Methane Abatement Now: Financing Agrifood Transition in the EU

The EU agriculture sector is a primary source of methane emissions, yet progress in reduction has stalled, with only a 4% decline between 2005 and 2022. The report identifies a critical 'definition gap' where the lack of clear net-zero aligned agricultural practices and transition pathways prevents banks and investors from identifying green activities. This is compounded by the exclusion of agriculture from the EU Taxonomy and the Green Asset Ratio (GAR). The report argues for repurposing the EUR 57.5bn annual Common Agricultural Policy (CAP) budget, introducing livestock emissions taxes, and implementing demand-side policies to reduce herd sizes. It emphasizes a 'just transition' to protect small farms and high-emission regions, particularly in France, Germany, and Ireland.

• The EU agriculture sector is a critical driver of methane emissions, accounting for 56% of total anthropogenic methane emissions in the EU, with enteric fermentation from cattle alone representing 67% of the sector's methane emissions in 2020.
• Agricultural methane emissions in the EU have seen minimal reduction in recent years, decreasing by only 4% between 2005 and 2022, despite a 6% decrease in cattle numbers during that period.
• Climate change causes significant economic losses for European agriculture, with the sector losing EUR 28.3bn annually (6% of production) to climate events, and potential catastrophic losses estimated at EUR 57.5bn.
• A 'policy definition gap' exists because there is no single, comprehensive EU legislative definition of sustainable agricultural practices or clear net-zero aligned transition pathways, which prevents the anchoring of policy to credible climate objectives.
• The Common Agricultural Policy (CAP) represents a major funding source of EUR 57.5bn per year (2023), but it currently lacks alignment with climate objectives, with 72% of funds under 2023–2027 Strategic Plans allocated to direct payments.
• The financing gap for EU agriculture was estimated at EUR 62bn in 2022, with small farms accounting for 61% of this gap. This is exacerbated by the exclusion of agricultural transition financing from banks' Green Asset Ratio (GAR).
• The report recommends the gradual introduction of a livestock emissions tax and the use of the Carbon Border Adjustment Mechanism (CBAM) to prevent carbon leakage and incentivise transition, noting that Denmark has already agreed to a livestock emissions tax effective from 2030.
• Demand-side policies, including food labelling changes and sustainable public procurement, are necessary to reduce the consumption of methane-intensive products and reduce livestock herd sizes.
• A just transition is essential as decarbonisation efforts will disproportionately affect a small number of farms in specific regions, particularly in France, Germany, and Ireland, which have the highest cattle populations.
• Food waste is the second-largest anthropogenic source of methane in the EU, and addressing it is identified as a cost-effective strategy where companies can save USD 14 for every USD 1 invested.

APA

Burge, L., Passaro, F., Van Coppenolle, M., & Tirado, R. (2025). Methane Abatement Now: Financing Agrifood Transition in the EU. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Methane-Abatement-Now-Financing-EU-Agri_2025-08-14-104325_tipr.pdf

Chicago

Burge, Lily, Fabio Passaro, Magali Van Coppenolle, and Reyes Tirado. Methane Abatement Now: Financing Agrifood Transition in the EU. Climate Bonds Initiative, 2025. https://www.climatebonds.net/files/documents/publications/Methane-Abatement-Now-Financing-EU-Agri_2025-08-14-104325_tipr.pdf.

Wikipedia

{{cite report |last1=Burge |first1=Lily |last2=Passaro |first2=Fabio |last3=Van Coppenolle |first3=Magali |last4=Tirado |first4=Reyes |title=Methane Abatement Now: Financing Agrifood Transition in the EU |publisher=Climate Bonds Initiative |date=July 2025 |url=https://www.climatebonds.net/files/documents/publications/Methane-Abatement-Now-Financing-EU-Agri_2025-08-14-104325_tipr.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{burge2025methane, author = {Burge, Lily and Passaro, Fabio and Van Coppenolle, Magali and Tirado, Reyes}, title = {{Methane Abatement Now: Financing Agrifood Transition in the EU}}, institution = {Climate Bonds Initiative}, year = {2025}, month = jul, url = {https://www.climatebonds.net/files/documents/publications/Methane-Abatement-Now-Financing-EU-Agri_2025-08-14-104325_tipr.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }