PART 1: Pricing agricultural GHG emissions along the agri-food value chain via emissions trading
Executive Summary – PART 1
Résumé – Partie 1
1. Policy rationale
1.1. Introduction
1.2. Agriculture emissions facts
1.3. Application of the Polluter Pays Principle in the European Union: legal precedent for its application to agricultural GHG emissions
1.4. The current climate architecture: is there a need for an additional policy instrument to address agricultural GHG emissions?
1.5. How can the Polluter Pays Principle address the problem of negative externalities
1.6. Challenges and objectives
2. Applying the Polluter Pays Principle: Emission Trading Systems
2.1. Developing a range of potential policy options applying the Polluter Pays Principle
2.2. Selection of five potential policy options
2.3. Cross-cutting aspects of emissions trading systems for agriculture
Measuring emission units
Establishing a system for Monitoring, Reporting, and Verification (MRV) for agricultural emissions
Non-obligated parties and the generation of certified on-farm voluntary credits
Setting a cap
Thresholds for participation
Mitigating risk of carbon leakage
Regulatory flexibilities within an ETS
Governance
Administrative costs
Operationalising an ETS
Ensuring compliance
Legislative changes needed
3. Policy option descriptions
3.1. Policy option 1: All Greenhouse Gases ETS
Policy option description
GHG emissions scope
Point of obligation
De Minimis threshold
3.2. Policy Option 2: Livestock ETS
Policy option description
GHG emissions scope
Point of obligation
De Minimis threshold
3.3. Policy Option 3: Peatland ETS
Policy option description
GHG emissions scope
Point of obligation
De Minimis threshold
Unique Policy Design Aspects
3.4. Policy Option 4: Upstream ETS
Policy option description
GHG Emissions Scope
Point of obligation
De Minimis threshold
Unique policy design aspects
3.5. Policy Option 5: Downstream ETS
Policy option description
GHG emissions scope
Point of Obligation
De Minimis threshold
Unique Design Aspects
4. Assessment of the five policy options
4.1. Overview of assessment criteria and comparison of the policy options
4.2. Comparison of 5 policy options across assessment criteria
4.3. Assessment of policy options
Effectiveness
Efficiency
Relevance
Coherence
Added Value
5. Conclusions of Part 1
5.1. Key strengths and trade-offs between potential ETS options
5.2. Potential next steps in considering an ETS for Agriculture
5.3. Open Questions and further Research
References – Part 1
Annex
PART 2: Linking carbon removals in the land sector to an agricultural emissions trading system
Executive Summary – Part 2
Résumé – Partie 2
1. Introduction
1.1. Structure of this report
1.2. Setting objectives and criteria to evaluate removals policy options
2. Demand for removals: AgETS summary
3. Supply of removals: LULUCF removals overview
3.1. LULUCF removals within the EU: an overview
3.2. Monitoring, reporting, and verification of removal options
Agriculture
Forestry
Biochar
3.3. Linking removals to the AgETS: expected supply of removals
4. Removals policy models: design elements
4.1. Emissions trading-related design decisions
Managing agricultural emissions reduction deterrence
Funding different removals with differentiated prices
Managing the non-equivalence of LULUCF removals and AgETS emissions reductions: the example of non-permanence
4.2. Other design decisions
Ensuring that carbon removals support other sustainability objectives
Ensuring coherence with LULUCF and national inventories
Avoiding double-counting between ETS and other policy targets
Design decisions to manage distributional impacts and increase stakeholder inclusiveness
5. Removals policy models
5.1. Removals policy models: introduction
Summary of recent literature
Overview of options for market-based policies to incentivise removals
5.2. Removal policy models: description and theoretical evaluation
‘No link: Disconnected market’
Indirect link
Direct link
5.3. Comparison of removal policy models
Linking to AgETS options
Interactions between removal policy model and design elements
6. Conclusion of Part 2
References – Part 2
Annex – Practical examples
A.1 New Zealand ETS – Forestry
A.2 California Air Resources Board Compliance Offset Program
A.3 Australian Emissions Reduction Fund
A.4 ETS2 and Social Climate Fund
A.5 Science-based Targets Initiative – Forest, Land and Agriculture (FLAG) target setting framework
A.6 Alberta’s Technology Innovation Emissions Reduction (TIER) system
A.7 French CAP strategic plan agri-environment climate measure (AECM) “Transition of practices” reduction of carbon footprint (70.27)
A.8 New Zealand He Waka Eke Noa Deductions proposal
A.9 Practical example selection