The European Commission has spent the last few years exploring policy options for putting a price on agricultural greenhouse gas (GHG) emissions — which, in turn would mandate GHG emission reductions in the sector — in their efforts to design policies that would contribute to the European Union’s (EU) new 2040 climate target.
Today, much of this work has been shelved and it looks like the only instrument that could be adopted to drive climate action in agriculture will be a voluntary credit system. Who would actually buy these credits (and for what purpose) and whether farmers would be interested in generating them are open questions.
IATP’s new blog unpacks how we got here and what to expect in 2026.
From mandatory measures to voluntary action: the vanishing climate ambition from the agrifood sector
When the European Commission began discussing options to advance climate action in the agriculture sector two years ago, there seemed to be a path towards an emissions trading system for the agrifood sector, following the EU’s trajectory of increasingly expanding emissions trading beyond the power and heavy industry sector.
Today, the picture looks much different. The final research report the Commission requested exploring mandatory policy options has not been published, and may never be. Much of the preparatory work done during stakeholder consultations has been removed from the Commission’s website. The discussion of a mandatory mechanism to cut agriculture GHG emissions has apparently been quietly shelved.
Now that the EU’s 2040 climate target has been weakened with various loopholes, the pressure to cut GHG emissions in agriculture might decrease (read more IATP analysis here), and along with it, the need for policy action.
As such, instead of a mandatory mechanism that would give the sector a long-term planning perspective, the Commission is now suggesting a voluntary approach based on carbon credits. Let’s unpack what this approach could look like and what impacts it may have.
The theory of the EU’s voluntary carbon market for agriculture
The concept of a voluntary carbon market for agricultural carbon farming credits is relatively simple. Farmers who would like to participate in the scheme adopt specific carbon farming practices that sequester carbon in soil, shrubs or trees, or that reduce GHG emissions from soil. From the changes achieved through the adoption of new practices, farmers can generate “units” of carbon dioxide equivalents (MtCO2e) meant to represent one tonne of carbon dioxide sequestered or reduced. These units can be sold (i.e. as carbon credits), allowing farmers to earn money from adopting better practices.
The Commission has been working on defining the rules and criteria for generating such credits with its Carbon Removal and Carbon Farming Certification Framework (CRCF) since 2021, with the first batch of practical guidelines expected to the adopted soon.
Beyond the current focus on farm practices that sequester carbon or reduce emissions from soil, the Commission is now considering expanding the scope of the framework to activities related to livestock production. What activities would be covered is under discussion, but are likely to focus on technical measures, such as feed additives or biogas production.
When the adoption of a mandatory pricing system appeared to be a possibility, the CRCF was meant to serve as the rulebook for calculating GHG emissions and carbon sequestration, as well as for generating credits in a compliance system. Now the Commission is looking for another use case for the CRCF —and a voluntary carbon market appears to be all that is left, at least until the political headwinds shift back in favour of climate action.
Wanted: Buyers of carbon farming credits
While the idea seems simple, it points to a central issue that has been hanging over the CRCF from the start of its development: Who will pay for the credits — and by extension pay farmers — and why?
Answering these questions has become increasingly more difficult for the Commission, as some options appear to no longer be on the menu.
Past (and current) attempts to reshape the EU’s agricultural subsidies towards spending public money on public goods — including environmental and climate benefits — have not materialized, making it unlikely that the next version of the Common Agricultural Policy would provide much space to support CRCF credits.
Securing private funding is similarly difficult, given that the policy options that would have obliged agrifood companies to purchase carbon farming credits from farmers have been politically sidelined.
Experience with other voluntary carbon market schemes does not suggest a sudden spring of buyers either. Private actors abandoned their voluntary climate commitments1 due to the scandals plaguing the broken voluntary offset market. Participation in a voluntary market also carries legal risks of greenwashing accusations, which is not remedied by the fact that the law that was meant to provide rules for respective claims — the Green Claims Directive — has been put on hold. In addition, the rollback of broader corporate accountability legislation is not conducive to fostering corporate sustainability leadership (and thus buyers).
Nevertheless, in efforts to secure funds the Commission’s answer to the questions seems to be that anyone, whether public or private actor, can purchase carbon farming credits for the purpose of offsetting their own GHG emissions — or not. What counts is that money flows.
The public consultation on the EU’s post-2030 climate policy (open until May 4) suggests the Commission is looking closely at two specific options to seek buyers.
Buyer #1: Corporate sectors
The Commission’s first suggestion to address the question of demand for carbon farming credits is a Buyers’ Club2, which it announced in last year’s Bioeconomy Strategy. It is meant to be a space in which the Commission can engage with potential (private) buyers to build up the voluntary carbon market for carbon farming credits.
The main purpose of the Buyers’ Club is to build trust by allowing stakeholders to familiarize themselves with the voluntary carbon market. The Commission announced that it is looking for two types of buyers for carbon farming credits.
The first, their primary focus, are buyers in the agrifood sector who are looking to reduce GHG emissions in their supply chains, or to offset them with carbon sequestration (also called “insetting”).
For these buyers, the Commission is considering creating an additional certificate under the CRCF that would attest for these companies’ “good performance” in their supply chain. These certificates would not quantify as a tradable unit — they’d be based on less stringent rules than those applied to carbon credit because it would certify activities that are already ongoing rather than only activities that farmers newly adopt.3
The second set of buyers could come from other sectors. The Commission speculates that there would be less demand from within the land-use sector for emission reduction efforts related to peatland restoration and is therefore looking for companies in other sectors wanting to offset their GHG emissions — accepting, in the best case, a zero-sum game from a climate perspective.
While details on the Buyers’ Club and the Commission’s role still have to be developed, a consultant report has explored some possibilities: the Commission could engage with potential corporate buyers of carbon farming credits to define their expectations and match them accordingly with the credit generating projects, or to coordinate corporate commitments to provide up-front payments to farmers (and certifiers), as well as arrange agreements to purchase carbon credits once they can be delivered.
The consultants suggest running a pilot phase from 2026 to 2030, with the aim of generating 1-2 MtCO2e worth of carbon farming credits. For comparison, the EU’s annual agriculture GHG emissions are currently at a level of more than 360 MtCO2e, with agricultural land use adding another 50 MtCO2e.
While the Commission states that it wants to mainly find buyers from within the agrifood sector, it remains unclear if there will be clear guardrails defining who will be able to purchase what kind of carbon credit and what climate benefits, they will be able to claim. Such regulation seems unlikely, given that the Green Claims Directive — the law that the Commission stated would define specific rules for claims based on carbon credits (i.e. climate neutrality claims) — has been put on hold for now.
As such, with all that we know so far, the concept of a Buyers’ Club may be the politically easiest path forward. But it does not provide a guarantee that there will be sufficient and consistent demand for carbon farming credits but rather creates a slippery slope to enable greenwashing.
Decades of experiences from other voluntary carbon markets have repeatedly shown that they underdeliver on actual climate benefits as well as the generation of finance. Betting on this new iteration to do better may be little more than clutching at straws.
Buyer #2: EU Member States
While EU countries agreed to the EU’s overarching 2040 climate target last year, they still need to divide up how to achieve this target amongst themselves and decide on what form these climate targets will take at the national level.
Under the 2030 framework, EU countries had several sector or energy-related targets with a range of “flexibilities” among those targets.4 For 2040, EU countries may decide to continue with that approach, move to economy-wide national targets, or negotiation a different target framework altogether.
In order to incentivize investments from EU countries in carbon farming credits, the Commission has floated the idea that the CRCF could be a tool for EU countries to achieve their national climate targets and to access “flexibilities” in the application of the rules to do so. It is unclear what such “flexibilities” would be as well as how sufficient national support for carbon farming would be measured. The Commission may only consider national investments in CRCF projects or the actual amount of CRCF units generated from the investments.
The latter option creates the difficulty that CRCF units are only generated at the end of a project, potentially creating a temporal mismatch for the 2040 climate target. While draft methodologies indicate that soil carbon and agroforestry projects may already generate credits after five years, the period is much longer for peatlands and afforestation projects with a minimum of 10 and 30 years, respectively.
To put such a mechanism into operation, the Commission seems to be planning an EU-wide purchasing facility. The purpose of this facility appears to be channeling government funding (along with private and EU-level funding) to carbon farming. As such, it may also be the funding platform underpinning the Buyers’ Club.
The Commission also appears to be making the case to Member States that advancing the voluntary carbon market in their territories is critical to improve on-the-ground data collection. Without improvements in the data, progress on farms may not be reflected in their national GHG inventories, and thus not counted towards meeting their national climate targets.
Channeling public money towards support for more sustainable farming practices is positive. Yet, whether this is the best policy approach is questionable. The CRCF is focused on isolated practices, rather than assessing the farm’s overall impact, and as such does not appear fit to drive the transformational changes needed to match the challenges of the climate crisis.
In addition, depending on how “flexibilities” are designed, it could undermine, rather than reinforce, climate action. This would especially be the case if countries are allowed to use carbon farming credits to avoid reducing GHG emission elsewhere in their economies.
It also ignores the fact that significant amounts of EU funding already goes to supporting farm practices, but not in a way that builds resilience or minimizes climate pollution. It would be better to reform this system, rather than to build something additional to try and pick up the slack on an inefficient system.
Farmers need real support, not false hope
Whether the Buyers’ Club or EU purchasing facility ever gets off the ground is an open question, and there are serious doubts that any buyers will be there if it does. There are also remaining questions about carbon farming credits in general, such as the fate of the credits when they expire.
Yet, a few things are clear: Farmers need real support to transition to more sustainable farm practices. Trying to sell them on a paperwork-heavy crediting system that may not materialize could undermine the transition and discourage them from trying to adopt climate-friendly practices in the future.
While the idea of a voluntary carbon market for agricultural carbon farming credits is simple enough, the Commission’s proposal appears to be attempting the easiest way out: Avoid discussing regulation or redesigning public spending in the sector — deferring the measures that are politically more difficult, but systematically necessary — while being able to signal action.
If the European Commission wants to go down this path, it should at least take additional measures to ensure a reliable trajectory for the sector:
- For corporate buyers: Adopting a stringent Green Claims Directive banning offsetting. Better yet would be to implement requirements for food producers and grocery retailers to curb the GHG emissions in their supply chains.
- For EU countries: Setting climate targets for their agriculture sector, which would also give farmers a long-term planning perspective.
Yet, without tackling farm subsidy reform in the EU’s Common Agricultural Policy, policymakers will continue to leave money on the table that could be used to support farmers in the transition, and improve Europe’s air, water, and biodiversity.
1 …or implement measures less publicly.
2 This policy option is similar to the first policy option explored in a study by Trinomics, Ricardo & IEEP, 2026 (unpublished) and the Buyers’ Club described in Deloitte (July 2025) Support to the design of policy options for financial incentives for carbon farming - Final report. The Buyers’ Club is planned to go beyond carbon farming and include carbon removal technologies in separate modules.
3 Since the goal of this undertaking would be to add the CRCF as an instrument for corporates to use in achieving their voluntary climate targets, the Commission is also set on ensuring alignment with two of the largest initiatives that create guidelines for voluntary corporate climate pledges, the GHG Protocol and the Science Based Targets initiative.
4 Under current EU climate policy, EU countries have to meet national climate targets for their land sink (LULUCF Regulation) as well as all sector not covered by the EU Emissions Trading System (Effort Sharing Regulation).
