Strengthening Roots of Agri-Carbon Market
Context:
Carbon markets offer a transformative pathway for Indian agriculture by linking sustainability with profitability. These markets incentivise eco-friendly practices, helping to reduce greenhouse gas (GHG) emissions while providing economic benefits to farmers. By adopting carbon pricing strategies, India can lead in sustainable agricultural reforms and contribute significantly to global climate goals.
About Carbon Pricing: Compliance and Voluntary Markets
- Compliance Markets
- Governed by national or international regulations.
- Require companies to adhere to emission limits by purchasing carbon credits or paying penalties for excess emissions.
- Voluntary Markets
- Unregulated platforms where entities trade credits to offset emissions.
- Operates via mechanisms such as the Clean Development Mechanism (CDM), Verra, and Gold Standard.
Both markets aim to achieve emission reductions and align with global climate commitments.
Global Progress on Carbon Markets:
- At COP29 (November 2024), a centralised UN carbon market was approved to streamline global efforts in reducing emissions. India also announced its compliance and voluntary carbon markets to enhance domestic climate initiatives.
- Institutions like the National Bank for Agriculture and Rural Development (NABARD), ICAR, and state universities have launched five agricultural projects under Verra for carbon credits.
Key Principles of Carbon Markets:
- Additionality: Emission reductions must result directly from new practices incentivised by carbon credits. Example: Implementing zero tillage to lower emissions.
- Permanence: Benefits must be sustained over the long term to prevent stored carbon from being released.Ensures ongoing commitment to emission-reducing practices.
Current State of Agricultural Carbon Markets in India:
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- India has over 50 agricultural projects targeting 1.6 million hectares of land, with the potential to generate 4.7 million credits annually. However, none of these projects are registered, resulting in farmers not being issued credits or income generated. This highlights the urgent need for structured and effective frameworks to unlock potential benefits.
- Performance of Startups vs. Corporations: Startups, termed “Carbon Core”, outperformed larger corporations in project management but struggled with inclusivity. Targeted efforts are needed to involve smallholders and marginalised groups.
How Carbon Markets Can Transform Indian Agriculture:
Indian agriculture faces the dual challenge of boosting productivity and mitigating climate change. Carbon markets can address these challenges by:
- Encouraging farmers to adopt sustainable practices such as zero tillage, intercropping, and alternate wetting and drying.
- Providing financial incentives through carbon credit systems for reducing emissions.
- Enabling farmers to transition to climate-resilient agricultural models, fostering long-term sustainability.
Insights from Recent Studies:
Case Study: Haryana and Madhya Pradesh Projects
A recent study published in Climate Policy analysed seven carbon farming projects focusing on inclusiveness, additionality, and permanence. Key findings include:
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- Marginalised Exclusion: Women constituted only 4% of participants, and SC/ST farmers were largely excluded due to skewed land ownership patterns.
- Adoption of Practices: Sustainable methods like zero tillage, intercropping, alternate wetting and drying, and tree planting were adopted, reducing emissions and meeting additionality criteria.
- Challenges Faced:
- 45% of farmers lacked communication.
- 60% reported insufficient training.
- 28% abandoned practices due to low financial incentives.
- 99% did not receive carbon credit payments.
Strategies to Improve Carbon Markets in India:
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- Promoting Inclusivity: Offer higher credit prices for projects involving smallholders and marginalised communities.
- Capacity Building: Provide regular training and effective communication to ensure farmers understand and adopt sustainable practices.
- Timely Rewards: Ensure prompt payment of carbon credits to maintain farmer motivation.
- Collaboration and Research: Partner with research institutions to minimise yield penalties and safeguard food security.
- Improved Monitoring: Use advanced technologies to ensure transparency and accuracy in project implementation.
Conclusion: Building a Robust Agricultural Carbon Market:
India’s agricultural carbon market holds immense potential but requires strategic interventions to overcome existing challenges. By fostering inclusivity, ensuring transparency, and leveraging technology, India can unlock the full potential of carbon markets. Collaborative efforts among policymakers, researchers, and private players will be key to achieving sustainable farming and meaningful climate action. Through these initiatives, India can set a global example of how carbon markets can transform agriculture and contribute to a resilient, low-carbon future.
