Can Carbon Markets Decarbonise and Revitalise Agriculture?

Anirudh Krishnan and Soumya Singhal


Agriculture is a significant employer and contributor to the GDP in India. However, the sector faces a two-fold problem due to climate change and a declining workforce. On the one hand, increased food demand is juxtaposed with a decline in the number of food providers – farmers. On the other hand, agriculture has to face the brunt of, while also exacerbating, climate change. The recently passed Energy Conservation (Amendment) bill proposes a domestic carbon credits market, which can act as a thrust toward solving both these issues. An emissions market can incentivise farmers to decarbonise agriculture while also increasing their incomes through the sale of credits. Carbon farming can help drive decarbonisation forward. This discussion paper identifies existing problems of the inaccess to technology, fragmented landholdings, and the nature of a voluntary market as possible hurdles for the effective participation of farmers in a carbon market. Further, it analyses the role of agritech startups, collective farming, and regulation of an emissions market in achieving the twin objectives.


KEYWORDS: Carbon farming, carbon markets, agritech in India, collective farming, climate change.



The Energy Conservation (Amendment) Bill was passed in the Rajya Sabha in December 2022. The Bill lays down a framework for regulating energy consumption and promoting energy efficiency and conservation. More importantly, the Bill empowers the central government to specify a domestic carbon credit trading scheme. Globally, entities have used the voluntary carbon market as an incentive to decarbonise agriculture and increase incomes from agriculture and related activities. Consequently, exploring the role of a domestic carbon credits market in India’s agricultural practices is vital in both decarbonising and revitalising India’s agricultural sector. 


The agriculture sector in India employs 54.6% of the population and contributes 17.4% to the country’s GDP (Department of Agriculture and Farmer Welfare, n.d.). The sector accounts for farming and non-farming activities that aid crop production and livestock management. The produce of agricultural activities serves both as a finished product for consumption and an intermediary product for further production. Given India’s growing population, the country will have to increase its agricultural production by 70% to cater to a growing population (Kishor, 2021). A predominant part of this increase can be expected in crop production to ensure food security. However, increased agricultural production will increase carbon emissions, given the carbon-intensive nature of the sector. Hence, scientists and policymakers are tasked with fulfilling rising food demand while also reducing greenhouse gas [GHG] emissions.