Pricing agricultural emissions and rewarding climate action in the agri-food value chain

The objective of the first part of this study is to analyse potential applications of the polluter pays principle towards agricultural greenhouse gas (GHG) emissions at the EU level. The focus of this part is on five options for an Emission Trading System (ETS) that could incentivise climate mitigation action in agriculture effectively and efficiently. Part 1 of this study outlines the design aspects of an ETS covering agricultural emissions that are common to all five options, such as governance and administrative aspects, as well as the unique aspects for each option, such as the scope, point of obligation and specific needs for monitoring, reporting, and verification (MRV) of emissions. The ETS options are then assessed according to indicators within the categories of ‘effectiveness’, ‘efficiency’, ‘relevance’, ‘coherence’, and ‘added value’. The results are based on a review of relevant theoretical and empirical literature as well as interviews with experts, and inputs from a stakeholder survey and workshop. Part 2 of this study, “Linking carbon removals in the land sector to an agricultural Emissions Trading System (AgETS+Removals Study)”, considers how the ETS options analysed in this first part could be extended to financially reward Land Use, Land Use Change, and Forestry (LULUCF) carbon removals.