Indian farmers rack up carbon credits with climate-conscious ways

India's millions of small-scale farmers face rising pressure from climate change, which is hurting harvests and fuelling debt. Done right, potential solutions like natural farming could make them more resilient while reducing emissions. Context's new series, Growing Green, explores the path to a just transition.

• Agriculture produces 17% of climate-heating emissions
• Farmers generate carbon credits with green methods
• Credit developers to share revenues with farmers

KARNAL, India - Indian farmer Jitendra Singh proudly holds up a rice stem on his farm of lush green paddy. "Look at the height and health of this plant - the number of florets on it is amazing," he said.

Located in the northern state of Haryana, one of India’s main rice and wheat-growing regions, Singh's 80-acre (32.4-hectare) farm is part of a gradual shift in how Indians cultivate their staple crops, from a model that is fertiliser and water-intensive to more natural, climate-friendly ways.

What convinced middle-aged traditional farmer Singh to change how he grows rice was the prospect of benefiting from another fledgling movement: generating carbon credits through sustainable agriculture to sell for additional income.

“The new method of rice cultivation is not only helping my land regain its fertility - it is also helping fight global warming,” Singh said. He expects to be among the first tranche of Indian farmers to receive payments from the carbon market.

A score of private firms have emerged in the past few years in India, tying up with farmers like Singh to generate carbon credits, even as the role of voluntary carbon offsetting in reducing global climate-heating emissions comes under scrutiny.

Across the country, these startups are enrolling farmers who cultivate resource-intensive crops like rice, cotton and sugarcane and are nudging them to use practices that emit less planet-warming gases - and in return generating credits for the avoided carbon and methane emissions from their farms.

Emissions from agriculture and land use accounted for 17% of global greenhouse gas emissions in 2018, according to U.N. data.

Higher yields, lower emissions

Singh first heard about the carbon credit programme in 2019 from a representative of Grow Indigo, one of the new backers of agriculture-based carbon offset projects in India.

Grow Indigo is a joint venture of India-based seed firm Mahyco Grow and U.S.-based agriculture technology company Indigo Ag which produces and sells farm-linked carbon credits.

With technical support from Grow Indigo, Singh tested a new way of cultivating rice on 20 acres of his farm. Instead of transplanting seedlings from a nursery into flooded fields, he used a drill machine to directly sow seed into the soil.

The new method - called direct seeded rice (DSR) - cuts the overall cost of cultivation by using 12-35% less irrigation water and reducing labour, sowing time and use of chemical herbicides and fertilisers.

“My rice yields have increased without having to flood my fields again and again - which also stops methane generation,” said Singh.

Produced by bacteria in flooded fields, among other sources, methane is a short-lived greenhouse gas that has more potent capacity to heat up the Earth's climate than carbon dioxide (CO2).

The cultivation of rice - a staple food for more than 3 billion people worldwide - is responsible for 12% of global methane emissions and 1.5% of total greenhouse gas emissions.

Singh also changed his traditional method of cultivating wheat, a winter crop that follows the monsoon crop of rice.

After harvesting rice, Singh no longer sets the stubble on fire - a major seasonal source of air pollution.

Instead, he mulches and spreads the stubble across the field, into which he plants wheat seeds directly without tilling - a practice that disturbs the soil and releases carbon.

The new "zero-till" method helps trap soil carbon, while mulching increases the fertility of the soil.

Fair share for farmers

Typically, avoiding or reducing greenhouse gas emissions equivalent to one tonne of CO2 generates one carbon credit.
For instance, when Singh avoids methane emissions from his rice cultivation or sequesters carbon in the soil by not tilling it, he can generate one carbon credit per acre.

Grow Indigo measures this carbon storage over a period using a combination of sampling methods and satellite monitoring, and then has it checked by a third-party auditor.

Once verified and entered on a recognised registry, the credits are available for purchase by buyers who want to offset their own carbon emissions, such as corporations or individuals.

For example, a multinational company could buy the credits to compensate for the emissions of its employees' air travel.

Generally, the price of one credit - depending on its quality - ranges between $2 and $50 on the voluntary carbon market, said Umang Agarwal, head of carbon and sustainable produce at Grow Indigo.

Agarwal said he hoped Indigo Agriculture's strict methodology would allow the Indian credits to fetch a high price, with farmers set to receive 75% of the revenue compared to the 35-45% share offered by some companies in India.

“If the money for carbon credits comes, good - otherwise I am happy with the yield gains through new methods,” said Gurucharan Singh Bhuttar, another farmer cultivating wheat and rice on 60 acres in Karnal district.

Bhuttar, who signed up with Grow Indigo about four years ago, said his wheat yield has increased after switching to the zero-till method, bringing in additional income of about 500,000 rupees ($6,000) per year as well as lower cultivation costs.

Carbon credits from agriculture are still a nascent market globally, according to Ecosystem Marketplace, an international repository of information on payments for ecosystem services.

Its figures show that in 2021, 500 million carbon credits were traded globally, valued at $2 billion. Of those, agriculture credits accounted for only 1 million, or about 0.2%.

Indian developers have yet to sell any farm offsets on the international carbon market, but Grow Indigo predicts they could grow into a $5 billion-$7 billion market in India in a decade.

Doubts over climate benefits

Globally, the voluntary carbon market has come under fire over the integrity of its contribution to the fight against warming.

Failings identified by researchers include emissions reduction claims that are temporary or were already happening, displacement of the emissions to other sites, exaggerated climate benefits and projects that would take place even without finance from the carbon market.

In the case of India, a recent analysis from the Centre for Science and Environment (CSE), a Delhi-based think-tank, noted that the sale price of credits is “at times inflated and at times it is so low that the project becomes unviable".

In some cases, the CSE found that a project had issued too many credits or had not resulted in the changes claimed on the ground. People who provided land and labour were not fairly compensated and project-related information was not transparent, it said in a report.

“I have never personally seen such a shroud of secrecy as I found in this market,” CSE's director general Sunita Narain told the report's launch.

"The entire purpose of these markets seems to serve the interests of project developers, buyers and intermediaries and not the mitigation of emissions," she added, calling for a floor price of $30 per credit.

Governments should consider these lessons when they meet at the COP28 U.N. climate conference in December to discuss the rules for global carbon markets, Narain added.

Back in Karnal district, meanwhile, Singh is enthusiastically awaiting the first reward for his new eco-friendly approach.

“If one farmer receives these carbon credit payments, others will not need much convincing to join,” he said.

($1 = 83.2575 Indian rupees)

(Reporting by Bhasker Tripathi; Editing by Megan Rowling.)