It is the first step towards regulating carbon sinks, removals and recycling. The Commission plans to put in place measures for eliminating or dramatically reducing carbon dependence, recycling carbon from waste, and scaling up carbon removal solutions. The Communication focuses on carbon farming, blue carbon farming, carbon recycling and carbon capture, storage and utilization, with significant emphasis on carbon farming monitoring, reporting and verifying.
This regulatory framework will significantly impact agricultural and food industry. It will be also important for participants of the voluntary carbon markets that presently are the main standard setters for carbon farming monitoring, reporting and verification.
Regulatory Background
Sustainable carbon cycles are one of the regulatory tools implemented by the EU to facilitate meeting decarbonization goals set by the international community and the European Union itself. Under the Paris Agreement, the European Union has committed to taking action towards keeping global warming below 1.5°C. This aim entails a sharp reduction in emissions during present decade. To realize it, the European Climate Law, approved earlier this year, sets a goal of achieving collective climate neutrality by the EU Member States, and requires balancing all greenhouse gas emissions and their removals in the Union, at the latest by 2050. In addition, the Commission proposed to amend Regulation (EU) 2018/841 for Land Use, Forestry and Agriculture by setting a Union target for net annual removals of 310 Mt CO2eq by 2030, and allocating respective targets to each Member State.
Carbon sinks provided by agriculture, forestry and land use sectors will play an essential role in this transition. Proposal to amend Regulation (EU) 2018/841 also sets a goal of reaching climate neutrality in the entire land sector by 2035. Once this regulation is adopted, carbon removals in terrestrial ecosystems should balance greenhouse gas emissions from all land, livestock and fertilizer use.
Regulatory framework proposed in the Communication
In the upcoming years we will see a robust scaling up of sustainable carbon cycles, resulting in carbon removals becoming a real gamechanger for the EU’s decarbonization efforts. First of all, by the end of 2022, the Commission will provide a legislative proposal for accounting and certifying carbon removals. The Commission sees the monitoring, verification and reporting of carbon farming practices as a key element to the success of the whole sustainable carbon cycle initiative.
Secondly, by the end of 2023, the Commission will assess the possibility to apply a polluter-pays principle to emissions from agricultural activities. Farmers and food-processing industry will have to strategically consider the impact of such a charge on their business.
The Commission envisages scaling sustainable carbon cycles as a priority until 2030. This process would entail public consultations, as well as engaging with experts and stakeholders experienced in carbon farming practices.
Carbon farming
Farmers have a critical role in restoring ecosystems and ensuring climate resilience in agriculture. Carbon farming is paving the way to more climate-conscious practices in agriculture. According to the Communication, carbon farming can be defined as a green business model that rewards land managers for taking up improved land management practices, resulting in the increase of carbon sequestration in living biomass, dead organic matter and soils - by enhancing carbon capture and reducing the release of greenhouse gases to the atmosphere, in respect of ecological principles favorable to biodiversity. Carbon farming can create environmental, productivity and social benefits, such as diversification of rural and regional economies and incomes, introduction of new or restored habitats for native species and improved air and water quality.
Carbon farming can become a new source of income for the agriculture sector players, such as land managers, food product buyers and supply chain companies that could, in many cases, benefit from advantages related to an overall more fertile and resilient land.
Carbon farming involves implementing practices that are known to improve the rate at which CO2 is removed from the atmosphere and converted to plant material and/or soil organic matter. Recent studies demonstrate the efficiency of several carbon-beneficial agricultural practices in increasing soil carbon sequestration, such as:
- Afforestation and reforestation,
- Agroforestry,
- Protecting soils and enhancing soil organic carbon,
- Conversion of cropland to fallow/permanent grassland,
- Restoration of peatlands and wetland.
Due to clear benefits of carbon farming, the Commission intends to accelerate its uptake throughout the Union. There are however several barriers to the widespread adoption of carbon farming in the EU, such as the cost of carbon management practices and uncertainty about revenue opportunities.
Financial barriers can be overcome by public funding under the Common Agriculture Policy (CAP) and other EU programs such as L’Instrument Financier pour l’Environnement (LIFE) or Horizon Europe. These programs can support the expansion of carbon farming, by for instance covering additional costs of monitoring, reporting and verification, or funding projects that improve understanding of farming practices and fill existing knowledge gaps.
Through revenues from the sale of carbon removal credits carbon farming might incentivize farmers and forestry managers to contribute to the decarbonization of the European Union’s economy.
Beyond carbon farming
Carbon farming is a predominant tool of sustainable carbon cycles, however the Communication also provides for other decarbonization methods: blue carbon, carbon recycling and carbon capture and storage.
Blue Carbon
Coastal ecosystems of mangroves or tidal marshes contain large amounts of carbon deposited over centuries. These ecosystems sequester and store more carbon - often called "blue carbon" - per unit area than terrestrial forests[1]. The ability of these plant ecosystems to remove carbon dioxide from the atmosphere makes them an important contributor towards mitigating climate change. Blue carbon restoration and protection have potential for developing market-based mechanisms that take advantage of the existing voluntary carbon market frameworks. Experts estimate that blue carbon in coastal areas have an accounting inventory value of about $180 million[2].
The Communication envisages innovative developments with regard to blue carbon ecosystems. These include investments to preserve, restore or create new habitats, and to provide solutions to enhance resilience and protection of the EU coastal areas against climate change.
Carbon recycling
The Commission proposes that carbon recycling should be developed especially through climate performance of buildings. Reducing overall emissions of construction sector is already underway based on the EU’s Renovation Wave Strategy and European Bauhaus initiative.
Carbon Capture, Utilization, and Storage (CCUS)
CCUS encompasses methods and technologies to remove CO2 from the flue gas and from the atmosphere, followed by recycling the CO2 for utilization and determining safe and permanent storage options[3]. The Commission is going to promote the development of a competitive CCUS market by building a knowledge base and engaging with all relevant stakeholders from industry, the public and civil society.
How the need for transparent and verifiable accounting and certification connects EC’s framework and the voluntary carbon market
Currently, voluntary carbon market sets the standard for certification of projects in carbon farming, blue carbon and CCUS. According to the Communication, the development of a certification framework should facilitate transparent identification of agricultural and industrial solutions that remove carbon from the atmosphere in a sustainable manner. Robust monitoring, reporting and verification of carbon removal at the level of individual farms or through industrial capture, transport and storage of CO2 is necessary to ensure their legitimacy and diminish the risk of fraud and error.
Standards for offset projects certification and emission reduction accounting may provide a starting point for developing a regulatory framework for reliable and accurate carbon removals under the sustainable carbon cycles initiative. Joining forces with voluntary carbon market stakeholders will be especially important to tackle challenges such as double-counting, non-permanence of carbon removals and additionality of new carbon farming projects.
[1]Andrew D. L. Steven, Mathew A. Vanderklift & Narnia Bohler-Muller (2019) A new narrative for the Blue Economy and Blue Carbon, Journal of the Indian Ocean Region, 15:2, 123-128.
[2] Luisetti, T., Jackson, E. L., & Turner, R. K. (2013). Valuing the European ‘coastal blue carbon’ storage benefit. Marine Pollution Bulletin, 71, 101–106. doi: 10.1016/j.marpolbul.2013.03.0
[3] What is CCUS? | AIChE
