum Supply Volume (Price Gap Support) | | ≥ 1,000 t H2e/year | Annual delivery | Offtake agreement prerequisite |
Minimum Supply Volume (Infrastructure Support) | ≥ 10,000 t H2e/year | Annual delivery | CAPEX subsidy eligibility |
Figure 2 below illustrates how Japan’s Carbon Thresholds for Green Hydrogen compare to those of other standards.
Figure 2 Comparison chart of hydrogen carbon intensity certification thresholds across India GHCI, Japan JCM, Korea CHPS various tiers, US DOE CHPS, and EU CertifHy standards
India's Designated Priority Sectors: Strategic Opportunities for P2X
India's Ministry of Environment, Forest and Climate Change has designated five priority areas for JCM cooperation, explicitly including P2X value chains: Green Hydrogen, Green Ammonia, Compressed Biogas (CBG), High-Emission Industry Transition, Carbon Capture and Storage (CCS), and Renewable Energy with Storage [4,5,6], Each category is expanded below and visualised via a Figure 3 below:
1. Green Hydrogen & Green Ammonia (Highest Priority)
2. Compressed Biogas (CBG)
3. High-Emission Industry Transition (Steel, Cement, Refineries)
4. Carbon Capture & Storage (CCS/CCUS)
5. Renewable Energy with Storage
Figure. 3 Interconnected diagram showing India's five JCM priority sectors and their integration pathways with Power-to-X hydrogen projects
Conclusion: From Commodity Play to Climate Finance Asset
The India-Japan JCM transforms Indian green hydrogen from a pure commodity export into a climate finance asset with embedded carbon value. However, monetizing this value requires navigating Article 6.2's additionality requirements, Japan's IPHE-aligned Well-to-Gate methodology, and bilateral Joint Committee governance—complexity that rewards preparation and penalizes improvisation.
For Indian P2X developers, the strategic question is no longer “Whether” to pursue Japanese exports, but “how quickly” can you establish JCM-compliant project structures before first-mover advantages consolidate. The window is open—Japan's 100 million tCO2e cumulative target by 2030 implies 16-17 million tCO2e/year in ITMO demand, and India's P2X pipeline can readily fill that gap if developers act decisively.
About HyGOAT
HyGOAT (Hydrogen Global Origin & Attestation Technology) is revolutionizing hydrogen certification with blockchain-powered compliance verification. Our GHCI platform enables P2X producers to demonstrate real-time carbon intensity compliance with global standards—including Japan's JCM, EU RFNBO, and Korea CHPS—through immutable, third-party-verified attestation. Learn more at hygoat.in
References
[1] PIB, 'India and Japan sign Memorandum of Cooperation...', 2025.
[2] Ministry of the Environment Japan, 'Signing of the Memorandum of Cooperation on the JCM...', 2025.
[3] Climate Action Transparency, 'India-Japan Joint Credit Mechanism for Climate Action', 2025.
[4] Grant Thornton India, 'India–Japan carbon market breakthrough', Oct. 2025.
[5] Anaxee, 'India's Article 6.2 Breakthrough: Japan Partnership and ...', Sep. 2025.
[6] ERCST, 'Existing Cooperative Approaches. Article 6.2 Domestic ...'.
[7] IGES Japan, 'Understanding Article 6.2 reporting with the JCM', Oct. 2022.
[8] Climate Action Transparency, 'A guide to navigating the links between Articles 6 and 13'.
[9] GGGI, 'Implementing Article 6 of the Paris Agreement: Options for ...'.
[10] New Energy Outlook reports and Government Japan targets, 2025.
[11] Ministry of Foreign Affairs Japan, 'Japan hydrogen strategy', Nov. 2023.
🏆 Update of the Week
HYDROGEN NETWORK INDIA ATTENDS 3RD INTERNATIONAL CONFERENCE ON GREEN HYDROGEN
Key takeaways:
🔸 The importance of training technicians for safe fuel cell use in vehicles (Dr. Thipse, ARAI)
🔸 Indigenization of ion-exchange membrane technology and the need for climate-specific durability testing in Indian conditions (Mr. Gupta, BHEL)
🔸 Development of hydrogen testing and training infrastructure, with GERMI’s 10 kW pilot plant producing 4 kg/day and training over 400 professionals (Mr. Pathak, GERMI)
🔸 Insights from Siemens’ 140 MW hydrogen projects across Europe, with data from over 200 stacks to optimize performance and stack life (Mr. Rohit Kumar, Siemens)
