Context
- The Union Budget 2026 announced a ₹20,000 crore carbon credit programme, creating confusion over whether it targets industrial decarbonisation (CCUS) or aims to support farmers through carbon markets.
India’s Key Initiatives
- Focus on industrial decarbonisation
- The programme is anchored in the Department of Science & Technology (DST) 2025 CCUS Roadmap, targeting hard-to-abate industries such as:
- power, steel, cement, refineries and chemicals.
- It promotes Carbon Capture, Utilisation and Storage (CCUS) to capture emissions from industrial sources and store or reuse them.
- The ₹20,000 crore allocation over five years is meant for technology deployment and research support.
- The programme is anchored in the Department of Science & Technology (DST) 2025 CCUS Roadmap, targeting hard-to-abate industries such as:
- Parallel developments in agriculture
- Though not part of this scheme, there is a growing interest in carbon markets for agriculture, where farmers adopt practices like:
- soil carbon sequestration,
- agroforestry,
- sustainable farming.
- Some State and private initiatives are already exploring such models.
- Though not part of this scheme, there is a growing interest in carbon markets for agriculture, where farmers adopt practices like:
Issues Associated
- Policy confusion
- The use of the term “carbon credit programme” has blurred the distinction between industrial CCUS and agricultural carbon markets.
- This has created unrealistic expectations among stakeholders, especially farmers.
- Exclusion of agriculture from CCUS
- Agriculture is not included in CCUS because its emissions are diffuse and biologically driven, making them unsuitable for point-source capture.
- This creates a gap between climate policy and agricultural potential.
- Communication gap
- The mismatch between the technical roadmap and public messaging has led to confusion in media and public discourse.
- Missed opportunity for farmers
- While agriculture has strong potential for carbon sequestration, the absence of a structured policy limits its role in income generation and climate action.
Way Forward
- Clear policy distinction
- The government must clearly separate industrial CCUS initiatives from agriculture-based carbon credit programmes to avoid confusion.
- Develop a dedicated agricultural carbon market
- A separate framework is needed to support farmers through verified carbon credits, ensuring both income generation and sustainability.
- Strengthen institutional mechanisms
- Build systems for measurement, reporting and verification (MRV) to ensure credibility of carbon credits.
- Promote a multi-sectoral approach
- Climate strategy should balance both: “smokestack emissions” (industry) and “soil-based solutions” (agriculture).
- Enhance awareness and capacity
- Educate stakeholders, especially farmers, about carbon markets and sustainable practices.
Conclusion
- India’s carbon credit policy is at a crucial turning point. While the current focus on industrial decarbonisation is essential, unlocking the potential of agriculture as a climate solution will require a parallel and well-designed policy approach.
