1 of 4
The Carbon Credit system incentivizes sustainable practices in sectors like agriculture, forestry, and conservation. Photo credit: Alfo Medeiros
2 of 4
The Jalinga Organic Tea Estate, founded in 1935 in Silchar, Assam, is India’s first attempt at integrating carbon credits into tea production. Photo credit: Jalinga Organic Tea Estate
3 of 4
Ketan Patel (center), fourth-generation tea grower and owner of Jalinga Organic Tea, trains out-growers in organic and regenerative practices and helps them benefit from Carbon Credit projects. Photo credit: Jalinga Organic Tea Estate
4 of 4
The ICO estimates that coffee growing areas will be reduced by as much as 50% by 2050. Photo credit: Emily McIntyre
For centuries, the global coffee and tea markets have shaped economies, cultures, and histories across continents. From the highland tea gardens of Kenya to the sprawling coffee plantations in Brazil, millions of farmers work to produce the beans and leaves that fuel much of the world’s daily routines. But what happens when the climate that has cradled these crops for generations begins to change, threatening not only the plants but the livelihoods of those who depend on them?
With approximately 25 million coffee growers and 13 million tea workers worldwide, these industries are more than just commodities—they’re lifelines. Brazil, for example, dedicates over 3 million hectares to coffee production, making it the world’s largest producer. Meanwhile, tea farms in China, India, and Kenya, where over 4 million hectares of land are cultivated, provide vital income to millions. Yet, this reliance on agriculture, much of it by smallholder farmers, creates a fragile dependency—one that’s increasingly tested by climate change.
For centuries, the patterns of rainfall, temperature, and soil fertility created ideal conditions for these crops. But in recent decades, those patterns have begun to shift. NASA, in defining climate change, describes it as a “long-term change in average weather patterns.” This seemingly sterile definition masks the profound realities: the temperatures are rising, rainfalls are growing erratic, soils are losing fertility, and pests once kept at bay are thriving. These changes could reduce coffee-growing areas by as much as 50% by 2050, a stark forecast from the International Coffee Organization. Tea production fares no better, with projections of a 10-20% yield decrease in key regions like India and Kenya.
Ketan Patel, a fourth-generation tea grower and owner of Jalinga Organic Tea, founded in 1935 in Silchar, Assam, India, highlights the significant impact of climate change on the industry. He explains, “The biggest impact is climate change. It’s very tough because tea requires a certain climate from March to December (harvest). In earlier days, you could count on things, but now it is haywire.”
This isn’t just a problem for the farmers—it’s a problem for everyone. The global tea and coffee markets combined are valued at over $200 billion, a staggering number that underscores the influence these crops wield across the supply chains. As consumers demand more ethical, sustainable products, the question becomes: Can the carbon credit market provide a lifeline not only to the planet but also to the millions of farmers who find their livelihoods threatened?
From Hope to Skepticism to Hope Again
At its heart, the carbon credit market, adopted in 1997 by the Kyoto Protocol and then replaced in 2016 by the Paris Agreement, is an elegant idea: allow those who emit carbon to purchase credits from those who reduce or offset it. In theory, this system incentivizes sustainable practices in sectors like agriculture, forestry, and conservation. But as with most ideas, the devil lies in the details.
The Paris Agreement’s ambitious goal of achieving carbon neutrality by 2050 represents a monumental challenge that requires a complete overhaul of the global economy. Limiting warming to 1.5°C above pre-industrial levels necessitates drastic reductions in greenhouse gas emissions across all sectors, from energy production and industry to transportation and agriculture.
The carbon market is divided into two: the voluntary carbon market (VCM) and the compliance carbon market (CCM). The former allows businesses and individuals to voluntarily offset their emissions, while governments typically mandate the latter to ensure compliance with environmental targets. Within the VCM, a complex ecosystem has formed—land and carbon owners; project developers like ALLCOT and South Pole, among others; standard developing organizations like Gold Standard and VSC, just to name two; certification organizations like CSC, RFA, and others; registry platforms like VERRA and Biocarbon; credit qualifiers like Verifit and IDEAcarbon, traders and buyers— all play a role in ensuring the system works. But while the market has grown, so too have the challenges.
Consider India’s Jalinga initiative, a bold attempt to integrate carbon credits into tea production. By promoting biodiversity and reducing emissions, Jalinga has become a poster child for how carbon credits can align environmental goals with economic incentives. Similarly, Colombia’s Solidaridad project trains coffee farmers in sustainable practices, teaching them how to reforest degraded lands and manage them responsibly, thereby generating carbon credits.
These projects illustrate the promise of carbon credits but also their fragility. Pricing fluctuates wildly—carbon credits peaked at over $16 per ton in late 2022 before dropping below $12.50 in early 2024. This volatility stems from concerns over the integrity of many projects. Buyers, increasingly aware of “greenwashing,” are becoming more selective, demanding higher-quality credits. Double counting and murky project verification processes have further eroded trust.
Yet despite these setbacks, demand for quality carbon credits remains high, particularly among corporations looking to meet climate commitments. This, in turn, has sparked an ongoing debate: Can carbon credits really be the answer? Or are they just another way for the wealthy to buy their way out of responsibility?
Benefits and Challenges of Carbon Credits for the Tea and Coffee Industries
The carbon credit market faces significant challenges, particularly regarding the integrity and additionality of offset projects. Ensuring that carbon credits genuinely represent emissions reductions is critical; however, many projects have been found lacking in these areas.
The fundamental issue lies in the concept of “additionality”—the idea that the carbon reductions wouldn’t have happened without the revenue of the sale of the project’s carbon credits. Yet a report from the Integrity Council for Voluntary Carbon Markets sheds a disquieting light: many projects, particularly in forestry, have been overstating their impact. A staggering 90% of credits from some certified projects don’t represent real emissions reductions. It turns out that measuring avoided emissions from something as complex as a forest is no easy task. Baselines get skewed, and inflated claims creep in.
Farmers—especially in developing nations—face yet another steep hill. Carbon markets, while offering income potential, often require upfront investments, technical knowledge, and participation in complex certification schemes. Researchers from Colombia’s CENICAFE have pointed out that transaction costs alone can eat up 40% of a farmer’s carbon credit sell price. This cost-benefit imbalance deters many farmers who could otherwise benefit from carbon credit schemes.
Another obstacle is scale. Projects must reach a critical size—often over 50,000 carbon credits (or tons of CO2)—to attract major developers. For tea and coffee farmers with small plots of land, hitting these targets is a pipe dream. Take projects like Jalinga in India; they aim to foster sustainable practices and generate carbon credits in multiple ways. Ketan explains that the company has a solar energy project, uses biofuel made up of biomass, and produces and uses biochar to capture carbon in the soil. This year, Jalinga is also committed to planting 300,000 trees while generating more permanent work positions in the process. It’s not enough that they protect 250 hectares of primary forest in their 1000-hectare estate.
They also work with out-growers who have been “handheld…into organic—teach them everything they do themselves—and give them a much better price, up to 50% more than what they would get selling to a different tea estate,” says Ketan.
Then, there’s the existential threat looming over tea and coffee: climate change. These crops are the canaries in the coal mine. Highly sensitive to temperature shifts and erratic rainfall, tea and coffee farmers stand to lose much of their productive land. As climate impacts worsen, any carbon credit schemes attached to tea and coffee must factor in how to help farmers not just reduce emissions but also survive a rapidly changing climate. Adaptation strategies, like climate-smart agriculture, are as critical as reducing carbon emissions in this context. The fate of the farmers and the crops they nurture depend on it.
Hopeful Value Chains
Here’s where things start to look brighter: carbon insetting. Unlike offsetting, where companies fund external projects to reduce emissions elsewhere, insetting integrates emissions reductions directly within a company’s supply chain. This isn’t just about reducing emissions. It’s about reshaping relationships between companies and the farmers they rely on.
Take Nespresso’s agroforestry project, for instance. Nearly three million trees have been planted across Colombia, Guatemala, and Ethiopia, not only sequestering carbon but also improving soil health, boosting biodiversity, and helping the farmers themselves. These types of insetting initiatives go beyond the typical corporate responsibility initiatives, creating tangible, local benefits that directly touch the lives of the people in the value chain.
In an age when millennials are willing to pay a premium for sustainably produced goods—41% according to Capgemini Research—there’s a real market opportunity here for carbon-neutral tea and coffee.
Moreover, carbon insetting can significantly enhance the resilience of tea and coffee crops against climate change. Techniques such as the ones Jalinga Organic Tea implements and helps out-growers implement can improve soil health and provide additional income streams for farmers while helping achieve carbon-neutral supply chains. The Food and Agriculture Organization (FAO) suggests that these carbon-neutral methods can not only help tea and coffee farmers adapt to climate change but also meet the growing demand from climate-conscious consumers.
Through insetting, companies can reduce their carbon footprint, control carbon offsets, and support the sustainability of their own supply chains while creating a stronger, more resilient future for their industries. But more importantly, they offer hope to millions of farmers whose lives are intertwined with the fate of these crops, bringing sustainability and resilience to the very heart of their communities.