Does the EU need an Emissions Trading System for Agriculture?

The document assesses the potential for an Emissions Trading System for Agriculture (Agri-ETS) in the EU, arguing that such a system would only be effective if it targets large-scale polluters, avoids free allowances and carbon offsets, and is integrated into a wider suite of reforms. It highlights the risks of 'GHG tunnel vision' and the necessity of reforming the Common Agricultural Policy (CAP) to stop subsidising harmful practices. The author advocates for a 'Just Transition Fund for Agri-food' to support small-scale farmers using Agri-ETS revenues.

• Agricultural emissions account for 11% of total EU greenhouse gas emissions, with livestock emissions (enteric fermentation and manure management) comprising approximately two-thirds of that figure.
• An effective Agri-ETS must include a stringent cap, a linear reduction factor aligned with carbon neutrality, and a Market Stability Reserve (MSR) to prevent the oversupply of allowances.
• The system should target large-scale livestock farming industries and use a de minimis rule to exclude small farms, preventing the burden of compliance from falling on small-holder farmers.
• Free allowances must be banned to avoid slowing decarbonisation and losing revenue; the document notes that in ETS1, free allocation resulted in a net overallocation of 200 million allowances and €40 billion in foregone revenue in 2023.
• The integration of carbon farming credits from the Carbon Removals and Carbon Farming (CRCF) Regulation should be prohibited because it risks 'mitigation deterrence' and prioritises temporary sequestration over permanent emission reductions.
• An Agri-ETS must remain a separate scheme and not be merged with ETS1, ETS2, the Effort Sharing Regulation (ESR), or the LULUCF Regulation to avoid weakening price signals and creating loopholes.
• Revenues from an Agri-ETS should be recycled into a 'Just Transition Fund for Agri-food' to provide financial assistance for farm transformation, reskilling, and support for lower-income households facing rising food costs.
• The Common Agricultural Policy (CAP) is currently described as 'misaligned with net-zero' and has undergone deregulation since 2022, making environmental conditionality requirements voluntary.

APA

Hernández, M. R. (2025). Does the EU need an Emissions Trading System for Agriculture? Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2025/12/2025_Position-paper_-Agri-ETS.pdf

Chicago

Hernández, Marlène Ramón. Does the EU need an Emissions Trading System for Agriculture? Carbon Market Watch, 2025. https://carbonmarketwatch.org/wp-content/uploads/2025/12/2025_Position-paper_-Agri-ETS.pdf.

Wikipedia

{{cite press release |last1=Hernández |first1=Marlène Ramón |title=Does the EU need an Emissions Trading System for Agriculture? |publisher=Carbon Market Watch |date=December 2025 |url=https://carbonmarketwatch.org/wp-content/uploads/2025/12/2025_Position-paper_-Agri-ETS.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{hernndez2025does, author = {Hernández, Marlène Ramón}, title = {{Does the EU need an Emissions Trading System for Agriculture?}}, publisher = {Carbon Market Watch}, year = {2025}, month = dec, url = {https://carbonmarketwatch.org/wp-content/uploads/2025/12/2025_Position-paper_-Agri-ETS.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }