Payment for carbon farming: Towards an ambitious and pragmatic certification scheme

The role of farmers and foresters contributing to carbon farming is crucial if Europe wants to reach the objective of climate neutrality. To encourage them, a robust certification system is essential, writes Adeline Favrel.

Adeline Favrel is project manager at I4CE, the Institute for Climate Economics. 

The European Commission will propose a ‘carbon certification’ by the end of the year as a first step towards remunerating farmers and foresters who contribute to carbon farming. This certification project raises debates and concerns.

For I4CE, the EU can respond and develop an ambitious certification by relying on the experience of the Member States in this field.

We need carbon certification to incentivise farmers and foresters to act

The European objective of carbon neutrality aims to balance greenhouse gas emissions and absorptions, by drastically reducing emissions on the one hand and increasing carbon sinks on the other.

Thus, it gives a decisive role to agriculture and forestry, which can capture carbon from the atmosphere and store it in the soil and biomass. But how can we encourage farmers and foresters to adopt practices that store more carbon, such as agroforestry? This can be achieved by paying them for the carbon removals, which is what the European Commission is planning.

Obviously, it will be necessary to clarify quickly who will pay and who will remunerate these stakeholders.

Although the Commission currently seems to favour making the private sector pay via voluntary carbon offsetting, this will not be enough and other sources of funding will inevitably have to be explored: the European carbon market, a possible future Emissions Trading System (EU ETS) for the agri-food industry, and of course public funding, but first and foremost, the Common Agricultural Policy (CAP).

At the moment, it is important to agree on a European carbon certification system in order to guarantee the impact the projects that will be financed will have on the climate, and on the environment as a whole.

The aim is to direct funds, whether private or public, more effectively towards climate-friendly practices. The Commission is currently working on this carbon certification project and will propose a regulation by the end of the year.

The public consultation phase and the discussions organised in the various European bodies since the beginning of the year have raised many points of debate and even legitimate concerns.

We can overcome them. We can find pragmatic solutions to these problems in order to build an ambitious carbon certification.

This can be done by taking inspiration from the successes and failures of certifications developed over many years at the international level or in some Member States, starting with the French Label Bas-Carbone that I4CE helped to build.

Should European certification be limited to carbon removals?

The first debate agitating European stakeholders is the scope of certification. Should we certify only carbon removals, or should we also take emissions reductions into account? 

Limiting certification to carbon removals alone would have perverse effects on agriculture. This could, for example, lead to the certification of a biomass production project that makes heavy use of nitrogen fertilisers, without any incentive to reduce the use of these fertilisers and the associated greenhouse gas emissions.

As many of the action levers are mainly concerned with reducing emissions in the agricultural sector, it would be a shame not to encourage farmers to implement practices that favour both objectives: carbon removals and reductions of emissions. 

While countries such as France wish to adopt a broader scope, the Commission is moving towards a certification framework limited to removals. As a result, it is responding to a fear of countries such as Germany and environmental NGOs.

What is this fear? It is the fear that mixing up removals and emissions would make it possible to mask a farm’s emissions and reduce its climate ambition. However, there are other ways of responding to this issue.

The Label Bas-Carbone in France, accounts for both emissions and removals, in order to have a complete view of the greenhouse gas balance of the farms while keeping two separate accounts. As a result, it guarantees transparency on both fronts and ensures that nothing is hidden under the carpet. 

How to ensure other environmental issues are considered while avoiding an overly complex mechanism? 

The second debate that is agitating the European sphere involves the consideration of other environmental challenges in carbon certification. Agriculture and forestry are not just carbon sinks!

There are several options for ensuring environmental integrity, some of which are already being tested by existing labels.

Firstly, there are safeguards to avoid major negative impacts, such as banning ploughing in forests or defining a maximum density of livestock per hectare. In addition to this, we can also assess the positive impacts on water and biodiversity, as the Label Bas-Carbone does.

Criteria can be established to guarantee the coherence of the project with a global trajectory: for example, within the agricultural sector, favouring the accounting of emissions per hectare rather than on the basis of the quantity produced and therefore favouring the transition from intensive to more extensive agriculture. 

Such pragmatic solutions also exist to address a third point of debate that has emerged in the discussions on the future European certification framework: its administrative and financial cost.

The more ambitious, rigorous and robust the certification, the higher the cost for farmers and foresters. There is a risk of discouraging them with an overly complex mechanism.

To address this tension between the cost and quality of certification, the Label Bas-Carbone has chosen to use the ‘discount’ principle.

In exchange for a discount on the certified absorptions (and emissions), the operator can choose simpler certification methods, which makes it possible to keep the mechanism accessible while limiting windfall effects. 

In order to encourage farmers and foresters to act for the climate, the European Union will have to develop new public policies. It must obviously continue to green the CAP, but it must also build new systems, and European carbon certification is an essential step.

We must not miss this step and we must not hesitate to draw on the experience of international and national certification systems to find pragmatic solutions and build an ambitious European framework.