Smart Net-Zero

July 04, 2024 | Carbon Market Watch | 

The European Commission is considering an EU Emissions Trading System (ETS) for agriculture to address the sector's persistently high carbon footprint, which accounts for 12% of the EU's total greenhouse gas emissions. The proposal follows Denmark's recent decision to introduce a carbon tax on agricultural emissions by 2030, expected to reduce emissions by up to 70%. However, challenges remain, including how to design an agricultural ETS that is fair, effective, and avoids offsetting schemes that could undermine emission reductions.

The debate highlights the need for stringent emission limits, no free pollution permits, and careful use of revenues to support a just transition, especially for small-scale farmers. Critics argue that without reforming the Common Agricultural Policy (CAP) and addressing demand-side policies, an AgETS alone may not be sufficient. The CAP currently funds activities that promote unsustainable farming, and changes are necessary to reward sustainable practices. The success of an agricultural ETS will depend on its ability to drive meaningful change in farming practices, reduce emissions, and support farmers in transitioning to more sustainable methods.