Low-methane feed strategies: An untapped carbon credit engine for India’s dairy sector

With India’s Carbon Credit Trading Scheme (CCTS) expected to become fully operational soon, the country is all set to reshape how it harnesses the carbon market.

Given its vast farming base and incentives from CCTS, India is at the forefront of harvesting carbon credits from agriculture. The Offset Mechanism under CCTS includes agriculture as one of its target sectors, and livestock falls under its purview. However, the current focus is solely on manure management, keeping enteric fermentation—the major source of methane emissions from livestock—unchecked.

As per India’s Fourth Biennial Update Report, enteric fermentation (a digestive process in livestock) contributes to 8% of the country’s total emissions. Yet it presents a compelling opportunity to transform a climate challenge into a driver of economic and environmental gains through carbon credits.

Feed as a climate and income lever

Methane emissions from enteric fermentation are closely linked to feed quality and digestion efficiency. While a minimum amount of methane is bound to be produced during digestion, improving feed digestibility can help ensure low emissions and high milk productivity (by enhancing nutrient absorption and conversion of feed to milk).

Several proven feed-based solutions exist for methane mitigation, including pelletised feed, green fodder (cereal crops, legumes, and millets), and anti-methanogenic supplements. According to a study in the Journal of Dairy Science, red algae additives can cut emissions by 33% and increase milk yield by 36%. Using feed to tackle methane emissions can not only seal them permanently but also unlock revenue through carbon credits, which are driven by quantifiable mitigation outcomes.

Carbon credit opportunity

The scale of this opportunity is substantial. If just 20% of India’s livestock emissions are targeted with anti-methanogenic supplements (the most effective of all supplements), it could allow earnings of INR 4,600–9,600 crore from carbon credits (as per voluntary carbon market credit rates of INR 1,200–2,500). At the same time, milk yield could increase by an estimated 38,000 million litres—nearly a 16% increase.

Revenue from carbon credits can also address concerns around the financial viability of incorporating these supplements. A project that provides Harit Dhara—an anti-methanogenic supplement—to 100 cows can abate 14.4 tonne carbon dioxide equivalent (tCO_2eq) per year and generate an income of INR 16,800–35,000 per year through carbon credits. Similarly, a red algae supplement project involving 100 cows can abate 25.6 tCO_2eq per year, reaping carbon credits worth INR 30,000–62,500 per year.

 

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A project that provides Harit Dhara—an anti-methanogenic supplement—to 100 cows can abate 14.4 tonne carbon dioxide equivalent (tCO_2eq) per year and generate an income of INR 16,800–35,000 per year through carbon credits.

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Barriers to scale

Despite the immense potential of livestock-based carbon credits, India is yet to fully leverage them due to three key barriers. First is the absence of baselines for monitoring, reporting, and verification (MRV). Their creation would require on-site measurement of emissions, which can be tedious and expensive. Second, the country faces logistical challenges of feeding livestock, with only a small proportion of them being exclusively stall-fed. Most are left to graze openly or are fed through a combination of open grazing and stall feeding. Incorporating supplements in the feed of livestock that graze openly will be difficult. Finally, there are concerns around residues from red algae additives. They could leave bromoform residues in milk, affecting its quality.

The way forward

A coordinated set of actions can unlock the full potential of livestock carbon markets in India. Standardised MRV protocols and emission factors can be developed to enable participation in carbon markets.

Equally important is aggregation through dairy cooperatives and milk producer companies (MPCs) to make carbon markets scalable and inclusive. Multiple smallholder farmers need to be brought together to make meaningful revenue from carbon credits. Cooperatives and MPCs, some of which are already well-established, can also facilitate access to inputs and reduce procurement and other transaction costs.

On the supply side, existing government schemes such as the Pradhan Mantri Matsya Sampada Yojana (PMMSY) and the National Livestock Mission (NLM) can be leveraged to provide farmers with access to anti-methanogenic supplements. PMMSY, which promotes seaweed cultivation, can enable the proliferation of domestic supply chains for red algae additives. The states of Tamil Nadu, Andhra Pradesh, and Karnataka, where milk production is high and PMMSY has great potential, can particularly benefit from this. Similarly, NLM, which works on strengthening the fodder supply chain, can scale the adoption of supplements by subsidising or facilitating access to them. This can be tested in the states of Gujarat, Punjab, and Rajasthan, where livestock are predominantly stall-fed.

To sum up, India has already demonstrated global leadership in dairy production. The next goal is to make this sector climate-smart and market-linked. Feed-based solutions for livestock methane mitigation offer a unique opportunity to align climate action with value creation for farmers at scale. The solutions are available, the co-benefits are clear, and the market mechanisms are evolving. What is needed now is a focused and concerted effort to scale these solutions and turn a climate liability into an economic asset.

 

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Deeksha Sridhar was a Senior Analyst in the Strategic Initiatives group at the Center for Study of Science, Technology and Policy (CSTEP), a research-based think tank.