In the race to net-zero carbon emissions, much of the mainstream conversation is dominated by the energy transition—on how fast we can transition from fossil fuels to low-carbon energy sources such as solar, wind, hydrogen, and nuclear. However, this does not capture the full scale of the climate challenge. Burning fossil fuels is just one, albeit significant, contributor to greenhouse gas (GHG) emissions. Approximately 25 percent of GHG emissions result from agriculture, forestry, and land use (AFOLU) patterns, which will not be eliminated solely by diversifying the source of energy fuels beyond coal and petrochemicals. Moreover, cleaner fuels will only reduce emissions; as opposed to removing the excess carbon content already present in the atmosphere as a result of industrial activity. Even with a 100-percent clean energy mix—a reality which remains several decades away—carbon emissions will continue to be generated. Achieving net-zero emissions targets thus requires going beyond reducing or avoiding emissions, to also removing carbon from the atmosphere.
Most of these farmers still rely on the vagaries of the weather for their crop harvesting and production, and are most vulnerable to extreme weather events like droughts and floods.
Even after 75 years of independence, ~55 percent of Indians are engaged in agriculture and allied activities for their livelihood. A “people-positive”, “human-centric” energy transition cannot ignore the vast majority of the population, who are also the most vulnerable to climate change. >80 percent of Indian farmers are smallholders, who cultivate plots of land smaller than one hectare in size. Most of these farmers still rely on the vagaries of the weather for their crop harvesting and production, and are most vulnerable to extreme weather events like droughts and floods.
Especially since the “Green Revolution”, conventional agricultural practices such as excessive tillage, flooding of fields, residue burning, deforestation, and overuse of chemical fertilisers have deteriorated soil quality in most of the country. Although these practices increased agricultural yields in many regions, it is increasingly clear that these gains are unsustainable. Nearly 30 percent of India’s land is considered ‘degraded’. ‘Soil Organic Content’ of Indian soil is much lower than prescribed by experts, and it is increasingly deficient in several nutrients. Smallholder farmers desperately seeking subsistence means of livelihood are more likely to engage in these unsustainable practices, which also lead to higher carbon emissions.
Varaha is building a technology platform to enable decarbonisation for smallholder farmers. We generate verifiable and additional “nature-based” carbon offset credits via best-in-class science and digital measurement, reporting and verification (MRV), working closely with smallholder farmers and land stewards to develop carbon avoidance and removal projects. Our growing portfolio of projects includes:
Varaha’s end-to-end carbon project enablement model utilises farmers and communities’ natural assets to avoid and remove carbon emissions while harnessing carbon market finance tools, such as forward pricing, to incentivise sustainable practices. Our data collection and ground data validation processes prove “additionality” at a farm level, through a farmer-held app and physical soil samples to collect ground-level data, combined with highly sophisticated technologies like remote-sensing-based Machine Learning (ML) models and Light Detection and Ranging (LiDAR) to validate on-ground practices. Our calibrated models then precisely quantify GHG emissions to generate high-quality, durable carbon credits independently verified by third parties as per global best practices.
The majority of credits from this project are carbon removal credits, signifying a positive contribution to reversing climate change.
Varaha’s community-centric and science-first approach has helped us become among the world’s leading developers of nature-based climate solutions in a short period. We share the majority of revenue from carbon credit sales directly with our 100,000+ smallholder farmers and land steward partners. Our ongoing projects are spread over 1 million hectares across five countries (India, Nepal, Bangladesh, Kenya, Tanzania), and we are building deep networks across a further eight to nine countries. Apart from directly increasing incomes and reducing CO2 emissions, our projects create a range of other benefits for the environment. For instance, our flagship regenerative agriculture project across seven states in the Indo-Gangetic plains is helping improve soil organic matter, reduce erosion, and improve water quality. The majority of credits from this project are carbon removal credits, signifying a positive contribution to reversing climate change.
Looking at the road ahead for nature-based solutions for carbon avoidance and removal, there exist some challenges to scale. In this respect, public policy and private sector market participants both have roles to play in overcoming these challenges.
Nature-based solutions are still an emerging sector within agriculture, and there is significant effort needed to build awareness by educating key stakeholders, including the government. Government and community mobilisers can thereby communicate to smallholder farmers about the long-term benefits of nature-positive, organic agriculture and agroforestry, particularly in light of the fact that there may be temporary declines in yields in the first 1-2 years (compared with traditional, chemical input-led farming practices). Most cultivators intuitively understand the long-term advantages of nature-positive, organic farming practices but are initially reluctant to shift their methodologies, citing income losses and uncertain yield as their main concerns. As the market for nature-based solutions matures, these concerns will begin to be addressed, as more project financiers enter as part of the carbon markets value chain to cover losses in the early years, and early pilots begin to demonstrate success.
Government and community mobilisers can thereby communicate to smallholder farmers about the long-term benefits of nature-positive, organic agriculture and agroforestry, particularly in light of the fact that there may be temporary declines in yields in the first 1-2 years.
Today, much of the demand for nature-based, carbon offset solutions is still in the international voluntary carbon market. This growing market is still at an early stage of its evolution, and price discovery mechanisms are maturing. As compliance markets emerge around the world, beginning with developing economies like the European Union and the United States, one expects greater and more stable demand for high-quality nature-based credits generated in India. For instance, Japan has included India in its list of partners under the Joint Crediting Mechanism (JCM), whereby Japan will finance emission reduction projects in India in exchange for carbon credits.
Indian capital markets have still not fully embraced carbon offsets, mainly due to an understandably cautious policy approach. It is heartening to see the Central government taking concrete steps for establishing the domestic carbon and “green” credit markets, through the Carbon Credit Trading Scheme (CCTS) as part of the Energy Conservation Bill. Ensuring transparency, market integrity, and standardisation are vital for its success, and properly aligning the CCTS with India’s Nationally Determined Contribution (NDC) goals and global climate standards is necessary to gain international recognition.
In June 2023, a draft of the Green Credit Programme (GCP) was released, which outlines the implementation rules and structure for individuals, agricultural cooperatives, forestry enterprises and other entities with the potential to generate nature-based credits. India is developing a national unified carbon market (ICM) where some sectors will be covered by a cap-and-trade compliance market and a voluntary market operating in parallel. India is currently fixing carbon emission intensity benchmarks and reduction targets for three years for companies in petrochemicals, iron and steel, cement, and the pulp and paper sectors. The companies in these sectors are also likely to be the first ones to trade on the country’s carbon trading market from April 2025.
The government should actively encourage global and domestic investments in Indian nature-based solutions, particularly project financiers and “forward” credit purchasers.
This policy momentum should continue. Crucially, this should not be accompanied by restricting the sale of domestically generated credits in the international market; doing so would deprive Indian smallholders of a significant market opportunity and repeat the adverse consequences of the wheat export ban of 2022. On the contrary, the government should actively encourage global and domestic investments in Indian nature-based solutions, particularly project financiers and “forward” credit purchasers. Indeed, in response to a letter, Rohit Kumar, Secretary General, Carbon Markets Association of India, stated that “the Government of India and the National ETS under Indian carbon market will not restrict Indian businesses’ participation in international voluntary carbon market and export of Indian origin voluntary carbon credits in international market”.
At the same time, domestic end-buyer demand needs to be stimulated. Indian corporations must show more urgency, first adopting science-based targets for offsetting emissions and then taking concrete steps. Businesses should recognise this as an opportunity rather than a compliance-related obstacle. Companies with large land exposure (for example food and beverage, and textile companies) particularly have an opportunity to decarbonise their supply chains (“insetting”), while simultaneously reducing long-term costs, increasing the well-being of partner communities (namely, farmers), and enabling a range of environmental benefits. Policymakers could push for faster action by corporations to adopt nature-based offsetting strategies.
Other potential challenges to scale include difficulties in establishing land ownership and slow action by the government to give permission for these nature-based projects to be executed on “common” lands (forests and mangroves). Governments should ideally work hand-in-hand with farming communities and project developers to identify and remove administrative bottlenecks for potential nature conservation and market opportunities, in order to contribute to India’s net-zero, food security and conservation goals.
Developers must insist on robust monitoring and transparent reporting of benefits such as farmer income and environmental metrics, and ensure active participation of farming communities in project design and benefit-sharing.
Finally, market participants such as project developers and accreditors must recognise that for any industry, ‘trust’ is earned over time. Developers must insist on robust monitoring and transparent reporting of benefits such as farmer income and environmental metrics, and ensure active participation of farming communities in project design and benefit-sharing. Over time, this will build trust in an emerging sector with the potential to play a decisive role in a people- and nature-positive energy transition.
As the effects of climate change continue to intensify, not only are the livelihoods of many Indians under threat but so is the food security of the rest of our population. Varaha’s solution is one which addresses this urgent need to prevent declining soil quality and unsustainable agricultural practices while moving India towards its ambitious net-zero goals. At Varaha, we want to ensure that this fight against climate change prioritises the most vulnerable communities and places them front and centre, and with the combination of technology and private market innovation at the core of our business model, we aim to realise this vision.
Madhur Jain is the Co-Founder and CEO of Varaha.
Gauraang Biyani is the Chief of Staff at Varaha.
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