Rice Carbon Credits, Rebooted: The Science of AWD, the Rules of VM0051, and Who Gets Paid in 2026

In 2023, the voluntary carbon market for rice quietly broke. Verra, the world's largest carbon registry, inactivated AMS-III.AU - the Clean Development Mechanism methodology that had underpinned most rice methane credit projects globally pausing millions of issued credits and stopping new project registrations mid-pipeline. The reason was scientific, not political: the old methodology failed to account for nitrous oxide rebound when farmers reduced flooding, meaning the climate benefit of rice water management had been systematically overstated.

Three years later, a replacement protocol is live, the first credits under it have been issued, and spot prices in India are trading at $17–18 per tonne CO₂e (carbon equivalent) in Q1 2026, based on registry-listed issuances and buyer disclosures (Gold Standard Registry, 2026; market transaction summaries reported by project developers). The question is no longer whether rice carbon credits work. It is whether the new rules are strict enough to make them last.

When Millions of Credits Were Paused Overnight

By 2022, rice carbon credit projects were operating across millions of hectares in South and Southeast Asia. Aggregators had signed farmer agreements, NGOs had deployed field teams, and investors had committed capital all built on AMS-III.AU, the Clean Development Mechanism methodology that had governed rice methane accounting for nearly a decade. Then, in October 2023, Verra inactivated It (Verra, 2023).

The reason was the greenhouse gas, most people in the room had not been measuring. Nitrous oxide (N₂O), released from rice soils when they dry and then reflood, is approximately 273 times more potent as a greenhouse gas than CO₂ over a 100-year period (IPCC, 2021). Alternate Wetting and Drying (AWD) the water management practice at the heart of every rice carbon project works by allowing paddies to dry between irrigations, cutting methane (CH₄) emissions by 47–70% according to published meta-analyses (Linquist et al., 2012; Sander et al., 2016), consistent with multi-country Asian rice field measurements (Wassmann et al., 2000). What AMS-III.AU missed was that the same drying process primes soil bacteria to produce N₂O on re-flooding. Ignore that exchange, and the net climate benefit of AWD is overstated sometimes significantly, depending on soil type, nitrogen fertilizer rates, and drying intensity.