Definition

• Internationally Transferred Mitigation Outcomes (ITMOs) are emission reduction units that can be traded between countries under Article 6.2 of the Paris Agreement. 
• ITMOs enable bilateral or multilateral cooperation by allowing a country to transfer its surplus emission reductions to another country to help meet its Nationally Determined Contributions (NDCs).
• The process not only supports emissions reductions in the host country (developing country) but also helps in technology exchange, promotes capacity building, and facilitates financial resources from the partner country (developed country), helping in the transition to a low-carbon economy and reaching the Sustainable Development Goals (SDGs). 

Significance of ITMOs for India

• Climate Finance Mobilization: ITMOs provide India with a significant opportunity to attract climate finance from developed nations which ensures funding for climate-resilient projects and green technology initiatives.
• Support for NDC Achievement: ITMO transactions can help India meet its ambitious climate targets, including reducing emissions intensity by 45% by 2030.
• Technology and Capacity Building: It allows India to partner with developed nations through agreements enabling technology exchange, particularly in renewable energy, carbon capture, and sustainable fuel technologies.
• Enhancing South-South Cooperation: Many African nations face severe impacts from climate change, particularly in agriculture and water resources. 
  • With its expertise in Renewable Energy deployment, digital tools, and sustainable agriculture, India is well-positioned to help the region using ITMOs.
  • This can also help India meet its NDCs while also accessing carbon market opportunities to fund sustainable development projects across the African continent.
• Strengthening Domestic Carbon Markets: The experience gained through ITMO transactions supports India’s Carbon Credit Trading Scheme (CCTS) and enhances its carbon market infrastructures. 
• Economic Growth and Green Jobs: Increased investments in clean energy and sustainable infrastructure through ITMOs can create employment opportunities in renewable energy, technology, and environmental sectors.
• Global Leadership in Carbon Markets: India’s engagement in ITMO trading strengthens its role in shaping international carbon market mechanisms and promoting equitable climate solutions.
• Sustainable Development Goals (SDG) Alignment: ITMOs facilitate projects that contribute to SDGs, such as affordable clean energy, climate action, and economic development, benefiting both India and its partner nations.

Challenges for India in using ITMO

• Risk of Over-Reliance by Developed Nations:Developed countries may purchase low-cost ITMOs from India and avoid investing in India’s substantial domestic decarbonization efforts. This high cost burden falls on India in the later years.
• Opportunity Costs: ITMO transfers could mean that emissions reductions achieved in India are not used for its own climate targets, potentially delaying domestic sustainability goals.
• Equitable Benefit-Sharing: The division of financial and technological benefits between India and partner countries (Developed Countries) must be carefully negotiated to ensure fairness in sharing the benefits.
• Market Volatility and Pricing Uncertainty: Carbon markets, including ITMOs, are subject to price fluctuations and regulatory uncertainties, which may affect India’s ability to secure stable funding.
• Risk of Greenwashing: Some partner countries might engage in ITMO deals to appear compliant with climate commitments while continuing high emissions domestically.
• Alignment with National Priorities: ITMO transactions should complement India’s developmental and energy transition goals rather than divert focus from domestic sustainability projects.

Conclusion

• India has to develop frameworks for effective use of ITMOs which will be helpful to both India and the other partner country. 
• The framework should  include safeguards for equitable benefit-sharing, transparency, and alignment with national and global climate ambitions.