The voluntary carbon credit market in India’s agriculture sector is gradually gaining momentum, although it remains relatively nascent compared to other industries. This makes it an exciting field with substantial opportunities for growth. The value and recognition of agricultural projects within the carbon market, like those in other sectors, vary based on factors such as project scale, certification standards, associated co-benefits and market demand. The government recently launched the ‘Framework for Voluntary Carbon Market in the agriculture sector.’ This framework is expected to simplify the process of entering domestic and international carbon markets for companies and support larger-scale projects.
On January 29, 2024, the Ministry of Agriculture and Farmers’ Welfare launched a framework aimed at promoting the Voluntary Carbon Market (VCM) within the country’s agricultural sector. The initiative seeks to empower small and medium-sized farmers to benefit from carbon credits.
In recent years, numerous private firms have emerged in India, partnering with local farmers to produce carbon credits. This collaboration comes amidst growing skepticism about the effectiveness of voluntary carbon offsetting in addressing global climate change concerns. These startups engage farmers cultivating resource-intensive crops like rice, cotton, and sugarcane, encouraging them to adopt practices that minimise planet-warming emissions. Noteworthy recent developments in the agriculture carbon credit market have set the stage for significant growth opportunities for companies.
For instance, on December 23, Transform Rural India (TRI), in collaboration with Intellecap and ACORN (Rabobank), launched a pioneering Carbon Credit Finance Project benefiting over 100,000 farmers in Jharkhand. The project is founded on the principle of fair compensation to farmers, with 80 per cent of the generated carbon credit revenue directly transferred to the farmers’ accounts.
On the current status of the voluntary carbon credit market for agriculture, Shailendra Singh Rao, Founder of Creduce, said, “The market for agricultural carbon credits in India is still nascent but expanding at an accelerated rate. At present, approximations vary between $1.2 billion and $5 billion, predicated on credit costs and anticipated uptake. It is anticipated that its future potential will reach $7 billion within a decade. Presently centering on rice cultivation and the prevention of field burning, this domain also incorporates a range of other practices such as soil management and agroforestry.”
Rao further said “Increasing global demand and governmental frameworks paint a bright future that may be to the benefit of millions of small and medium-sized producers. Despite obstacles such as project verification and equitable farmer compensation, this market exhibits tremendous potential for promoting climate action and enhancing rural livelihoods in India.”
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