Carbon credits and climate change Mitigation: A comprehensive review

Introduction

The story of carbon credits begins with a simple but powerful idea: if we can put a price on carbon pollution, perhaps the market itself will find the most efficient ways to reduce it. This idea, born in the corridors of international climate negotiations in the 1990s, has since evolved into a multi-billion-dollar global industry touching everything from Indonesian rainforests to rooftop solar panels in rural Rajasthan. India is particularly vulnerable to the effects of climate change. The country's agriculture sector, which sustains the livelihoods of over 600 million people, faces mounting threats from erratic monsoons, heat stress, groundwater depletion, and soil degradation. At the same time, Indian agriculture is itself a significant source of GHG emissions accounting for approximately 18% of the nation's total emissions, primarily through enteric fermentation in livestock, paddy cultivation, and the burning of crop residues (MoEFCC, 2021). Yet within this challenge lies enormous opportunity. Indian soils hold the potential to sequester millions of tonnes of carbon annually. Agroforestry systems practiced by smallholders can lock up atmospheric CO₂ while providing timber, fodder, and fruit. Improved paddy management can drastically reduce methane emissions. These are not hypothetical solutionsthey are being actively studied and quantified by a network of ICAR institutes and state agricultural universities across the country. This review paper traces the conceptual and policy architecture of carbon credit markets, examines what Indian agricultural research has found about mitigation potential, and evaluates whether the carbon market framework can truly deliver on its promisefor the climate and for India's farmers.

Understanding Carbon Credits: Concepts and Architecture 2.1 What Is a Carbon Credit?

A carbon credit is a tradable certificate or permit representing the right to emit one tonne of carbon dioxide (CO₂) or its equivalent in other greenhouse gases (CO₂e). When an entity reduces, avoids, or sequesters one tonne of CO₂e, it can claim one carbon credit. This credit can then be sold in the market to another entity wishing to offset its own emissions. The underlying logic is elegant: climate change doesn't care where emissions are reduced, so letting the www.extensionjournal.com market find the cheapest reductions maximizes efficiency. Carbon markets broadly fall into two categories. Compliance markets are legally mandated systems where regulated entities must stay within set emission caps or purchase credits to cover exceedances. The European Union Emissions Trading System (EU ETS) is the world's largest compliance carbon market. Voluntary markets, by contrast, are driven by corporate sustainability commitments, consumer preferences, or ethical motivations, without a legal obligation. In India, both types have relevance, though the voluntary market has seen more activity to date (Newell et al., 2021) [10] .

Historical Evolution of Carbon Markets

The conceptual foundation for carbon trading emerged from the 1972 Stockholm Conference on the Human Environment and gained traction through the 1992 United Nations Framework Convention on Climate Change (UNFCCC). However, it was the 1997 [23] Kyoto Protocol that established the first legally binding framework for carbon markets, introducing three flexible mechanisms: Joint Implementation (JI), International Emissions Trading (IET), and the Clean Development Mechanism (CDM) (UNFCCC, 1997) [23] . The CDM was, in many ways, a revolutionary concept. For the first time, developing countries like India could participate in global climate action not by cutting their own emissions but by hosting emission-reduction projects financed by industrialized nations. Between 2004 and 2020, India became one of the world's top CDM host countries, registering over 1,600 projects ranging from wind farms to biogas plants (CDM Pipeline, 2020) [3] . The Paris Agreement of 2015 marked a new era, replacing the top-down Kyoto architecture with a bottom-up system of Nationally Determined Contributions (NDCs). Article 6 of the Paris Agreement established new mechanisms for international carbon markets, though their rules were only finalized at COP26 in Glasgow in 2021 and refined further at COP27 and COP28 (Sharma and Jha, 2022) [17] . [7] .

Key Market Mechanisms

Research from Tamil Nadu Agricultural University (TNAU) has highlighted the vulnerability of rainfed rice and pulses in South India to increasingly erratic Northeast Monsoon rainfall (Geethalakshmi et al., 2011, TNAU Coimbatore) [4] .

Meanwhile, scientists at G.B. Pant University of Agriculture and Technology have documented shifts in the Himalayan cryosphere affecting irrigation water availability for farmers in Uttarakhand (Singh and Kumar, 2018, GBPUAT Pantnagar) [19] . These are not abstractionsthey represent real losses of income, food, and hope for millions of farming households.

Carbon Sequestration and Agricultural Mitigation Potential: Evidence from Indian Research Institutions 4.1 Soil Organic Carbon Sequestration

Soil is the largest terrestrial carbon reservoir, containing approximately 1,500 Gt of organic carbon in the top metre globallyroughly double the amount in the atmosphere. Practices that increase soil organic carbon (SOC) not only sequester carbon but also improve soil health, water retention, and crop productivity, creating a rare win-win situation. Systematic research on SOC dynamics across Indian soils has been a cornerstone of work at ICAR-NBSS&LUP Nagpur. Long-term studies have established that conversion from conventional tillage to no-till or conservation agriculture can increase SOC by 0.1-0.4% per year in the www.extensionjournal.com top 20 cm of soil (Ramesh et al., 2019, NBSS&LUP Nagpur) [15] . Integrated nutrient management combining organic manures with mineral fertilizers has been shown to consistently increase SOC across diverse soil types in the Indo-Gangetic Plains, Deccan Plateau, and coastal regions.

Research at Punjab Agricultural University (PAU), Ludhiana, has specifically examined the role of crop residue management in the wheat-rice system. Retention of wheat straw as mulch instead of burning not only prevents massive CO₂ and black carbon emissionsthe burning of an estimated 15-20 million tonnes of rice straw in Punjab alone each year creates serious air quality crisesbut also contributes measurably to SOC buildup over 3-5 year periods (Singh et al., 2020, PAU Ludhiana) [18] . [20] . This technique has direct implications for carbon credit generation, as reduced methane emissions can be quantified and monetized under approved carbon accounting methodologies.

Tamil Nadu Agricultural University has pioneered research on the System of Rice Intensification (SRI) as a combined mitigation and adaptation strategy. SRI involves younger seedlings, wider spacing, and reduced water use, leading to significantly lower methane emissions alongside higher yields (Geethalakshmi et al., 2011, TNAU Coimbatore) [4] . The university's research stations across different agroclimatic zones of Tamil Nadu provide robust site-specific emission factors that are critical for accurate carbon accounting in smallholder rice systems.

Agroforestry as a Carbon Sink

Agroforestrythe deliberate integration of trees with crops and/or livestock on the same land unitrepresents perhaps the most culturally embedded and ecologically proven approach to carbon sequestration in Indian agriculture. India has a rich tradition of agroforestry systems, from the taungya systems of Himachal Pradesh to the homegardens of Kerala, and current estimates suggest 28 million hectares of agroforestry across the country (NITI Aayog, 2020) [11] .

Researchers at GBPUAT Pantnagar have documented above-ground biomass carbon accumulation rates in poplarbased agroforestry systems in the Tarai region of Uttarakhand, finding that well-managed poplar-wheat systems can sequester 3-5 tCO₂/ha/year in above-ground biomass during rotation periods of 6-8 years (Pandey and Sharma, 2016, GBPUAT Pantnagar) [12] . These systems also provide substantial below-ground carbon inputs through root biomass and litter decomposition. [19] . Bamboo's rapid growth rate and high carbon density make it particularly attractive for carbon credit projects in degraded lands. Acharya N.G. Ranga Agricultural University (ANGRAU) in Guntur has evaluated coconut-based agroforestry systems prevalent in coastal Andhra Pradesh for their carbon sequestration potential. Studies show that intercropping with cocoa, turmeric, or banana under coconut can significantly enhance total system carbon stocks compared to monoculture coconut plantations, while improving farmer income diversification (Rao and Reddy, 2019, ANGRAU Guntur) [16] .

Livestock and Enteric Fermentation Management

With the world's largest livestock populationapproximately 536 million animals -India's livestock sector contributes nearly 65-70% of agricultural GHG emissions, primarily through enteric fermentation in ruminants and manure management. This is an area where ICAR institutions have made significant research investments. ICAR-National Dairy Research Institute (NDRI), Karnal, has conducted systematic studies on feed additives and improved feeding strategies to reduce enteric methane.

Research on tannin-rich tropical legumes, essential oils, and defaunation agents has shown methane reduction potentials of 15-25% under Indian conditions (Singhal et al., 2017, ICAR-NDRI Karnal) [22] . Importantly, many of these strategies also improve feed conversion efficiency and milk production, providing economic incentives for farmers to adopt them. The National Institute of Animal Nutrition and Physiology (ICAR-NIANP) in Bengaluru has developed region-specific emission factors for different livestock categories and production systems across India, providing the scientific foundation for robust GHG inventories and baseline establishmentboth critical requirements for credible carbon credit generation from the livestock sector (Bhatta et al., 2015, ICAR-NIANP Bengaluru) [1] . www.extensionjournal.com

Policy and Regulatory Frameworks 5.1 International Frameworks

The architecture of international carbon markets has undergone dramatic transformation since the Kyoto Protocol. The Paris Agreement's Article 6 represents a more flexible, country-driven approach to international cooperation on mitigation. Article 6.2 allows bilateral 'cooperative approaches' between countries trading Internationally Transferred Mitigation Outcomes (ITMOs), while Article 6.4 establishes a new multilateral crediting mechanism supervised by a UN body (Sharma and Jha, 2022) [7] . A critical innovation in Article 6 is the concept of 'corresponding adjustments'when a country sells credits to another country, it must subtract those reductions from its own NDC accounting. This prevents double-counting, a persistent integrity problem that plagued CDM markets. However, implementing these adjustments in practice requires sophisticated national registry systems and international tracking infrastructure that many developing countries are still building.

India's Carbon Market Development

Challenges and Critiques of Carbon Credit Systems 6.1 Methodological Challenges

The fundamental challenge for any carbon credit system is establishing with sufficient confidence that the emission reductions or removals claimed are real, additional, measurable, and permanent. In agricultural settings, this is technically demanding. Soil carbon stocks are notoriously variablea field can show very different carbon values even within small distances due to natural soil heterogeneity. This makes precise monitoring, reporting, and verification (MRV) both technically challenging and economically costly.

The concept of 'additionality' requires demonstrating that the carbon benefit would not have occurred without the carbon market incentive. For conservation agriculture or agroforestry, which farmers often adopt for agronomic reasons independent of carbon markets, establishing additionality can be difficult. Research at PAU Ludhiana and GBPUAT Pantnagar has highlighted that many recommended practices are already being promoted through government extension programs, making it challenging to attribute adoption specifically to carbon credit incentives (Kumar and Singh, 2021, PAU Ludhiana) [6] . 'Permanence' is another critical concerncarbon stored in soil or biomass can be released back to the atmosphere through tillage, fire, pests, or climate events. Carbon standards typically address this through 'buffer pools'setting aside a percentage of credits to insure against such reversalsbut the appropriate buffer size for Indian agricultural contexts under a changing climate requires careful calibration based on local research.

Equity and Smallholder Access

Perhaps the most ethically significant challenge is ensuring that carbon markets actually benefit the smallholder farmers who implement climate-friendly practices, rather than simply creating a financial instrument for corporations to continue business-as-usual with the comfort of offsets. India's average farm size is approximately 1.15 hectaresfar too small for individual farmers to meaningfully participate in carbon markets, where transaction costs for project registration, monitoring, and credit issuance typically require projects of thousands of hectares to be economically viable. Aggregation approaches that bundle thousands of smallholders into single projects offer a solution but create governance challenges. Who controls the project? How are benefits shared? Who bears the monitoring costs? Research from ICAR-CRIDA Hyderabad examining communitybased watershed projects that attempted carbon credit generation found that governance structures and transparent benefit-sharing mechanisms were as important as technical carbon accounting in determining project success and farmer satisfaction (Wani et al., 2017, CRIDA Hyderabad) [24] . Gender equity is an additional consideration often overlooked in carbon credit discussions. Women perform a substantial proportion of agricultural labor in India but often lack formal land tenurea prerequisite for participating in most carbon credit schemes. Agricultural universities and ICAR institutes working on socioeconomic dimensions of climate change must integrate gender-sensitive approaches into carbon credit program design.

Market Integrity and Credibility Crises

The global voluntary carbon market has faced serious credibility challenges in recent years. Investigative journalism and academic research in 2023 revealed that a significant proportion of REDD+ forest protection credits issued by major certifiers did not represent genuine emissions reductionsforests claimed to be 'saved' were never at significant deforestation risk in the first place (West et al., 2023) [15] . This so-called 'phantom credit' problem eroded market confidence and prompted major reforms in www.extensionjournal.com verification methodologies. For India's emerging carbon market to avoid similar pitfalls, robust regulatory oversight is essential. The participation of credible scientific institutionsincluding ICAR institutes with deep expertise in soil science, forestry, and agricultural systemsin developing monitoring protocols and spotchecking verification claims would significantly enhance market credibility. Research capacity developed at institutions like NBSS&LUP Nagpur for soil carbon assessment using spectroscopic and remote sensing approaches can provide cost-effective verification support at scale (Mandal et al., 2016, NBSS&LUP Nagpur) [7] . [14] . Blockchain-based carbon registries offer the promise of transparent, tamper-proof tracking of carbon credit issuance, transfer, and retirement. Several pilot initiatives in India, including through the National Payments Corporation of India and private fintech partnerships, are exploring how blockchain can enhance smallholder participation by reducing transaction costs and ensuring transparent benefitsharing in aggregated projects.

Opportunities and Innovations

Blue Carbon and Coastal Systems

Coastal ecosystemsmangroves, seagrasses, and tidal marshesstore carbon at rates per unit area far exceeding terrestrial forests, and India's 7,517-kilometre coastline harbors globally significant mangrove forests. Research at ICAR-Central Marine Fisheries Research Institute (CMFRI) and several coastal state agricultural universities has begun quantifying blue carbon stocks along Indian coasts, revealing enormous potential for blue carbon credit projects that simultaneously support coastal fisheries and protect communities from storm surges (Prasad et al., 2020, ICAR-CMFRI Kochi) [13] .

Biochar and Soil Amendment Approaches

Biochara stable form of carbon produced by the pyrolysis of agricultural residues, woody biomass, or other organic materialsoffers a uniquely durable form of carbon sequestration. Unlike soil organic matter, which turns over relatively rapidly, biochar persists in soils for hundreds to thousands of years. Ultimately, carbon credits are not a silver bullet. Even the most optimistic projections for agricultural carbon sequestration in India would offset only a fraction of total national emissions. Mitigation requires deep decarbonization of energy, transportation, and industry alongside the nature-based solutions that carbon markets can support. But for farmers on the frontlines of climate change people who are already losing sleep over failed monsoons and rising input coststhe prospect of additional income from carbon credits while improving their own land represents something meaningful and worth pursuing.

Conclusion

Carbon credits represent an imperfect but important tool in humanity's response to climate change. Their value lies not in absolving polluters of responsibility, but in creating economic signals that direct investment toward practices and technologies that reduce atmospheric greenhouse gases. In the Indian agricultural context, the scientific evidence from ICAR institutions and state agricultural universities points to substantial, genuine mitigation potential across soil carbon sequestration, methane mitigation in rice, agroforestry, and livestock management. The transition to a credible, effective carbon market ecosystem in India requires concerted effort from scientific institutions to develop robust MRV methodologies, from policymakers to create an enabling regulatory framework, and from project developers to design programs that www.extensionjournal.com genuinely empower smallholder farmers rather than simply extracting value from their land. Done right, carbon credit markets can simultaneously address climate change, enhance agricultural resilience, and improve rural livelihoodsmaking them one of the more promising intersections of environmental policy and agricultural development in the coming decades. As this review has shown, the research foundations are increasingly solid. What is needed now is the political will, institutional capacity, and inclusive design to translate scientific knowledge into market mechanisms that work for the climate and for India's farmers.

Acknowledgement

AcknowledgementsThe authors gratefully acknowledge the scientific contributions of researchers across ICAR institutes and state agricultural universities whose painstaking field studies and laboratory investigations over decades have created the evidence base synthesized in this review. Special thanks are due to the Directors and Heads of Department at ICAR-IARI New Delhi, ICAR-NBSS&LUP Nagpur, ICAR-CRIDA Hyderabad, ICAR-CRRI Cuttack, ICAR-CAFRI Jhansi, ICAR-NDRI Karnal, ICAR-NIANP Bengaluru, and ICAR-CMFRI Kochi, as well as colleagues at GBPUAT Pantnagar. The authors declare no conflict of interest. This review received no specific funding from any governmental, commercial, or not-for-profit agency.

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