CashNews.co
Anchoring India’s Agri Carbon Market on Climate Finance & Integrity
By Umang Agarwal, Head of Carbon, Grow Indigo
India’s strength in the agriculture carbon credit market lies in the vast agricultural land and farming population and its diverse agricultural practices.
India’s agricultural carbon credit market has huge potential, positioning us to lead in global climate change efforts. By tapping into our vast and diverse agricultural landscape, we can transform conventional farming practices into powerful tools for reducing greenhouse gas emissions and capturing atmospheric carbon. This market offers a way to combat climate change and opens up new revenue streams for farmers, providing financial incentives to adopt sustainable practices. The market’s potential is built on four key project types: regenerative agriculture, agroforestry, biochar, and enhanced rock weathering (ERW) – each well-suited to Indian agriculture.
Regenerative agriculture refers to a collection of agricultural practices that improve soil health and resource efficiency. These practices often include reduced tillage, direct rice seeding, reduced nitrogen inputs, crop residue management, and diversifying crop rotations. Agroforestry involves integrating trees into agricultural systems. This practice sequesters carbon in both above-ground biomass and soil.
Biochar is a charcoal-like material produced by heating biomass (typically crop residues like rice stubble or maize shanks) in a low-oxygen environment. It is stable, meaning the captured carbon remains sequestered for centuries, and can be applied to soils as a soil amendment, directly adding carbon to soil. ERW accelerates the natural process of rock weathering, which involves the reaction of minerals like calcium and magnesium with CO2 to form stable carbonates.
While agroforestry and biochar have seen some initial success with carbon credit issuances, the vast potential of regenerative agriculture projects remains largely untapped. Both biochar and ERW, with their durable carbon removal capabilities, are attracting significant interest and achieving high prices (often above $100) in the voluntary carbon market (VCM).
The Indian government is also taking active steps to grow the agricultural carbon market. In January 2024, the government introduced a framework for a VCM in agriculture. This framework builds on the Green Credit Programme, which broadly supports sustainability efforts across sectors. To strengthen the carbon credit system, policies are being developed to create a transparent and reliable trading platform. Transparent guidelines will help ensure high-quality carbon credits, boosting confidence among buyers and attracting investment. While these government-led initiatives lay a solid foundation, a market-driven approach will be essential to fully realise the agricultural carbon market’s potential. An open VCM can let credit prices reflect the true value of emission reductions and sequestration efforts from agriculture and maximise the returns for farmers.
To address the challenge of long gestation periods, climate financing should prioritise providing partial payments to farmers upon validation of practices, to boost farmer participation. Additionally, funding aimed at programme developers for scaling up carbon programmes will accelerate project implementation and reduce their risk.
Beyond financial challenges, establishing integrity and trust in the agriculture carbon market is essential. This requires transparent and auditable processes to prevent double counting and fraudulent activities.
To read more click on: https://agrospectrumindia.com/e-magazine
By Umang Agarwal, Head of Carbon, Grow