Amazon's $30 million deal: E-commerce giant signs carbon credit agreement with Indian rice farmers; here's what it means

Amazon has sealed a $30 million (Rs 280 crore) deal to buy carbon credits generated by rice farmers in India. The agreement is among the largest of its kind globally and the first at this scale in the country's agriculture sector.

According to sources cited by ET, the credits will come from the Good Rice Alliance, an initiative led by Bayer with support from GenZero, backed by Temasek, and Shell Nature-Based Solutions. Large carbon credit deals are usually seen in the renewable energy sector, making this agriculture-focused agreement notable.

Under the first phase of the deal, Amazon is set to purchase over 685,000 metric tonnes of carbon dioxide equivalent credits, to help the company offset its global emissions and advance towards its net-zero goals.

The alliance includes more than 13,000 small farmers across 35,000 hectares in the country, aiming to help them shift to farming methods that reduce methane emissions, by offering training, field support and financial incentives.

Rice farming is a major source of methane emissions because fields are usually kept flooded. This method contributes about 8–10% of global methane emissions, making it the second-largest source in agriculture. Consequently, India, the world’s largest rice producer, is also the third-largest methane emitter.

Farmers in the programme are encouraged to use better water management methods such as alternate wetting and drying, as well as direct seeded rice. Methane is a powerful pollutant, with a global warming effect more than 27 times that of carbon dioxide.

Globally, major technology companies are increasingly buying carbon credits to balance their emissions. Microsoft recently signed a soil carbon credit deal worth between $171 million and $228 million, while Meta agreed to a forestry credit deal worth up to $16 million. Shell is also one of the largest buyers, retiring millions of credits every year.

India is now close to launching its first carbon trading programme, which will track emissions from industries. At present, most carbon trading in the country is done on a voluntary basis.
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