Agriculture directly generates more than 10% of Europe's greenhouse-gas emissions. At the same time, by sequestering carbon in soils, peatlands, and agro-forestry systems, agriculture offers significant potential to mitigate climate change. Actions to reduce agricultural emissions and increase on-farm carbon sequestration is referred to as carbon farming.

On behalf of the European Parliament, Ecologic Institute with support from IEEP investigate the potential of carbon farming to mitigate emissions in the EU and how to effectively increase carbon farming action. Ahead of two key EU Commission policy proposals in December 2021 (the 'Carbon Farming Initiative' and 'Carbon Removals Certification Mechanism'), the study summarises existing knowledge on carbon farming options, business models, and challenges. It also evaluates funding and policy opportunities to support its uptake.

Study conclusions

The report concludes that carbon farming offers significant potential for climate change mitigation and also delivers other societal co-benefits, including for biodiversity, soil health and water quality. Promoting the widescale implementation of agricultural climate mitigation should be a European priority. Care must be taken to ensure that carbon farming delivers permanent mitigation and delivers co-benefits without encouraging actions that contradict other EU Green Deal objectives (such as animal welfare). A key challenge is cost-effective, accurate monitoring, while the risk of non-permanence and non-additional mitigation needs to be carefully managed.

Further research and practical experience is needed to develop effective policies to incentivise carbon farming. Existing EU policies on climate, biodiversity, and agriculture offer many potential sources of funding and opportunities to encourage farmers to take mitigation actions. Voluntary carbon markets and supply chain-financing could play a role in upscaling carbon farming, though given its scope and influence, the Common Agricultural Policy (CAP) offers the most significant opportunities (but also barriers) for widescale carbon faming uptake.