Temporary Carbon Units from Carbon Farming and EU Agri-food Climate Policy

Carbon farming and new EU climate policies must be designed in a way that maintains environmental standards. Ecologic Institute and Öko-Institut outline key opportunities, risks, and policy options.

Planned EU policy instruments – including a possible Agricultural Emissions Trading System (AgETS), Mandatory Climate Standards (MCS), and public procurement programmes – aim to integrate carbon farming measures. The analysis examines how these instruments interact with the EU Carbon Removals and Carbon Farming Regulation (CRCF) and explores alternative approaches to support climate-friendly agriculture.

Carbon farming: opportunities and risks

Measures such as soil carbon enhancement, agroforestry, and peatland rewetting sequester carbon and support biodiversity, but their climate benefits are often only temporary. Weaknesses in the current CRCF certification methodologies can lead to the generation of low-quality units that dilute mitigation efforts. Without clear liability rules, robust standards, and reliable verification procedures, climate benefits may easily be overstated.

Avoiding offset risks

For new market-based climate policies such as an AgETS, the question arises whether temporary CRCF units should be used. The analysis suggests that using these units for offsetting would likely weaken the effectiveness of such policies. Instead, they should be limited to contribution-based approaches that direct funding toward carbon farming without claiming emission reductions elsewhere. A public procurement programme can also add value if it avoids offset claims.

Integrating with the Common Agricultural Policy (CAP)

The overlap between the CRCF and the Common Agricultural Policy (CAP) poses risks such as double funding and lack of additionality, potentially undermining the credibility of EU climate action. The analysis outlines different models for better coordination, including hybrid approaches that combine CAP income stability with performance-based CRCF incentives. Clear legal and administrative safeguards are essential.

Activity-based payments are highlighted as a particularly suitable approach. They reward farmers for implementing specific climate-friendly practices, are easy to implement, and fit well with temporary carbon farming activities. Looking ahead to the post-2027 CAP reform, the analysis identifies ways to strengthen activity-based payments both within and outside the CAP.

Further information and downloads

Download Report

How to Support the Transition Towards Climate Friendly and Resilient Agri-food Systems in Central Eastern Europe?

Pricing Agricultural Emissions and Rewarding Climate Action in the Agri-food Value Chain

Ensuring Carbon Farming Delivers Sustainability Benefits

Carbon Farming Co-benefits

Contact at Ecologic Institute

Hugh McDonald
Email: hugh.mc.donald@ecologic.eu

Ecologic Institute is an independent, academic think tank for environmental research and policy analysis. Since its founding in 1995, Ecologic Institute has been dedicated to improving environmental policy, sustainable development and policy practice. We strengthen the European and international dimensions in research, education and environmental policy discourse.