Carbon rice farming: A license to pollute at the expense of small farmers

by GRAIN | 12 Jul 2023
Rice farmers working on the field. Photo: Mongkon Duangkhiew

Earlier this year, an investigative report by Climate Home News found that the multinational oil corporation, Shell, likely pocketed millions of dollars from rice farming projects in China. If that in itself doesn’t raise eyebrows, the story is more dubious than it seems. The projects introduced irrigation methods that would cut methane emissions and allow Shell to then claim these emissions reductions to offset its emissions or to sell them as carbon credits to other big polluters.[1] What’s more, the report found that Shell had used "accounting tricks" to exaggerate emissions reductions from the project and that 85% of the credits generated by the project ended up in the hands of PetroChina, China's state-owned oil and gas company.

The company that certified Shell's rice projects, Verra, responded by putting the projects on hold, pending a review. Verra is currently embroiled in other, similar scandals with carbon offsetting projects in other parts of the world.[2] And, while the Shell project may be on hold, Verra and other certification companies are moving ahead with dozens of other carbon offsetting projects on rice farms in Asia and elsewhere. Indeed, rice farming has become one of the biggest targets for carbon offsetting projects.

These carbon rice farming projects not only serve as greenwashing tactics for big corporations like Shell, but also unfairly burden small rice farmers in developing countries with the responsibility to reduce corporate emissions. Many of these farmers are already on the frontlines of the climate crisis, with few guarantees that they will reap any benefits from these initiatives.

Big business for big polluters

One of the reasons why corporations are targeting rice farming for carbon offset projects is that it accounts for an outsized share of emissions from agriculture. According to the International Panel of Experts on Climate Change (IPCC), rice farming accounts for 9 to 11 percent of total agricultural emissions, mostly from methane and nitrous oxide (N2O) emissions.[3] The global warming potential from rice farming is said to be almost three to six times higher than from maize and wheat farming.[4]

At the same time, rice farming, unlike the farming for other major commodities like maize, wheat and soybeans, is still largely in the hands of small-scale producers. As a result, the vast majority of carbon rice farming projects focus on reducing emissions from small-scale farms.[5] The projects typically claim that the carbon credits they generate will provide much-needed additional income to farmers. In fact, the poverty of small rice farmers is central to how most of these projects’ work. They claim that farmers would not be able to afford the switch to rice farming methods that produce less methane, such as more efficient irrigation systems or climate-friendly rice seed varieties, if it wasn't for the additional income provided by the carbon farming projects. In reality, the carbon credit price paid to farmers fluctuates and is relatively low, on average between US$15 to 30 per acres per year.[6]

Corporate interest in rice carbon farming projects is exploding. Rice cultivation projects are now the second most popular project type in the agriculture sector after manure management system in the University of Berkeley's database of global voluntary carbon market projects. Berkeley's Carbon Trading Project database contains all the carbon offset projects and credit issuances within the four major voluntary offset project registries. It lists 275 rice emissions reduction projects to date, with more than half of the projects located in China. These projects are managed by agribusiness companies like Chongqing Gengfang Agriculture Development and Yueyang Agriculture and Rural Development Group, Co.Ltd.

International institutions like the International Rice Research Institute (IRRI), the World Bank and the UN Environment Programme (UNEP) are also heavily promoting carbon farming projects for small rice farmers as a way for countries to achieve their national emissions reduction targets. UNEP and IRRI recently established a Sustainable Rice Platform that they co-convene and that serves as a verification body for emission reductions from rice farming around the world.

One of the Sustainable Rice Platform projects in Vietnam, which is hailed as the most successful example of carbon rice farming to date, integrates 184,000 hectares of rice fields into what is called the “Vietnam Sustainable Agriculture Transformation” project. Over the last seven years, it received US$238 million in funding from the World Bank on the condition that the project use certified seeds, improve water management and optimise the application of chemical fertilisers and pesticides. In early 2023, Vietnam’s Ministry of Agriculture and Rural Development announced that they planned to extend the project to cover one million hectares.

Yet the project in Vietnam is based on a methodology from the UN Clean Development Mechanism, called AMS-III.AU, the same used in Shell's much contested carbon rice farming projects in China, and which is now under scrutiny because of integrity concerns.[7]The methodology requires rice farmers to: change their rice field irrigation mechanism from continuous to intermittent flooding and/or a shortened period of flooding; alternate wetting and drying methods; and/or changing rice cultivation from transplanted to direct seeded rice practices to cut the release of methane gas into the atmosphere. The methodology -less demanding on verifications and paperwork- is designed for small scale farmers, but, in the case of Shell's projects in China, it appears that a large contiguous area of irrigated rice farms was artificially divided into small plots to satisfy the rules of the methodology. Researchers with Climate Home News also found that the project was making dubious claims about its role in making changes to irrigation methods. Some agribusiness companies have begun to connect sales of their products with carbon credits from rice farming. The Israeli-owned irrigation company Netafim is offering carbon credits to rice farmers that buy and use its irrigation equipment. The irrigation company claims that by using its drip-irrigation equipment instead of the usual flooding irrigation system rice farmers can earn 10 carbon credits per hectare of land per year. Netafim acts as project manager and ensures that participating farmers follow certain procedures and submit the necessary data for verification. Only once the carbon credits are sold in the carbon market will Netafim pay the farmers based on a share of the sale price. The small rice farmers must buy the irrigation equipment first and take on the financial risks, without any real guarantee of when and how much they will be paid.[8]

Genetically engineered low-methane rice varieties : In 2015, a team of researchers from the US, China and Sweden claimed to have developed a strain of rice that releases less methane. The new strain is modified with a single gene from barley to shift rice photosynthesis allocation from the roots to the plant parts above ground. The rice varieties are currently undergoing three years of field trials in China.[9]

The climate crisis has been used by seed companies to expand their business by promoting “climate friendly” crop varieties. In November 2022, Bayer Crop Science launched a partnership with the International Rice Research Institute and USAID to introduce and conduct on-farm testing of climate-smart rice varieties that are said to require less water. Bayer committed up to US$4 million of "in-kind support" for the project.[10]

Moving away from market-based approaches

Agriculture and the larger food system are major sources of greenhouse gas emissions, including from rice farming production that is still mainly in the hand of small-scale farmers. And, yes, it is important to reduce the emissions and water use from the 165 million hectares of rice cultivated worldwide. But, it makes no sense reducing emissions from small rice farms so that other polluting industries can maintain their emissions, especially when these industries contribute far less to people's livelihoods and basic food needs than rice farming.

Emissions from rice farming can be effectively reduced without carbon farming projects. There are many successful examples of how small farmers can use agroecology, traditional varieties and a combination of techniques, such as direct seeding, intermittent flooding and dryland rice production, to reduce methane emissions and cut back on or eliminate the use of nitrogen fertilisers, which are another major source of emissions in rice farming.


[1] Climate Home News, ‘Revealed: How Shell cashed in on dubious carbon offsets from Chinese rice paddies’, March 2023,
[2] Climate Home News, "Verra boss steps down after criticism of its carbon credits," May 2023:
[3] IPCC, ‘Contribution of working groups I, II and III to the 5th assessment report of the Intergovernmental Panel on Climate Change. Climate Change Synthesis Report’, 2014
[5] UNFCC, ‘AMS-III.AU. Small-scale methodology. Methane emission reduction by adjusted water management practice in rice cultivation’,
[6] Carbon Credits, ‘Agricultural Carbon Credits and Carbon Farming Guide’, 2022, and Indigo Ag,
[7] Verra, ‘Verra Inactivates UNFCCC CDM Rice Cultivation Methodology’, March 2023,
[8] Sue Surkes, ‘Netafim to introduce carbon credits for rice growers using drip irrigation’, The Times of Israel, 2022,
[9] J. Su, C. Hu, X. Yan,Y. Jin, Z. Chen, Q. Guan, Y. Wang, D. Zhong, C. Jansson, F. Wang, A. Schnürer & C. Sun., ‘Expression of barley SUSIBA2 transcription factor yields high-starch low-methane rice’, 2015, Nature,
[10] IRRI, ‘USAID highlights Bayer-IRRI DSR collab at COP27’, 2022,
Author: GRAIN
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