Agri sector policy bias must go

International policy recommendations based on climate science, such as those from the Intergovernmental Panel on Climate Change Sixth Assessment Report (IPCC-AR6), stress the need for climate policies to prioritise carbon dioxide (CO2) removal (CDR) processes.

Global agencies have recognised the increasing reliance on regenerative agriculture and the crucial role it plays in achieving net-zero targets through further agricultural CDR. The agricultural sector has the potential to capture historically emitted CO2 on a massive scale by sequestering it in various forms, such as crop tissue, biochar, and soil organic carbon. However, national and international policies currently discriminate against a significant portion of the climate services provided by agriculture.

At the heart of this discrimination lies an inconsistent and unjust greenhouse gas (GHG) accounting approach to a fundamental aspect of human existence: our metabolic emissions.

These emissions originate from our respiration, excretion, and kitchen waste, all of which are a result of our metabolic needs. Each individual emits approximately 0.54 tonnes of CO2 equivalents (tCO2e) per year, primarily in the form of CO2 and methane. Collectively, the global population of 8 billion emits around 4.3 billion tCO2e per year. Emissions from human metabolism are an unavoidable category that should be recognised as a separate subsector in GHG inventories, exempt from mitigation efforts.

While these emissions constitute a small fraction of those resulting from burning fossil fuels, their omission from sectoral GHG accounting introduces a significant bias against agriculture. This bias leads policymakers to inconsistently apply the well-established GHG Protocol to national GHG inventories.

The Scope Inconsistency

The GHG Protocol is the most widely used GHG accounting standard globally, employed by governments, industry associations, and various organizations. It defines three scopes of GHG (Scopes 1, 2, and 3), representing increasing levels of an enterprise's control and accountability for mitigation. Scope 1 refers to the GHGs that an enterprise can directly control while producing a product or service. Net positive Scope 1 represents emissions, while net negative Scope 1 represents CDR (or sequestration) by the enterprise. National GHG inventories build upon the GHG Protocol to allocate net Scope 1 to subsectors, providing sector-specific data for climate policy.

Herein lies the inconsistency. Emissions from human metabolism are not distinguished but are attributed by default to Scope 1 of the food crop and horticulture subsectors. In contrast, emissions resulting from the use of fossil fuels are separated and treated as Scope 1 of downstream users rather than the petroleum subsector. It is incorrect to burden the agriculture sector entirely with the emission burden of human metabolism under Scope 1. As a result of this misattribution, the agriculture sector is not given due recognition for the majority of its climate services.

The value calculation is crucial to understanding this issue. India's national GHG inventory (projected for 2023) recognises only 228 million tonnes of CO2e (MtCO2e) per year as CDR from sequestration in farming residue, fodder, and other terrestrial removals. On-farm emissions in India amount to approximately 660 MtCO2e. However, the national GHG inventory incorrectly calculates the agriculture sector's net Scope 1 emissions as 432 MtCO2e (14% of India's emissions).

The national GHG inventory fails to account for India's 756 MtCO2e of human metabolism emissions (0.54 tCO2e per person-year of its 1.4 billion population). In reality, India's agriculture sector's CDR is 984 MtCO2e, making its net Scope 1 a sequestration of 324 MtCO2e. This establishes agriculture as a net sink rather than a net source. (For a detailed explanation of these calculations, refer to this writer's article titled Economic Implications of a Universal GHG Accounting Protocol on the Social Science Research Network, a searchable electronic publishing site.)

Carbon pricing is universally accepted as a policy instrument to incentivize further CDR. The current damage cost of GHG emissions is approximately $100 per tCO2e, with expectations of a future increase. The estimated annual financial value of Indian agriculture’s climate services, therefore, is an astounding $98.4 billion (Rs 8.1 lakh crore). With 155 million hectares of arable land, this translates to an approximate monetary rate of Rs 52,000 per hectare per year.

These numbers establish the financial magnitude of discrimination arising from the scope inconsistency. Providing just compensation and budgetary allocations to the food subsector of agriculture, calculated as outlined above, would have additional welfare benefits. Food price inflation constrains the income potential of farmers and farm workers. Investing in agriculture through global carbon funds for CDR will benefit the most vulnerable sections of society while simultaneously addressing climate change and food insecurity.

(The writer is a former faculty at leading B-schools in India, Singapore, and the US. His recent book is ‘‘The Art & Science of Managing Externality.’)