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Carbon emissions and associated global warming have become a threat to the world, the major contributor being the extensive use of fossil fuels and uncontrolled generation of solid wastes. Energy generation from renewable energy sources is considered an alternative to achieving carbon neutrality. Anaerobic digestion (AD) is a sustainable technology that has been endorsed as a low-carbon technology complimenting both waste management and renewable energy sectors. The AD technology recovers the volatile matter from waste biomass as much as possible to produce biogas, thus reducing carbon emission as compared to open dumping or burning. However, there is a need of compilation of information on how each subsystem in AD contributes to the overall carbon neutrality of the entire system and chances of achieving a circular economy along with it. Therefore, this article aims to clarify the associated internal and external factors that determine the low carbon characteristic of anaerobic digestion technology. From this review, the potential of AD system for energy-atmosphere-agriculture nexus has been explored. Carbon emission mapping of the potential entities involved in AD were identified and perspective to life cycle assessment and future research direction has been pointed out. Climate change impact and acidification potential are the two entities that can influence the overall environmental sustainability of an AD system. It was recognized that each stage of AD system starting from substrate supply chain, biogas production, upgradation, utilization, and digestate application had a remarkable effect on the overall carbon emission potential based on its design, operation, and maintenance. Selection of suitable substrates and co-digesting them together for improved biogas production rate with high methane content and proper digestate post-processing and storage can vastly reduce the carbon emission potential of the AD technology. Further, a case scenario of India was assessed considering the utilization of major surplus biomass available through AD. Re-routing the three major substrates such as agricultural crop residues, animal wastes and organic fraction of municipal solid wastes through AD can reduce at least 3.5–3.8 kg CO 2-eq per capita of annual carbon emission load in India. Furthermore, the pathways in which the policy and legislations over establishment of AD technology and how to explore linkages between achieving circular economy and low carbon economy for Indian scenario has been highlighted. • The carbon recovery potential of anaerobic digestion (AD) technology is reviewed. • The benefits of AD for energy-agriculture-atmosphere nexus are discussed. • Coverage area and digestate handling segments significantly influences the low carbon nature of AD. • With the current research, AD has the potential to reduce up to 4 kg per capita of CO2-eq. • The role of AD for creating a low carbon circular economy model is highlighted. [ABSTRACT FROM AUTHOR]