How farming can help achieve carbon neutrality
The carbon credit market in India is still in its infancy, but it has the potential to expand dramatically in the future years. The prospects for carbon credits in the agriculture sector, a major contributor to the Indian economy, are enormous in this domain.
The sector has the potential to contribute to both economic and environmental sustainability.
India, as a party to the Paris Agreement, aspires to keep global warming below 2 degrees Celsius. To that end, it has set a 2030 aim of reducing its greenhouse gas (GHG) emissions intensity by 33-35 percent below 2005 levels. The carbon credit market could be a valuable mechanism for raising funding to assist India in meeting this goal.
“The agricultural sector is a significant contributor to GHG emissions, particularly through the production of livestock, rice cultivation, and the use of fertilizers. However, it can also be a significant carbon sink through the use of sustainable land management practices, such as agroforestry, conservation agriculture, and improved livestock management,” says Anjal Prakash, Associate Professor (Research) and Research Director at the Bharti Institute of Public Policy, Indian School of Business.
Agroforestry, or the integration of trees into agricultural landscapes, can provide numerous benefits, including carbon sequestration, biodiversity conservation, and improved soil health.
Farmers that practice agroforestry can create carbon credits, which can be used to supplement their income. Carbon credits can then be sold to companies wanting to offset their emissions on carbon markets.
The expansion of carbon markets, together with government support for sustainable agriculture practices, can provide a conducive climate for the use of carbon credits in agriculture. However, there are various issues that must be addressed.
These include a thorough legislative framework for carbon credits, as well as their trading via an exchange, brokers, and related infrastructure. Also, the comparatively low demand for carbon credits from international buyers, which can limit Indian enterprises’ earnings potential, must be addressed.
To engage In the carbon credit market, farmers and other stakeholders must have technical knowledge and competence.
Farmers require training, skill enhancement, and expert assistance in this area. They, as well as other stakeholders, must be schooled in sustainable agriculture practices. They must also learn how to generate, verify, and trade carbon credits.
The carbon credit market has been around for over two decades and has expanded rapidly in various parts of the world. Europe has traditionally been the greatest market for carbon credits, with the European Union Emissions Trading System (EU ETS) being the largest in the world. Other regions, such as China and South Korea, have also established carbon markets in recent years. India has been fairly slow in this sector, despite the fact that the potential is enormous.
According to a report by the World Resources Institute India, “With a carbon market, India has at its disposal an instrument that can provide the right policy and price signals to incentivize deep decarbonization while ensuring global competitiveness. A well-designed carbon market can potentially reduce costs of emissions reductions and mobilize finance needed for decarbonization.”
The Bureau of Energy Efficiency is set to administer the country’s carbon trading framework, which is getting ready for rollout.
According to Abhay Bakre, Director General, of the Bureau of Energy Efficiency, “By 2030, the Indian carbon market will be the leading market in the world. It will ensure that this market assists in driving decarbonization efforts while driving the cost of technologies down.”
The Energy Conservation (Amendment) Bill, 2022, was passed by Parliament in December of last year. The bill amends the Energy Conservation Act of 2001 to provide the government with the authority to create carbon markets in India and to detail a carbon credit trading mechanism.
According to Prakash, who worked on the IPCC’s 6th assessment report and works on climate change adaptation and mitigation issues in South Asia, India’s commitment to fulfilling its climate targets will necessitate major investment in clean energy and other low-carbon technology.
The carbon credit market has great potential for the future, but it will need continuous government and business sector assistance to attain its full potential.