Union Budget 2026: Carbon Credit Programme
Overview
A significant policy announcement in Union Budget 2026 includes a substantial ₹20,000 crore allocation for a carbon credit programme. This announcement has led to confusion and conflicting narratives regarding its intended purpose.
CCUS for "Hard-to-Abate" Industries
- The primary focus of the budget announcement is on Carbon Capture, Utilization, and Storage (CCUS) technologies for industries like power, steel, cement, refineries, and chemicals.
- The "R&D Roadmap for CCUS" by the Department of Science and Technology explicitly targets these sectors, categorizing them as "hard-to-abate" due to concentrated emissions.
- The ₹20,000 crore is slated for the deployment of CCUS technologies to capture and utilize or store carbon dioxide from industrial processes.
Agriculture's Role
- Agriculture is acknowledged as a greenhouse gas source but is excluded from CCUS strategies due to its diffuse and biologically mediated emissions.
- Carbon Dioxide Removal (CDR) strategies involving agriculture, such as soil carbon sequestration and agroforestry, are noted but are not the focus of the budgetary provision.
Counter-Narrative: Farmers and Carbon Credits
Despite a clear industrial focus, a narrative suggests that the funding will enable farmers to earn carbon credits through sustainable practices. This seems to conflate industrial CCUS and the voluntary carbon market initiatives involving agriculture.
Policy Communication and Opportunities
- The term "carbon credit programme" has led to expectations of an agricultural focus, highlighting a communication gap.
- A structured carbon farming programme could be a logical extension, requiring distinct policies and funding.
- The government needs to clarify distinctions to manage expectations and capitalize on both industrial and agricultural opportunities.
Conclusion
The ₹20,000 crore CCUS programme is essential for industrial decarbonization and achieving net-zero goals. Simultaneously, the narrative around farmer carbon credits underscores a promising opportunity in the voluntary carbon market. Clear demarcation and development of separate policies for these fronts are crucial for India’s climate strategy.
Arkalgud N. Ganeshamurthy is a Fellow of the National Academy of Agricultural Sciences, highlighting the need for comprehensive multi-sectoral approaches for sustainable development.
