Context:
Union Budget 2026 allocated ₹20,000 crore for a carbon credit programme, creating confusion over whether it targets industrial decarbonisation (CCUS) or farmer income via carbon farming.
Key Highlights:
- Government Initiative / Policy Details
- Budget allocation primarily targets Carbon Capture, Utilization, and Storage (CCUS).
- Focus on hard-to-abate sectors like power, steel, cement.
- DST (Dec 2025 roadmap) outlines industrial CCUS strategy.
- Conflicting Narrative
- Parallel claims suggest income generation for farmers via carbon credits.
- Confusion due to mixing industrial carbon markets with voluntary carbon markets.
- Agriculture & Carbon Market
- Agriculture excluded from CCUS due to diffuse emissions.
- Potential exists for carbon sequestration through sustainable farming.
- Requires separate, structured carbon farming policy.
- Key Concepts
- Carbon Credit: 1 tonne of CO₂ reduced/removed.
- CCUS: Capturing CO₂ from industrial emissions.
- Carbon Sequestration: Storing atmospheric CO₂ (e.g., soil, forests).
- Significance / Concerns
- Lack of clarity may hinder policy implementation and investor confidence.
- Risk of misaligned expectations among stakeholders (industry vs farmers).
Relevant Prelims Points:
- CCUS is crucial for net-zero targets, especially in heavy industries.
- India’s climate commitments include reducing emission intensity and increasing non-fossil capacity.
- Voluntary carbon markets allow private entities to trade carbon credits.
- Agriculture contributes ~14–18% of India’s emissions, mainly methane and nitrous oxide.
- Carbon sequestration potential exists in soil, agroforestry, and regenerative agriculture.
Relevant Mains Points:
- Issue of Policy Ambiguity
- Blurring lines between industrial decarbonisation and agricultural carbon markets weakens governance.
- Need for clear institutional frameworks and sectoral demarcation.
- Industrial Decarbonisation Imperative
- Hard-to-abate sectors require technological interventions like CCUS.
- Aligns with India’s energy transition and climate commitments.
- Agriculture & Climate Opportunity
- Carbon farming can provide additional income streams for farmers.
- Enhances soil health, resilience, and sustainability.
- Challenges
- Measurement, Reporting, Verification (MRV) complexity in agriculture.
- Lack of credible domestic carbon market ecosystem.
- High cost and scalability issues in CCUS.
- Way Forward
- Clearly separate industrial CCUS funding and agricultural carbon policies.
- Develop a regulated domestic carbon market with strong MRV systems.
- Promote public-private partnerships in CCUS.
- Pilot carbon farming schemes with farmer incentives.
- Integrate both sectors under a comprehensive climate strategy.
UPSC Relevance:
• GS 3: Environment (Climate Change, Carbon Markets)
• GS 3: Economy (Green Finance, Sustainable Development)
• GS 2: Governance (Policy clarity, implementation challenges)