Integrating Agricultural Emissions into the European Union Emissions Trading System: Legal Design Considerations

In the European Union, greenhouse gas emissions statistics indicate only a slight decreasing trend over the last number of years in emissions from agricultural sources. Unless drastic action is taken in other sectors, the European Union’s 2030 and subsequent climate targets are unlikely to be met without greater reductions made in agricultural emissions. The policy instruments aimed at reducing agricultural emissions that are currently in place have proven to be ineffective; therefore, there is a need to look for new approaches towards bringing agricultural emissions down faster and farther. One obvious new approach is to integrate agricultural emissions into the European Union Emissions Trading System, which, so far, has proven very successful in reducing greenhouse gas emissions in the energy and industrial sectors. Hardly any attention has been paid in the scholarly legal literature to the question of integrating agricultural GHG emissions into emission trading systems. This article seeks to fill this gap. This paper presents the concluding findings of a Dutch Research Council-funded research project that aimed to assess whether and under what conditions the European Union Emissions Trading System could play a role in compelling the agricultural sector to reduce its greenhouse gas emissions. We answered this question by looking at lessons learned from existing examples in the world of market-based approaches to integrating agriculture into emission reduction schemes. To do this, we performed an ex-post assessment of three of the very few examples that exist in the world of such schemes in Canada, California, and Australia, followed by an ex-ante assessment of the prospect of including agricultural emissions under the European Union Emissions Trading System based on the practical experiences of those examples. In the ex-ante study, we evaluated how such inclusion could work, either indirectly, through allowing on-farm offset programs to reward increased carbon sequestration, or directly, by requiring farmers and/or other actors in the agricultural sector to surrender allowances for their direct emissions. As lawyers, we focused mainly on the legal considerations of such a proposition. Having conducted both the ex-ante and ex-post assessments, we conclude that introducing stricter legal instruments of one form or another that will reduce agricultural greenhouse gas emissions and increase carbon removal on agricultural land seems necessary for the European