BRICS Carbon Markets Partnership: New Delhi Declaration 2026 and Global Climate Governance

Why in News

The 18th BRICS Summit, held on 12–13 September 2026 at Bharat Mandapam, New Delhi, adopted the New Delhi Declaration. Under India's chairmanship, the Declaration commits to a BRICS Carbon Markets Partnership MoU — focused on cooperation in domestic carbon market development, capacity building, and climate finance mobilisation. Simultaneously, the Declaration opposed the EU's Carbon Border Adjustment Mechanism (CBAM) as a "unilateral, punitive, discriminatory and protectionist measure" inconsistent with international law. The developments are significant for India's climate diplomacy, its nascent Carbon Credit Trading Scheme (CCTS), and the global debate on Article 6 of the Paris Agreement.

Background

BRICS (originally Brazil, Russia, India, China, South Africa) expanded in January 2024 when Egypt, Ethiopia, Iran, and the United Arab Emirates joined as full members. Saudi Arabia holds observer status. The expanded grouping now represents approximately 40% of global greenhouse gas (GHG) emissions, over 45% of global population, and about 35% of global GDP (PPP). India held BRICS chairmanship in 2021 (virtual summit) and again in 2026 (in-person).

India's 2026 BRICS presidency theme: "Building for Resilience, Innovation, Cooperation and Sustainability" — the word BRICS serving as the thematic acronym. Climate change, specifically carbon markets, was a flagship priority of India's chairmanship.

Carbon Markets — Key Concepts

• Carbon markets allow entities to buy and sell carbon credits; each credit represents one tonne of CO₂ equivalent reduced or removed
• Compliance markets (e.g., EU ETS, China's National ETS): mandatory; regulated by governments
• Voluntary carbon markets (VCMs): voluntary; companies buy credits to offset emissions
• Article 6 of the Paris Agreement: Framework for international cooperation on mitigation, including Internationally Transferred Mitigation Outcomes (ITMOs)
• India's CCTS: Under the Energy Conservation (Amendment) Act, 2022; administered by Bureau of Energy Efficiency (BEE)

Current Developments — 18th BRICS Summit Outcomes

• BRICS Carbon Markets Partnership MoU: Commits BRICS members to cooperation on domestic carbon market development, capacity building, exchange of experiences, and climate finance mobilisation
• Opposition to CBAM: New Delhi Declaration opposed "unilateral, punitive, discriminatory and protectionist measures" — collective developing-country position against the EU's CBAM
• Climate Finance: Reaffirmed the unfulfilled USD 100 billion/year developed-country commitment; called for the New Collective Quantified Goal (NCQG) to reflect developing-country needs
• India's CCTS as a model: India presented CCTS as a template for BRICS-country domestic carbon markets; discussions on future BRICS-wide carbon market interoperability
• BRICS Green Hydrogen Task Force: Established; India and South Africa are co-chairs
• New Development Bank (NDB): Committed to increase green and climate project lending to 40% of total lending portfolio

Key Facts

• BRICS 2026 Chairmanship: India; Theme: "Building for Resilience, Innovation, Cooperation and Sustainability"
• 18th BRICS Summit: 12–13 September 2026, Bharat Mandapam, New Delhi; chaired by PM Narendra Modi
• BRICS membership (2026): 9 full members — Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, UAE; Saudi Arabia (observer)
• BRICS share of global CO₂ emissions: approximately 40%
• India's CCTS: Legal basis — Energy Conservation (Amendment) Act, 2022; administered by BEE under Ministry of Power
• Article 6 of Paris Agreement: Framework for carbon market cooperation; ITMOs (Internationally Transferred Mitigation Outcomes)
• EU ETS: World's largest carbon market; covers approximately 40% of EU GHG emissions
• China's National ETS: World's largest by covered emissions (since 2021); covers power sector
• New Development Bank (NDB): BRICS multilateral bank; headquarters in Shanghai; 40% green/climate lending target

Constitutional Provisions (India)

• Article 253: Parliament may legislate to implement international conventions and treaties — applies to India implementing Paris Agreement Article 6 carbon market commitments
• Article 51(c): Fundamental Duty — foster respect for international law and treaty obligations; climate commitments fall under this
• Article 48A (DPSP): State shall endeavour to protect and improve the environment

Legal Framework

• Energy Conservation (Amendment) Act, 2022 (India): Establishes CCTS; empowers Central Government to designate obligated entities and issue carbon credit certificates
• Paris Agreement, Article 6: Three pathways — Article 6.2 (bilateral ITMOs), Article 6.4 (Sustainable Development Mechanism under UNFCCC), Article 6.8 (non-market approaches)
• UNFCCC (1992): Framework convention; principle of common but differentiated responsibilities and respective capabilities (CBDR-RC)
• Kyoto Protocol (1997): First binding carbon market (CDM — Clean Development Mechanism); India was a major CDM project host
• Environment (Protection) Act, 1986: Framework for India's domestic emissions regulations

Institutional Framework

• Bureau of Energy Efficiency (BEE): Administers CCTS under Ministry of Power
• BRICS Climate Working Group: Coordinates BRICS climate cooperation; under India's chairmanship focused on carbon markets in 2026
• UNFCCC Secretariat: Administers Article 6.4 Sustainable Development Mechanism
• Green Climate Fund (GCF): Primary multilateral climate finance fund
• New Development Bank (NDB): BRICS multilateral development bank; Shanghai headquarters; Dilma Rousseff (Brazil) as President
• G20 Sustainable Finance Working Group: India's G20 presidency (2023) initiated the SFWG roadmap on sustainable finance and carbon markets
• NITI Aayog: Coordinates India's NDC implementation and carbon market strategy

Economic Dimensions

India's carbon market potential is significant. Under the CCTS, the Bureau of Energy Efficiency estimates India could issue carbon credits worth ₹500–800 crore annually from energy-intensive sectors in the near term. Indian companies with demonstrated low-carbon production processes could earn CCTS credits and potentially sell them internationally through Article 6.2 bilateral agreements with BRICS partners or the EU under a future equivalence arrangement.

BRICS-wide carbon market interoperability — covering nations with ~40% of global emissions — could create a USD 50–100 billion carbon market, the world's second largest after the EU ETS. India is also among the top-five global Voluntary Carbon Market (VCM) project hosts (forestry, renewable energy, improved cookstoves).

Banking and financial angle: RBI's Climate Risk Framework (2024–25) mandates climate-related financial disclosures from scheduled commercial banks. Carbon credits as an asset class will increasingly feature on bank balance sheets. NABARD and SIDBI are exploring green bond issuances linked to CCTS credits. For IBPS/banking exam candidates: carbon markets create new financial instruments — carbon certificates, climate bonds, green deposits.

Environmental Dimensions

Carbon markets, when well-designed, channel finance to cost-effective emission reductions. BRICS Carbon Markets Partnership — covering nations with ~40% of global emissions — could significantly accelerate global decarbonisation if robust MRV (Measurement, Reporting, Verification), independent verification, and no-double-counting rules are enforced. India's NDC 2022 commits to reducing emissions intensity of GDP by 45% from 2005 levels and achieving 50% non-fossil electricity capacity by 2030. Carbon markets can help finance green energy transitions in BRICS developing members.

However, carbon markets without ambition ratchets or Article 6 accounting integrity risk becoming instruments for greenwashing rather than genuine emission reductions.

Social Dimensions

India's CDM (Clean Development Mechanism) history showed that poorly designed carbon projects can dispossess vulnerable communities (e.g., afforestation on community land). The Article 6.4 Sustainable Development Mechanism under UNFCCC includes stronger safeguards for local communities and indigenous peoples. India's CCTS should incorporate Free, Prior and Informed Consent (FPIC) principles for land-based projects. BRICS Carbon Markets Partnership should include social safeguard requirements to prevent recurrence of CDM-era failures.

International Relations

• India vs. EU on CBAM: BRICS collective opposition strengthens India's WTO challenge and G20 negotiating position
• India-China on carbon markets: China has the world's largest compliance carbon market (National ETS, since 2021); India's CCTS is partly modelled on it
• India-Brazil: Both are major VCM project hosts; bilateral cooperation on forest carbon credits under Article 6.2 is under discussion
• NDB Green Finance: New Development Bank committed 40% green lending; supports BRICS climate market infrastructure
• UNFCCC COP31 (2026): India is using BRICS Carbon Markets Partnership as leverage in Article 6 negotiations
• India-UK CCTS recognition: UK signalled recognition of India's CCTS for its own carbon border mechanism — precedent for India-EU arrangement

Challenges

• Market fragmentation: BRICS members have different carbon market designs (China: compliance ETS; India: CCTS; Russia: voluntary; Brazil: developing; others: nascent)
• MRV integrity: Without robust MRV, BRICS carbon markets risk credibility deficits
• Double counting: Article 6 accounting rules (Corresponding Adjustments) must be applied to prevent both BRICS member and buyer country claiming the same reduction
• Political complexity: Russia under sanctions faces difficulties integrating into international carbon markets
• Additionality: Credits must represent genuinely "additional" reductions not driven purely by commercial or regulatory requirements

Government Initiatives

• India's Carbon Credit Trading Scheme (CCTS): Framework operational; pilot sectors include iron and steel, cement, aluminium, chlor-alkali, textile
• India's NDC (2022): 45% emissions intensity reduction from 2005 by 2030; 50% non-fossil electricity by 2030
• Green Hydrogen Mission: Target of 5 MMTPA (million metric tonnes per annum) green hydrogen by 2030; eligible for CCTS credits
• National Action Plan on Climate Change (NAPCC): Eight missions including National Solar Mission and National Water Mission
• India-UK Bilateral Carbon Market arrangement: UK recognising India's CCTS credits as a precedent

Way Forward

• Deepen BRICS Carbon Markets Partnership: Move from capacity-building MoU to a formal BRICS Carbon Market Registry with mutual recognition of credits under Article 6.2
• India-EU carbon equivalence: Use India-EU FTA carbon chapter to negotiate CBAM offset for CCTS credits, following the UK precedent
• Strengthen MRV infrastructure: NITI Aayog should establish a National Carbon Registry with ISO 14064-compliant verification standards
• NDB Green Finance: New Development Bank should scale BRICS carbon market project financing, particularly for India, Brazil, and South Africa
• Economic Survey 2025–26: Fast-track CCTS deployment to energy-intensive MSMEs with concessional NABARD financing for emission-reduction capex
• UNFCCC COP31: India should champion an Article 6 framework balancing developing-country interests with market integrity

Possible Mains Questions

1. Examine the BRICS Carbon Markets Partnership (New Delhi Declaration, 2026) in the context of India's climate diplomacy, its impact on global carbon market architecture under Article 6 of the Paris Agreement, and India's response to the EU CBAM. (GS Paper II — International Relations / GS Paper III — Environment, 250 words)
2. Carbon markets are market-based solutions to a collective action problem. Critically evaluate whether India's Carbon Credit Trading Scheme (CCTS) can deliver on its environmental promise while ensuring equity and social safeguards. (GS Paper III — Environment and Economy, 250 words)

Possible Prelims MCQs

1. The 18th BRICS Summit (2026) was held in: (A) Johannesburg (B) Beijing (C) New Delhi (D) Brasília — Answer: C
2. India's CCTS derives its legal authority from: (A) National Green Tribunal Act, 2010 (B) Environment Protection Act, 1986 (C) Energy Conservation (Amendment) Act, 2022 (D) Forest Conservation Amendment Act, 2023 — Answer: C
3. Article 6 of the Paris Agreement governs: (A) Loss and damage funding (B) NDC review cycle (C) International cooperation on carbon markets and transfer of mitigation outcomes (D) Developed-country climate finance — Answer: C
4. The New Development Bank (NDB), established by BRICS, is headquartered in: (A) New Delhi (B) Beijing (C) Shanghai (D) Moscow — Answer: C

Essay Dimensions

1. Carbon markets as climate diplomacy: can BRICS shape a fairer global carbon order?
2. Article 6 of the Paris Agreement: promise, pitfalls, and the politics of carbon trading
3. BRICS in a bipolar world: climate convergence or geopolitical posturing?
4. Green growth or green colonialism: a developing world perspective on carbon markets
5. India's climate identity: balancing development aspirations with global environmental leadership

Interview Questions

1. What is the difference between Article 6.2 (bilateral ITMOs), Article 6.4 (Sustainable Development Mechanism), and Article 6.8 (non-market approaches)?
2. How does "double counting" work in carbon markets and what does the Paris Agreement's "corresponding adjustment" mechanism do to prevent it?
3. India hosted the 18th BRICS Summit in 2026. What were India's strategic priorities, particularly on climate?
4. Can the New Development Bank play a significant role in financing India's carbon market infrastructure?
5. India opposed CBAM while simultaneously developing the CCTS. Is this contradictory? How would you reconcile these positions?

FAQ

Q: What is the BRICS Carbon Markets Partnership?

An MoU under the 18th BRICS Summit New Delhi Declaration (September 2026) for cooperation among BRICS nations on domestic carbon market development, capacity building, and climate finance. It does not yet create a unified BRICS carbon market.

Q: What is Article 6 of the Paris Agreement?

Article 6 enables voluntary cooperation between countries to meet NDC targets through transferable carbon credits (ITMOs — Internationally Transferred Mitigation Outcomes). Three pathways: 6.2 (bilateral), 6.4 (multilateral UN mechanism), 6.8 (non-market approaches).

Q: What is India's CCTS?

India's Carbon Credit Trading Scheme (CCTS), established under the Energy Conservation (Amendment) Act, 2022 and administered by the Bureau of Energy Efficiency (BEE), is India's domestic compliance carbon market. Obligated entities (energy-intensive industries) must meet energy efficiency targets and can trade carbon credit certificates on a designated exchange.

Q: How many members does BRICS have as of 2026?

Nine full members: Brazil, Russia, India, China, South Africa (founding), plus Egypt, Ethiopia, Iran, and the UAE (joined January 2024). Saudi Arabia holds observer status.

Further Reading

• MEA — 18th BRICS Summit, New Delhi Declaration, September 2026
• BEE India — Carbon Credit Trading Scheme
• UNFCCC — Article 6 and Carbon Markets
• New Development Bank