[18th March 2026] The Hindu OpED: A bit of blur over India’s new carbon credit plan

Mentor’s Comment

India’s Carbon Capture, Utilization, and Storage (CCUS) initiative aims to reduce greenhouse gas emissions to meet 2070 net-zero targets, focusing on high-emitting industrial sectors. The Union Budget 2026-27 announced a ₹20,000 crore scheme to scale up CCUS deployment, specifically targeting power, steel, cement, refineries, and chemical industries. The Budget 2026 announcement highlights the tension between industrial decarbonisation via CCUS and nature-based carbon markets involving agriculture. This raises issues of policy clarity, sectoral prioritisation, and climate governance design.

What is the core objective of India’s carbon credit plan?

1. Industrial Decarbonisation Focus: Targets sectors like power, steel, cement, refineries, and chemicals where emissions are concentrated and difficult to eliminate.
2. CCUS Deployment: Ensures capture of CO₂ from industrial flue gases and its utilization or storage underground.
3. Technology-led Transition: Supports R&D roadmap released by Department of Science and Technology (Dec 2025).
4. Budgetary Commitment: ₹20,000 crore over five years for large-scale CCUS deployment.

Why is agriculture excluded from CCUS strategy?

1. Emission Characteristics: Agricultural emissions (methane, nitrous oxide) are diffuse and biologically mediated.
2. Technological Limitation: CCUS is suited for point-source emissions, not dispersed sources like farms.
3. Policy Segregation: Clear distinction between CCUS (industrial) and Carbon Dioxide Removal (CDR) via soil, biochar, agroforestry.
4. Role of Agriculture: Positioned under carbon sequestration pathways, not industrial capture.

What is causing confusion around ‘farmer carbon credits’?

1. Terminology Overlap: Use of “carbon credit programme” creates perception of inclusivity across sectors.
2. Parallel Narratives: Media and discourse suggest farmers can directly earn credits under Budget allocation.
3. Existing Voluntary Markets: Agriculture and forestry projects already generate credits for domestic and global buyers.
4. Policy Communication Gap: Lack of clear distinction between regulated compliance markets and voluntary carbon markets.

What are the implications of prioritising CCUS over agriculture?

1. Industrial Competitiveness: Supports decarbonisation of sectors contributing ~25% of India’s emissions.
2. Net-Zero Alignment: Essential for achieving India’s climate commitments.
3. Missed Rural Opportunity: Delays monetisation of agriculture’s carbon sequestration potential.
4. Fiscal Prioritisation: Directs public funds toward capital-intensive technologies instead of nature-based solutions.

Can agriculture-based carbon markets emerge as a parallel opportunity?

1. Soil Carbon Sequestration: Enhances carbon storage through regenerative practices.
2. Agroforestry Potential: Integrates trees into farming systems to generate carbon credits.
3. Private Sector Initiatives: Pilot programmes compensate farmers for sustainable practices.
4. Policy Requirement: Needs separate funding, institutional frameworks, and certification mechanisms.

What policy approach is required to resolve the ambiguity?

1. Clear Sectoral Demarcation: Separates ‘smokestack’ (industrial) and ‘soil’ (agriculture) carbon pathways.
2. Dedicated Agricultural Policy: Establishes structured carbon farming programme with incentives.
3. Market Development: Creates trusted domestic carbon market for agriculture credits.
4. Communication Clarity: Ensures alignment between policy design and public narrative.

Conclusion

India’s carbon credit framework reflects a dual transition challenge: industrial decarbonisation through CCUS and agricultural transformation through carbon sequestration. Policy clarity, sector-specific instruments, and institutional coherence are essential to avoid misaligned expectations and unlock full climate and economic potential.