Biochar Finds Room to Grow as India Tightens Carbon Credit Exports

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As New Delhi prioritizes domestic carbon capacity ahead of CBAM pressures, durable carbon removals are emerging as one of the few areas of India’s carbon economy still attracting sustained international demand.

NEW DELHI / LONDON — India’s carbon market is entering a period of strategic transition.

After years of functioning as one of the world’s largest suppliers of low-cost voluntary carbon credits, New Delhi is increasingly reassessing how domestic mitigation outcomes should be used as climate obligations, industrial policy and trade competitiveness become more closely intertwined.

The shift is particularly visible in the government’s evolving approach toward carbon credit exports.

Indian policymakers have signaled growing caution over the large-scale international transfer of low-cost offsets, especially as the country prepares for tighter domestic climate targets and mounting external pressures from mechanisms such as the European Union’s Carbon Border Adjustment Mechanism (CBAM).

At the same time, one segment of the carbon market continues attracting strong cross-border interest: durable carbon removal.

A recent long-term purchase agreement between UK-based Supercritical and Indo-Danish climate technology company MASH Makes for approximately 10,000 tons of biochar carbon removals is increasingly viewed by market participants as an example of how higher-integrity removal projects may continue scaling internationally even as conventional offset markets become more constrained.

Based in Udupi, Karnataka, MASH Makes converts agricultural residues into biochar through pyrolysis systems designed to stabilize carbon while reducing open-field biomass burning.

India Reconsiders the Role of Carbon Credits

India’s changing approach toward carbon exports reflects broader questions now emerging across international climate markets: Who should ultimately retain the benefits of low-cost emissions reductions?

The debate intensified after 2022, when India’s Ministry of Power indicated that unrestricted exports of carbon credits could complicate the country’s own climate accounting and industrial transition objectives.

Under Article 6 of the Paris Agreement, internationally transferred mitigation outcomes generally require a “Corresponding Adjustment,” meaning the exporting country can no longer count those emissions reductions toward its own Nationally Determined Contribution (NDC).

For rapidly industrializing economies, that introduces an increasingly important policy calculation.

India has committed to reducing emissions intensity by 45% by 2030 while continuing large-scale industrial expansion and infrastructure growth. Policymakers therefore appear increasingly focused on preserving lower-cost mitigation capacity for future domestic compliance needs.

The issue is gaining additional urgency as CBAM-related carbon costs begin reshaping global manufacturing competitiveness.

Sectors including steel, cement, aluminum and refining could face growing pressure to demonstrate lower embedded emissions in export markets, increasing the strategic importance of domestically available mitigation options.

That broader policy direction is helping accelerate development of the Indian Carbon Market (ICM), including implementation of the Carbon Credit Trading Scheme (CCTS) and related compliance infrastructure.

Rather than functioning purely as export-oriented environmental commodities, carbon credits are increasingly becoming integrated into industrial planning, trade strategy and long-term energy transition policy.

Why Biochar Continues Attracting Capital

Despite tighter scrutiny surrounding traditional offsets, biochar removals continue drawing international investment because they occupy a different position within carbon markets.

Unlike many conventional avoidance credits, biochar is categorized as a durable carbon dioxide removal (CDR) pathway with comparatively measurable storage characteristics.

The process involves heating agricultural biomass in oxygen-limited pyrolysis systems, converting unstable organic material into a stable carbon-rich substance that can potentially store carbon in soils for extended periods while also improving soil quality and water retention.

The technology has attracted increasing attention from buyers seeking removal pathways that offer higher permanence and more transparent carbon accounting.

According to market data published by Puro.earth — a Finland-based carbon removal registry backed by Nasdaq — biochar has become one of the fastest-growing segments within durable carbon removal markets in recent years.

Industry data suggests issuance volumes expanded significantly between 2019 and 2024 as corporate buyers increasingly shifted toward higher-integrity removal pathways.

The sector’s growth also reflects broader changes in corporate climate procurement strategies.

As investor scrutiny, disclosure requirements and regulatory oversight continue intensifying, many companies are placing greater emphasis on permanence, traceability and independently verifiable removal accounting.

That trend has contributed to a widening pricing gap between conventional avoidance offsets and durable removals.

While many traditional offsets continue trading at relatively low prices amid ongoing debates over quality and additionality, premium biochar removals have increasingly traded at substantially higher levels depending on verification standards, delivery structure and permanence characteristics.

Market participants increasingly describe the shift as a broader “flight to quality” within voluntary carbon markets.

Carbon Markets Become More Selective

The Supercritical–MASH Makes transaction also highlights the growing role of forward-purchase agreements in financing carbon removal infrastructure.

Rather than purchasing only already-issued credits, buyers are increasingly committing capital earlier in project development cycles to help finance future removal capacity.

That model is becoming particularly important for engineered carbon removal sectors where infrastructure costs remain high and long-term project financing is still developing.

More broadly, India’s evolving carbon strategy reflects a wider transformation underway across global climate markets.

Governments are becoming increasingly cautious about exporting mitigation outcomes that may later prove valuable for domestic compliance systems, industrial competitiveness or trade-related carbon obligations.

As a result, voluntary carbon markets may become increasingly differentiated between lower-cost avoidance credits and higher-integrity removal pathways capable of meeting more demanding verification standards.

In that environment, durable carbon removals such as biochar are increasingly positioned not simply as offsets, but as long-term climate infrastructure assets capable of attracting institutional capital even as broader carbon markets become more fragmented and policy-sensitive.