What Are Carbon Credits? Simple Guide for Indian Farmers.
India’s farming is entering a new income era with carbon credits—certificates earned when farmers reduce or remove greenhouse gases through practices like no-till, cover crops, rice AWD/SRI, agroforestry, and biochar. One carbon credit equals 1 tonne of CO2e reduction or removal, which companies buy to meet climate goals, opening an additional revenue stream for small and marginal farmers. India has notified a Carbon Credit Trading Scheme and launched a voluntary carbon market framework for agriculture, making it easier for FPOs and farmer groups to participate through proper monitoring, reporting, and verification. By adopting climate-smart methods and working with trusted project developers or FPOs, farmers can improve soil health, save inputs, and earn saleable credits in domestic and global markets.
Table of Contents
What are carbon credits?
A carbon credit is a certificate for reducing or removing 1 metric tonne of greenhouse gases (CO2e) through verified practices like agroforestry, soil carbon, or methane reduction. companies buy these credits to offset their emissions and meet sustainability goals or policy requirements.
Why it matters to Indian farmers
India has introduced a Carbon Credit Trading Scheme and a framework to promote voluntary carbon markets in agriculture, aiming to create new income opportunities for small and marginal farmers. with recognized standards and methods, farmer groups can get credits for climate-smart practices and sell them to domestic or international buyers.
How farmers earn Carbon Credits
- Adopt eligible practices: no-till, cover crops, residue retention, improved fertilizer use, rice methane reduction (AWD/SRI), agroforestry, biochar.
- Aggregate with FPO/NGO or project developer: grouping reduces cost and improves monitoring.
- MRV (Monitoring, Reporting, Verification): baseline, soil tests or remote sensing, data logs, third-party verification, and credit issuance on a registry.
Common eligible practices
- Soil carbon: no-till, cover crops, crop rotation, organic amendments increase soil organic carbon.
- Rice methane reduction: alternate wetting and drying (AWD), SRI methods lower CH4 emissions.
- Agroforestry: integrating trees (e.g., bamboo, mahogany, fruit trees) sequesters carbon in biomass and soils.
- Biochar: converting crop residues into stable carbon stored in soils can earn high-value credits under dedicated standards.
Registries and standards
- Verra (VCS) and Gold Standard are widely used by Indian agriculture projects for crediting.
- India’s framework recognizes pathways for farmers to participate in the voluntary carbon market; Verra methodologies are considered eligible under India’s initiatives.
Voluntary vs compliance markets
- Voluntary market: companies buy carbon credits to meet self-set targets or CSR; more flexible methodologies and co-benefit focus.
- Compliance market: credits used to meet regulatory caps or intensity targets; India notified the Carbon Credit Trading Scheme (CCTS) and is operationalizing carbon trading mechanisms.
Offsetting vs insetting
- Offsetting: buyers compensate emissions by purchasing credits from outside their value chain.
- Insetting: buyers fund reductions inside their own supply chain (e.g., food brands supporting farmer practices), often preferred for Scope 3.
CARBON credit Trading is here.
— KM_ vote_Kachori (@KnKsnKarn) July 1, 2025
Indian industries will be MADE to LIMIT Emissions.
If they Cross the limit, they will HAVE to BUY CARBON ‘CREDITS’ to ‘compensate’ for the extra pollution and get labelled as Non Polluting.
Consumer suffers.
Do you Get the SCAM . Follow the MONEY pic.twitter.com/wcMi3pS9df
Step-by-step for farmers/FPOs
- Choose a practice bundle: pick 1–2 practices suitable for your agro-climate and water availability (e.g., AWD in rice, no-till + cover crops).
- Form a group: join or create an FPO/SHG cluster to reduce cost and standardize practices for verification.
- Select a developer/standard: discuss Verra/Gold Standard methods, data requirements, and revenue share.
- Baseline and plan: document current practices, soil tests, field mapping (GPS), and training.
- Implement and monitor: keep logs of irrigation, fertilizer, residues; use remote sensing and periodic soil sampling as required.
- Verification and sale: third-party audit, credit issuance on registry, sell to buyers or brokers.
Revenue and prices (what to expect)
Credit prices vary by project type, method, co-benefits, and buyer demand; agriculture projects with strong integrity and verification tend to get better prices. biochar and high-integrity nature-based credits can command premium pricing in some markets. government support aims to increase farmer participation and improve viability over time.
Costs and risks
- Upfront costs: soil tests, training, data systems, audits; often handled by developer with a revenue share.
- Time to credits: 12–24 months typical for monitoring and issuance cycles.
- Integrity risks: additionality, leakage, permanence; good MRV and conservative accounting are essential.
Quick comparison of pathways
- Soil carbon: broad applicability; needs consistent practice change and soil/MRV rigor.
- Rice methane reduction: strong fit for paddy belts; requires irrigation management.
- Agroforestry: timber + fruit income plus credits; longer growth cycles.
- Biochar: converts residue waste to durable carbon; can achieve premium pricing where certified.
Who buys these credits?
Indian and global companies with net-zero or CSR goals, especially food, retail, logistics, and consumer brands; insetting demand is growing in supply chains.
Conclusion
Carbon credits offer Indian farmers a practical path to earn extra income while improving soil health and resilience through climate‑smart practices like no‑till, AWD/SRI in rice, agroforestry, and biochar. India’s evolving carbon market framework and trading scheme are opening doors for FPOs and smallholders to participate, provided projects follow strong MRV and use recognized standards.
FAQs
1) What is 1 carbon credit?
A- One credit equals 1 tonne of CO2e reduced or removed with verification.
2) Can small farmers participate?
A- Yes; India’s framework promotes VCM in agriculture and encourages small/marginal farmer participation via FPOs and developers.
3) Which standard should we choose?
A- Verra and Gold Standard are the most referenced; selection depends on method fit, data needs, costs, and buyer preference.
4) How do we prove results?
A- Through MRV: baseline data, practice logs, remote sensing, soil sampling, and third-party verification before credits are issued.
5) Is insetting better than offsetting?
A- Supply chains increasingly prefer insetting for Scope 3 as it builds farmer resilience and traceable impact; both are used.