From Knowledge to Credits: Scaling Climate-Smart Cotton Production

The global textile sector faces urgent pressure to ensure supply chain compliance and decarbonize production. This pressure is driving the global carbon credit market. This market (carbon offset / carbon credit) is projected to grow from USD 414.8 billion in 2023 to USD 1,602.7 billion by 2028, at a compound annual growth rate (CAGR) of around 31.0%.¹ The growth of carbon credits creates a three-fold opportunity: (1) additional income for smallholder farms, (2) tradable certificates for buyers to offset carbon, and (3) growth of the platforms and infrastructure providing these credits.

Concurrently, these actors are able to promote sustainable soil health and fairness in the cotton trade: The Fund for the Promotion of Innovation in Agriculture (i4Ag) has been supporting an innovation where digital infrastructure is matched with on-the-ground asset generation to capitalize on this demand. Under this innovation, the software developer bizpando AG is currently developing a carbon removal documentation platform to generate carbon credits specifically for the cotton market. Whereas the International Cotton Advisory Committee (ICAC) guides the project technically, the Aid by Trade Foundation (Cotton made in Africa initiative, CmiA) joined forces to scale the adoption of biochar, thereby promoting and operationalizing climate-smart solutions into sustainable opportunities for CmiA-verified farmers in Cameroon. At the same time, the Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is accelerating the production of biochar. Biochar is enriched with organic fertilizer and is a means of improving stable soil health and sustainably increasing yields. It thus sets the basis for the sale of the carbon currency. To scale this innovation, further investment partners are being sought.

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The success of the project is measured by higher and more stable yields, the sequestration of soil carbon (~3 t CO₂-eq ha⁻¹ yr⁻¹ potential), and a permanently increasing income – through increased harvests, but also through the monetization of CO₂ certificates. 

Initial calculations from Cameroon show, that 1,000 cotton farms cover an average cultivation area of around 1 hectare. Assuming a potential of about ~3 t CO₂ equivalents per hectare and year, this results in an estimated compensation effect of around 3,000 t CO₂ eq per year. Reaching 45,000 CmiA-verified smallholder farms by 2027 through GIZ and its partners, would correspond to a combined cultivation area of around 45,000 hectares. Under the same potential assumption, around 135,000 t CO₂ equivalents per year could be compensated.

As soon as sufficient data and learning experiences are available after the second cotton campaign, the model can be extended to other countries in the Global South at any time. According to the International Cotton Advisory Committee (ICAC), around 1,956,524 more cotton producers could be reached in East, Southern and North Africa, and another 957,597 in West and Central Africa. 

This innovation offers a combination of proven agricultural impact and digital scalability. We are currently securing partners to support EUR 1 mio. in infrastructure and training, needed to scale this innovation. For an investor, this capital will deliver social and strategic returns: 

1. Scale carbon credits: The completed infrastructure unlocks the verification of ~135,000 tons of CO₂ equivalent credits per year (based on the 2027 target of 45,000 hectares).
2. Improve revenue for farmers: Pilot data shows, that the methodology delivers a 118% yield increase for farmers, thus doubling their economic resilience.
3. Provide strategic access for buyers: Partners will gain "first-mover" status in a fully digitized, compliance-ready supply chain ahead of tightening global regulations.