COMMISSION STAFF WORKING DOCUMENT Sustainable carbon cycles - Carbon farming Accompanying the Communication from the Commission to the European Parliament and the Council Sustainable Carbon Cycles
Date: 2021-12-15
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU environmental policy, European forestry policy, carbon capture and storage, carbon neutrality, climate change, common agricultural policy, farming sector, greenhouse gas, maritime economy, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.12.2021  SWD(2021) 450 final  COMMISSION STAFF WORKING DOCUMENT Sustainable carbon cycles - Carbon farming Accompanying the Communication from the Commission to the European Parliament and the Council Sustainable Carbon Cycles {COM(2021) 800 final} - {SWD(2021) 451 final}  
 
 
Table of contents 

1  WHAT IS CARBON FARMING? ............................................................................................................... 3 

2 

3 

CARBON  FARMING  AS BUSINESS MODEL:  LESSONS  LEARNT FROM EXPERIENCE ON THE 
GROUND ..................................................................................................................................................... 4 

UPSCALING CARBON FARMING ........................................................................................................... 9 

3.1  Public support to kick-start effective and ambitious carbon farming .................... 13 

3.1.1 

3.1.2 

The Common Agricultural Policy........................................................ 14 

Support under other EU funds ............................................................. 17 

3.1.3 

State aid................................................................................................ 18 

3.2 

3.1.4  Combined approaches for carbon farming........................................... 20 
Improving  monitoring,  reporting  and  verification  (MRV)  methodologies,  data 
management and tailored advisory services to land managers .............................. 23 

3.2.1 

Boosting user-friendly tools and database integrations ....................... 24 

3.2.2 

Role of research and innovation .......................................................... 27 

1 

 
 
 
 
 
 
 
Glossary 

Term or acronym 

Meaning or definition 

CAP 

EAFRD 

EAGF 

FADN 

FaST 

FSDN 

GHG 

GSAA 

IACS 

LPIS 

LUCAS 

LULUCF 

MRV 

RD 

R&I 

Common Agricultural Policy 

European Agricultural Fund for Rural Development 

European Agricultural Guarantee Fund 

Farm Accountancy Data Network 

Farm Sustainability Tool 

Farm Sustainability Data Network 

Greenhouse gas 

Geospatial aid application 

Integrated Administration and Control System  

Land Parcel Identification System 

Land Use and Coverage Area frame Survey 

Land use, land use change and foretsry 

Monitoring, reporting and verification 

Rural development 

Research and innovation 

2 

 
 
 
 
 
 
1  WHAT IS CARBON FARMING? 

Carbon farming can be defined as a green business model that rewards the actors of the land 
sector for taking up improved land management practices resulting in carbon sequestration in 
living biomass, dead organic matter, and soils by enhancing carbon capture and/or reducing 
the release of carbon to the atmosphere.  

The concept of carbon farming is new and has been introduced by the Farm to Fork Strategy 
that,  building  on  the  European  Green  Deal  Communication,  encourages  the  agriculture  and 
forestry sectors to deliver more on climate action and calls for the setting up of the necessary 
incentives at land manager level. Such financial incentives can come from public or private 
sources  or  a  combination  of  the  two  and  reward  land  managers  for  the  change  in  their 
management practices or for the achieved mitigation results. The carbon farming credits that 
land managers generate can be sold on voluntary carbon markets or be rewarded by public or 
private  incentive  programs  and  hence  become  an  additional  “product”  on  top  of  food  and 
biomass.  

The  steady  emerging  of  private  carbon  farming  initiatives  shows  an  increasing  trend  in  the 
demand side for carbon farming credits. Actors of the bioeconomy, such as food processors, 
are interested in buying carbon farming credits to reduce the carbon footprint in their value 
chains. Further potential buyers can be public entities, companies and individuals who want to 
financially contribute to more climate action on land with a view to compensate for their own 
emissions. 

The selling of carbon farming credits can create a new source of income for land managers, 
who  can  at  the  same  time  in  many  cases  benefit  from  side  advantages  related  to  increased 
business  resilience,  overall  higher  environmental  quality  of  their  land  and  under  certain 
conditions higher profitability from land yields. 

The potential of carbon removals, emission reductions and protection of existing stocks varies 
according  to  bioclimatic  conditions,  including  risk  of  climatic  hazards,  and  furthermore, 
strongly  depends  on  factors  such  as  topography,  soil  type,  and  past  and  current  land  use 
practices. Other social, infrastructural, and economic conditions can also influence uptake and 
final  mitigation.  Although  very  site-dependent  in  application,  the  following  are  the  most 
effective examples of carbon farming practices: 

  Afforestation  and  reforestation  in  respect  of  ecological  principles  favorable  to 
biodiversity  and  enhanced  sustainable  forest  management  including  biodiversity-
friendly practices and adaptation of forests to climate change: the planting of new trees, 
the restoration of degraded forests remove CO2 from the atmosphere over many decades 
and possibly centuries, at the same time providing ecosystem services and enhancement 
of biodiversity. Implementing a change in forest management over large areas could 
result  in  a  significant  total  additional  mitigation  potential  and  strengthen  climate 
resilience, by significantly reduced risk of carbon losses following disturbances; 

  Agroforestry and other forms of mixed farming: land use management systems in which 
woody  vegetation (trees  or shrubs) are deliberately  grown in  combination with  crop 
and/or animal production systems on the same land. Agroforestry has an important role 
in carbon sequestration, combining significant mitigation effects with co-benefits for 
ecosystems and biodiversity; 

3 

 
 
 
 
  
 
  Use of catch crops, cover crops and conservation tillage: protecting soils, and enhancing 

soil organic carbon on degraded arable land;  

  Targeted conversion for example of cropland to fallow or set-aside areas to permanent 

grassland; 

  Restoration of peatlands and wetlands: raising the water table of drained peatlands or 
wetlands not only restores the hydrological balance of soils but also reduces oxidation 
of the existing carbon stock and increases the potential for carbon sequestration1. 

An overview of the mitigation potential of these practices is described in  the Staff Working 
Document “Sustainable carbon cycles for a 2050 climate neutral EU”. 

2  CARBON  FARMING  AS  BUSINESS  MODEL:  LESSONS  LEARNT  FROM  EXPERIENCE  ON  THE 

GROUND 

Carbon farming incentives can take the form of action-based or result-based schemes. In the 
case of action-based carbon farming, beneficiaries receive payments for implementing defined 
management actions, independently of the resulting impact of those actions. A typical example 
are the area-based payments for agri-environment-climate commitments co-financed under the 
common  agricultural  policy  (CAP),  where  land  managers  benefit  from  CAP  support  for 
complying  with  very  specific  farming  practices  which  have  been  selected  by  the  managing 
authority for the assumed environmental benefits. 
In  a result-based approach,  on the other hand, the payment is directly linked to measurable 
indicators of the climate benefits provided, irrespective of the precise farming practices that 
are applied.  
Result-based  incentives  offer  several  advantages,  compared  to  action-based  incentives,  for 
example they ensure a more targeted use of the relevant funds towards the intended climate 
objective and a greater degree of flexibility for land managers who are able to choose their 
management  strategies  to  achieve  the  desired  results,  rather  than  following  a  set  of  rules. 
However, they also have challenge and limitations, for example the risk of non-delivery of the 
expected results or the potentially insufficient cover of additional costs. 
To develop carbon farming as successful and attractive business model, the relevant business 
opportunities need to be identified, taking into account challenges and costs linked to the setting 
up,  implementation  and  upscale  of  carbon  farming  schemes.  To  that  end,  the  Commission 
published  the  “Technical  Guidance  Handbook  –  setting  up  and  implementing  result-based 
carbon farming mechanisms in the EU”2 (“the Handbook”) that explored key issues, trade-offs 
and design options to support a widespread adoption of carbon farming initiatives in the EU. 
In particular, the Handbook analysed  examples  of financial incentives in  the five following 
contexts  relevant  for  their  mitigation  potential:  peatland  restoration  and  rewetting; 
agroforestry;  maintaining  and  enhancing  soil  organic  carbon  on  mineral  soils;  grasslands; 
livestock farm carbon audits. The Handbook highlighted the variety in the design of a carbon 
farming initiatives where building blocks can have different features, such as: 

1 There is a balance between CO2 removals and CH4 emissions which is closely linked to the water table that 
needs to be regulated.  
2 https://op.europa.eu/en/publication-detail/-/publication/b7b20495-a73e-11eb-9585-01aa75ed71a1/language-en 

4 

 
 
 
                                                 
  objectives  and definition of result indicators:  existing schemes currently  reward emission 
reductions  or  avoidance  or  carbon  removals,  sometimes  including  co-benefits  for 
biodiversity and ecosystem restoration; 

  credibility of realized mitigation: current schemes apply different principles when dealing 

with additionality and permanence; 

  governance: methodologies, registries and evaluation requirements vary depending on the 
scale  of  the  projects;  for  smaller,  more  experimental  schemes  and  pilots,  less  formal 
governance may be less time consuming and more agile whereas schemes that aim to sell 
credits for balancing emissions and those accountable for spending significant amounts of 
public money need more formal systems of governance; 

  monitoring, reporting and verification (MRV) procedures: MRV is integral to result-based 
carbon farming schemes, as it is the step that quantifies the impact of climate actions, but it 
causes a trade-off as high stringency MRV can deliver accuracy but it is associated with high 
costs; 

  availability of necessary skills and expertise: current schemes showed that skills and capacity 
are needed to be continuously developed during the scheme design and operation, including 
for training advisers or consultants, or the development of calculator tools; 

  funding:  the  setting  up  and  running  of  result-based  carbon  farming  schemes  require 
considerable resources, including a multi-disciplinary team, a partnership of organisations, 
an adequate budget and considerable time. 

All the above-mentioned aspects are usually clearly described in the rules and methodologies 
associated to each carbon farming initiative: whatever its nature, private or public, voluntary, 
or regulatory, those rules are necessary in order to ensure transparency and reliability.  
Examples of existing carbon farming schemes analysed in the Handbook are described below.  

Peatland rewetting 

The German MoorFutures is a voluntary carbon crediting scheme, where the quality of the credits is 
a central aspect, as they are guaranteed by the public regional authorities. The scheme maintains its 
own registry and does not allow trade in credits. Particular emphasis is given to ecosystem services 
such as increasing biodiversity, flood protection, groundwater retention, nutrient retention.  

The UK Peatland Code is a voluntary standard with the aim to restore and sustainably manage two 
million  hectares  of  UK  peatlands  by  2040.  Eligible  project  areas  must  be  classified  under  the 
condition of drained or actively eroding peatland with a minimum depth of 50 cm. The Peatland Code 
Field Protocol identifies baseline categories for eligibility.  

The Dutch Green Deal was initiated by the Dutch Government with input and involvement from 17 
private stakeholders. There are three eligible activities for consideration in the program including 
raising  water  level  to  20  cm  under  extensive  agricultural  land,  implementing  paludicultures  with 
cranberries or rewetting of nature to soil surface or above. These activities consider the barriers to 
uptake by farmers by allowing them to continue to use their agricultural land. 

5 

 
 
 
 
 
 
 
Agroforestry 

The French CarboCage mechanism is designed to sustainably manage valuable hedges for several 
purposes  such  as  erosion  prevention,  advanced  water  management  and  timber  supply.  The  trial 
project aims to find a method of carbon storage evaluation and to potentially establish a local carbon 
market coupled with additional benefits, especially in the form of improved biodiversity. 

The UK Woodland Carbon Code functions under local forestry authorities and serves as a standard 
validating  and  rewarding  carbon  sequestered  in  biomass.  In  order  to  generate  marketable  carbon 
credits, parties have first to comply with national forestry rules that contain minimum standards on 
biodiversity and sustainable management. 

AGFORWARD is an EU-funded research project aiming to analyse the benefits of upscaling the 
agroforestry practices across Europe leading to development of rural areas. Among key deliverables 
the initiative has produced a widely-recognised definition of agroforestry as well as a set of leaflets 
covering advice on main stages of its implementation. 

Montado is a result-based scheme aimed at ensuring by the use of specific indicators that adequate 
measures  are  taken  to  prolong  natural  regeneration  of  the  system  resulting  in  soil  protection  and 
undisturbed carbon storage. 

The German CarboHedge project is focused on developing benchmarks that will help to understand 
levels of carbon that can be sequestered in hedgerows and field copses. 

Maintaining and enhancing soil organic carbon (SOC) on mineral soils 

The Austrian Humus Kaindorf program aims to test and develop practical options for SOC 
sequestration and increase uptake of SOC sequestration in agricultural practice, including 
through the generation of CO2-certificates. Commitments should be undertaken for 12 years 
and  there  are  strict  eligibility  criteria.  No  conversion  of  land  use  is  allowed  during  the 
commitment  period.  Sampling  is  done  at  the  beginning  of  the  commitment,  after  3  to  7 
years and after another 5 years. The program sells CO2 certificates to regional or national 
companies that aim to offset their emissions. Currently up to 500 participating farmers are 
included over up to 5 000 ha across Austria. The price is EUR 45 per tonne, of which EUR 
30 go directly to the farmers.  

The UK based Carbon Assets for Soil Health Project aims to develop an evidence base for 
the  setting  up  of  a  reward  system  for  public  goods  associated  with  good  soil  health 
management. In the initial three years (2020 – 2022) the project aims to develop a better 
understanding of the techniques and their potential to increase soil carbon sequestration and 
of  the  funding  opportunities  available  for  farmers,  including  of  regulatory  standards  to 
maximise carbon sequestration through improved soil management. The project is crowd-
sourcing data from both organic and non-organic farmers who have been monitoring soil 
organic matter (SOM) on their farms via an online survey, to provide insights and evidence 
base on the relationships between cropping history, management practices, soil types and 
SOM levels.  

Most of the analysed carbon farming initiatives generate income through the selling of credits 
for the achieved emission reductions or removals. The prices obtained can be determined by 
markets or fixed in advance based on the costs.  

6 

 
 
 
 
 
 
 
 
 
The price for carbon farming credits can vary greatly. Experience of ongoing EU schemes, 
particularly on peatland restoration, has shown that prices are usually higher than those traded 
in the international voluntary carbon markets and that buyers are generally willing to pay higher 
prices to secure co-benefits in terms of biodiversity and ecosystem restoration. Based on the 
analysis of different types of existing carbon farming schemes, three basic approaches can be 
identified for the marketing of carbon credits: 

-  Scheme  platform:  the  scheme  operates  an  exclusive  sale  platform,  selling  the  credits 

generated from different projects to different customers; 

-  Intermediary  driven  approach:  individual  project  developers  or  credit  off-takers  help  to 
develop the project and cover early phase costs, while securing the mandate and right to 
market and sell credits when these are issued. In this decentralised system, the scheme may 
operate a registry to help keep track of the credits, but the responsibility for ensuring their 
integrity is delegated; 

-  Exchange based approach: project developers from different schemes use a central registry 
and issuer to keep track of uniquely identified credits, which can be traded between buyers. 
This approach allows for aggregation and selling of credits from many different sectors. 

Carbon  farming  initiatives  may  also  take  steps  to  reduce  the  market  uncertainty  for  land 
managers, for example by establishing a set payment per ton of carbon sequestered over the 
project period. In such a case, the scheme designers set the price at a level that they can either 
cover from their own funds or that they expect they can recoup, for example by selling offset 
credits.  This  approach  shifts  price  uncertainty  away  from  land  managers  and  places  it  on 
scheme  administrators  who  will  manage  the  market  risks  and  ask  for  an  appropriate 
remuneration. 

Another important element is the timing of the payment. Ex-post result-based payments lead 
to increased uncertainty for land managers and can cause cash flow issues, especially where 
substantial  up-front  investment  is  required.  Both  the  uncertainty  and  the  delay  between 
expenditure  and  reward  can  therefore  constitute  barriers  to  uptake.  The  analysis  of  existing 
schemes suggests four different ways around this problem, all of which involve having an ex-
ante as well as an ex-post element to the payments: 

(a)  Separate (non-result-based) payment to  cover  upfront costs. Almost all schemes rely on 
non-market  funding  and  support  for  their  establishment  costs,  hence  up-front  payments 
could  come  from  the  same  source.  Possibilities  for  funding  from  public  sources  are 
described in section 3.1 below; 

(b) Ex-ante payments by selling ex-ante credits. Either the buyers of these credits or the scheme 
operators  have  to  accept  the  risk  of  non-delivery  of  the  promised  climate  mitigation 
benefits. This means selling the credits at a discount, which would reduce overall income;  

(c)  Purchase of credits by buyers in two instalments. This approach would involve purchasers 

paying a proportion of the price ex-ante, with the balance payable ex-post; 

(d) Hybrid scheme approach. Hybrid schemes combine elements of action- and result-based 
schemes, generally offering a payment to carry out a set of management actions, which is 
topped  up  if  the  land  manager  can  demonstrate  to  have  delivered  additional  climate 
benefits. Such schemes are a particularly valid alternative when the risk of non-delivery is 
high,  as  the  risk  is  de  facto  shared.  The  majority  of  result-based  schemes  for  the 
conservation of  farmland biodiversity work on this basis, with  the action-based element 
designed to deliver a basic level of management, and the result-based element linked to 
higher  level  biodiversity  indicators  that  require  more  demanding  management.  This 
provides the ‘freedom to farm’ that is a major attraction of ‘pure’ result-based schemes. As 

7 

 
alternative  structure,  there  are  examples  where  land  managers  are  paid  up-front  with  a 
guaranteed  payment,  the  monitoring  is  done  at  regular  intervals,  and  the  beneficiary 
receives  a  top-up  at  the  end  of  the  commitment  period  which  rewards  the  difference 
between the GHG reductions corresponding to the upfront payment and the total result.  

Environmental  safeguards  should  ensure  that  carbon  farming  can  respect  environmental 
integrity, i.e. that carbon farming practices do no significant harm to biodiversity conservation 
and other environmental objectives. Alongside climate mitigation benefits, a large number of 
carbon  farming  initiatives  are  intended  to  produce  environmental  co-benefits  or  social  co-
benefits on the wellbeing of rural areas, but very  few have so far formally incorporated co-
benefits and wider sustainability into their payment structures, as this can add to complexity 
and costs. However, carbon farming initiatives should contribute to the financial recognition 
of these co-benefits because, if there is good evidence that such benefits are being delivered, 
this can help secure premium prices on the voluntary market. Co-benefits may also help attract 
funding from public bodies.  

The following box summarises advantages, challenges, and limitations of result-based carbon 
farming schemes. 

Advantages: 
1. flexibility for the land manager - encouragement of adaptability, innovation and 

entrepreneurship; 

1. clearer link between payment and mitigation impacts - higher credibility/appeal and 

potential for higher additionality; 

2. carbon impacts are an objective effect, not a side-effect of sustainable practices - 

potentially higher effectiveness; 

3. lower adverse selection of parcels with lower yields by farmers; 
4. educational role for farmers and wider society. 

Challenges and limitations:  
5. potential higher financial risks/uncertainty for land managers; 
6. potential higher transaction costs for developers; 
7. challenges related to monitoring, reporting and verification of climate mitigation results 

(costs, degree of reliability/robustness); 

8. challenges of ensuring additionality and of securing permanence of the carbon impacts; 
9. the time needed to have results that can be measured  is potentially long in the case of 
soil organic carbon, and in some cases the change is appreciable only after the project 
life span; 

10. 

higher flexibility for the beneficiaries requires strong advisory support in the 

scheme design for which capacity or resources are necessary. 

Financial opportunities on voluntary markets can be found through supply chain or value chain 
financing, i.e. when operators active in the food processing or retailing sectors want to take 
measures to reduce the carbon footprint of their value chain. This could be achieved through 
the purchase of carbon credits on the markets to compensate for the GHG emissions produced 
along the supply chain, or through the financing of carbon farming schemes for their suppliers 
(e.g. farmers). As part of the Farm to Fork strategy, the Commission facilitated the co-creation 

8 

 
 
 
 
 
of  an  EU  Code  of  conduct  on  responsible  food  business  and  marketing  practices3  with 
stakeholders. Operators ‘between the farm and the fork’, such as food processors, food service 
operators and retailers, are encouraged to sign the Code and to voluntarily commit to undertake 
tangible and measurable actions to align with the objectives of climate neutrality by 2050 and 
contribute to achieving sustainable food systems. The code identified carbon farming, among 
others, as a way to stimulate sustainability in production. The Commission is also working on 
a proposal for framework legislation on sustainable food systems4. 

Recently,  an  increasing  number  of  private  carbon  farming  initiatives  have  emerged.  Many 
global corporates and SME players pledged to achieve net-zero emissions across their full value 
chain by 2050 in line with the Paris Agreement recommendations, whereas others also set mid-
term objectives limited to absolute cuts of the direct emissions and emissions from generated 
energy. On the road to reaching these goals, carbon removal solutions play an inevitable or at 
least compensating role to the reduction measures already underway. 
Due to their strong link to the land sector, agri-food operators are particularly engaged: food 
and fertiliser companies work with direct suppliers as well as farmers and foresters from their 
value chain to promote sustainable agriculture and forest management. Pilot projects or even 
large-scale campaigns  aim to introduce  practices  allowing to accurately  measure  and report 
GHG emissions as well as capture and store carbon while integrating biodiversity and yields 
preservation.  Initiatives  consist  of  tailored  advisory  with  sharpened  focus  on  conservation 
practices,  deployment  and  leveraging  of  digital  reporting  tools  allowing  for  life-cycle 
assessment. Alliances across the industry are formed to explore methodologies of quantifying 
the  sequestration  with  MRV  tools  in  place.  Reliable  data  convertible  into  carbon  credits  is 
sought by several existing voluntary marketplaces that connect supply and demand of credits 
and  are  supported  by  intermediaries  and  financial  agents  using  their  partner  networks  to 
enhance trading.  

Based on the experience gained with existing initiatives, the setting up of effective result-based 
carbon  farming  schemes  requires  a  sound  evidence  base,  good  data,  takes  time,  needs  to 
actively  involve  the  key  stakeholders,  including  land  managers,  and  requires  adequate 
investment in advice and support. Nonetheless, voluntary carbon markets enable a high degree 
of flexibility in the scheme design so that over the recent years many carbon farming initiatives 
that reward carbon sequestration have emerged, opening a variety of financial opportunities.  

3  UPSCALING CARBON FARMING  

Despite the development of carbon farming initiatives across the EU and the increasing interest 
shown  by  stakeholders  in  this  business  model5,  carbon  farming  remains  in  its  infancy.  To 
upscale  carbon  farming,  implementation  issues  need  to  be  identified  and  addressed.  This  is 
particularly required as regards EU funding, also in order to address the recommendations of 
the European Court of Auditors (ECA) in a recent report on CAP funding6. The ECA findings 
stressed the importance of dealing with emissions from cultivated drained organic soils, e.g. by 

3 f2f_sfpd_coc_final_en.pdf (europa.eu) 
4 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13174-Sustainable-EU-food-system-
new-initiative_en  
5 As shown by the wide participation in numerous workshops organized by the Commission - COWI, Reviewing 
the Contribution of the Land Use, Land-use Change and Forestry Sector to the Green Deal 
(https://op.europa.eu/en/publication-detail/-/publication/8f100af5-e44d-11eb-895a-01aa75ed71a1/language-en). 
6 https://www.eca.europa.eu/Lists/ECADocuments/SR21_16/SR_CAP-and-Climate_EN.pdf  

9 

 
 
 
                                                 
rewetting and restoration, including a monitoring system for peatlands and wetlands, which fits 
well to be incentivised by carbon farming schemes, as also concluded in the Handbook. 

According to a recent survey7, the main implementation challenges posed by carbon farming 
relate to: 

 

financial burden resulting from the costs of carbon farming management practices and 
uncertainty about revenue possibilities;  

  uncertainty  or  lack  of  trust  in  the  reliability  of  certification  standards  in  voluntary 

carbon markets; 

  complexity and high costs of robust monitoring, reporting and verification systems;  

 

 

 

insufficiently tailored advisory services; 

insufficient rewards for co-benefits;  

regulatory obstacles 

which are confirmed by the consultation of stakeholders, as shown in the following figure8:  

7 COWI, p. 234 ff. 
8 COWI, p.230. 

10 

 
 
 
 
 
 
 
 
                                                 
Uncertainty about funding and revenue opportunities 

Although land managers are generally willing to participate in carbon farming initiatives which 
is  confirmed  by  the  existence  of  well  running  projects  on  farms,  the  uncertainty  about  the 
financing of the necessary costs and the profitability of the initiatives constitute major barriers 
to uptake. Result-based schemes are expensive in MRV, up-front investments are necessary, 
particularly in case of switch of land management, and high costs for measurements combined 
with  the  uncertainty  about  the  achievement  of  the  results  make  the  choice  of  result-based 
carbon farming not attractive or too risky. 
In order to raise land managers’ awareness, knowledge campaigns about funding possibilities 
could be used. Public and private interaction could furthermore be considered as solution to 
secure revenues, whereby for instance the CAP sets minimum quality standards and provides 
action-based payments for the implementation of certain practices, while private markets can 
pay for very high-quality carbon credits (see section 3.1.4). In addition, MRV costs could be 
lowered by public support under the CAP or State aid, thus driving down the costs for the land 
manager. The certainty about revenue possibilities, particularly where based on initial action-
based funding, would also likely address the general reluctance of land managers to enter too 
prescriptive schemes (‘freedom to farm’). Possible support under public and private funding is 
described in section 3.1. 

Uncertainty  or  lack  of  trust  in  the  reliability  of  certification  standards  in  voluntary  carbon 
markets combined with complexity and costs of MRV systems 

A  commonly  perceived  barrier  is  the  lack  of  high-quality  and  homogenous  MRV,  also  to 
measure  co-benefits  for  productivity  and  adaptation  elements.  In  some  cases,  the  main 
challenge  is  not  the  measurement  itself,  but  rather  the  establishment  of  baselines  and 
additionality. The need for harmonised, user-friendly, and cost-efficient tools to certify carbon 
removals thus qualifies as an important implementation challenge among stakeholders. 
Again, public support would have the potential to address these issues in the short-term through 
financing  for  research  advancements,  such  as  in  exploring  the  opportunities  from  the 
integration  of  existing  databases  with  the  increasingly  available  remote  images,  developing 
user-friendly GHG calculators, training in favour of land managers to invest into and learn how 
to use high-quality MRV tools. Opportunities for monitoring and measuring possibilities and 
for tools and advisory systems are described in section 3.2. However, to ensure the purchase 
of high-quality credits on the markets in the medium and long-term, additionality, together with 
well-defined rules for permanence of land-based carbon removals need to be guaranteed. To 
that end, the Commission is developing a credible governance system, in order to establish the 
regulatory framework for the certification of carbon removals based on robust and transparent 
carbon accounting to monitor and verify their authenticity9.  

Lack of knowledge and of tailored advisory services 

A  common  argument  of  land  managers  for  being  prevented  from  entering  carbon  farming 
schemes  is  the  lack  of  sufficient  knowledge  and  agronomic  advice  on  carbon  farming 
techniques and their outcomes, also in terms of better farm management. Carbon farming can 

9 The legislative proposal is scheduled by end of 2022. See more in Commission Communication – Sustainable 
Carbon Cycles (section 4). 

11 

 
 
 
 
 
 
 
 
                                                 
encompass different practices, from small adjustments to fully-fledged changes to the overall 
farming management, with corresponding different outcomes on soil and production capacity 
and other ecosystem services. Moreover, carbon farming techniques can be applied in different 
ways,  depending  on  the  pedo-climatic  conditions  of  the  farm.  There  are  some  gaps  in 
knowledge and a general lack of homogeneity in skills, natural conditions and baselines of land 
managers across the various Member States. 
Possible solutions to address these issues are increased and continuous support for training and 
advisory  services.  Good  practices  should  be  encouraged  and  their  potential  for  carbon 
sequestration  or  emission  reduction  should  be  made  known  to  land  managers  via  targeted 
advice, for example under the CAP (including “training the trainers”). Further, the Handbook 
can be used as a guidance tool on how carbon farming can be effectively implemented.  
Advisory services possibilities are described in section 3.2. 

Insufficient consideration of co-benefits  

Most practices and techniques which can be incentivized with carbon farming can have several 
side-benefits for other environmental objectives, such as on plant, soil and animal biodiversity 
and  water  purification.  The  inclusion  of  co-benefits  in  carbon  farming  schemes  would  add 
value to credits and reach appropriate rewards to incentivize the uptake. On the other hand, the 
inclusion of co-benefits poses several challenges such as the choice of indicators, the difficulty 
of monitoring and the insufficient financial compensation, that need to be addressed to ensure 
that the response to climate change is fully integrated with that to other pressing environmental 
and social issues, notably the continuing decline of biodiversity and the need to adapt to climate 
change.  
It is important that  carbon  farming  schemes embrace environmental objectives, that the no-
harm principle is applied and that best win-win solutions are supported.  

Regulatory obstacles 

Another  barrier  to  the  effective  functioning  of  carbon  farming  schemes  is  the  existence  of 
contradictory incentives10 and possible conflicts among different policy objectives. One-sided 
approaches  create  imbalance  between  climate  impact,  environmental  needs,  administrative 
possibilities,  and  economic  feasibility.  This  in  turn  creates  confusion  on  possible  interested 
land managers who could be confronted with scenarios where they would either need to choose 
which  policy  requirements  to  follow  or  would  be  hindered  into  adopting  carbon  farming 
practices because of conflicting EU or national legislation. Currently, for many farmers such 
situation  is  leading  to  the  feeling  of  the  impossibility  of  contributing  and  succeeding  in  all 
objectives11. 
To counterbalance these effects, EU and national polices could adopt an integrated approach, 
where policy  goals would not appear as conflicting but as complementing each other. Such 
integrated  approach  should  aim  at  achieving  synergies  by  combining  targets  in  the  field  of 
carbon sequestration, biodiversity, and water, with a focus on practical feasibility also taking 
into account the regional and pedo-climatic specificities. A stronger focus in EU and national 
policies on collective and multi-stakeholder approaches would also contribute to address the 
challenges posed by co-existing legal demands. 

10 For instance some CAP coupled support for livestock and mitigation targets under climate legal framework. 
11 INTERREG North Sea Region – Carbon Farming. White Paper “Incentivising carbon farming; policy 
recommendations from the Carbon Farming project” (link).  

12 

 
 
 
 
 
 
                                                 
As regards CAP support, a recent evaluation of the impact of the CAP on climate change and 
greenhouse gas emissions concluded that a better targeting of climate demands in the Member 
States’ instruments is needed 12. In that regard, the new CAP has already raised the minimum 
climate baselines under the enhanced conditionality.  

Further implementation challenges and trade-offs have been identified through stakeholders’ 
consultation,  such  as  the  conflict  between  food  security  and  the  increase  of  non-productive 
land; as regards action on peatlands, the lack of identified areas in the Member States and the 
risk of losing direct payments in case of peatland restoration; low transaction costs; low level 
of compensation in the forestry sector; risk of land abandonment; effects on the land price13. 
The  following  sections  will  highlight  the  opportunities  and  potential  of  existing  policies  to 
address these challenges. 

3.1  Public support to kick-start effective and ambitious carbon farming 

As highlighted in the previous section, the uncertainty about funding possibilities for the set-
up and operating costs of a carbon farming initiative combined with the risk of non-delivery of 
the expected results constitutes the most critical barrier to land managers’ uptake. The risk of 
non-delivery is inherent  to  carbon  farming schemes  that link the payment to the amount of 
carbon benefits eventually delivered. Land managers have to invest first in new management 
practices and  the set-up  of the monitoring,  reporting  and  verification system for the carbon 
credits while the revenues may only come some years later when the carbon benefit is measured 
and reported, making carbon farming approaches insufficiently attractive for land managers.  
The public funding under the CAP and other EU programs - such as Horizon Europe, LIFE, or 
the  cohesion  funds  -  can  support  the  upscaling  of  carbon  farming,  for  example  to  cover 
additional costs related to monitoring, reporting and verification aspects, or to finance pilot and 
research projects that improve the effectiveness of carbon farming.  
An additional public avenue is the use of State aid that can complement or strengthen actions 
covered by CAP support.  
Public funding can significantly reduce the risks for land managers who are interested to enter 
carbon farming schemes, thereby securing their engagement. 

12 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/1408-Evaluation-of-the-impact-of-
the-CAP-on-climate-change-and-greenhouse-gas-emissions_en.- The evaluation concluded that the mitigation 
and adaptation potential of several CAP measures could increase if:  
• ploughed grassland would not be classified as permanent grassland;  
• the ban on ploughing permanent grassland would be extended beyond environmentally sensitive permanent 
grasslands;  
• small farmers would not be exempted from climate-relevant requirements under greening;  
• fallow land would always be covered;  
• protection and restoration of wetlands and peatlands would be enhanced;  
• the level of ambition of CAP instruments/measures would increase;  
• aid for areas facing natural or other specific constraints would be subject to land management requirements;  
• coupled support for livestock would be targeted at extensive systems;  
• support would be screened to avoid poor adaptation. 
13 COWI, p.240-241. 

13 

 
 
 
 
 
                                                 
3.1.1  The Common Agricultural Policy 

The possibility to enhance carbon sinks through afforestation, sustainable forest management, 
agro-forestry,  soil  conservation,  appropriate  management  of  carbon  stocked  in  carbon-rich 
soils, gives farmers and foresters a particular role to play.  
Farmers use around 40% of the total EU land area for the production of agricultural products, 
while forests  and  other  wooded  land  cover  over 43.5%14 of the EU’s  land space. The CAP 
supports around 6.7 million beneficiaries across the European Union, representing around 85% 
of EU farmland15. 
For this portion of land, the CAP provides a wide range of support policy instruments that can 
help encourage climate mitigation, protection, and enhancement of some carbon sinks. Under 
the  current  CAP  for  example,  in  2019  51.7 million hectares  of  permanent  grassland  were 
covered through direct payments and 77.7 million hectares corresponding to 74% of the EU 
arable land fell under the obligation for crop diversification. At the end of 2020, the overall 
expenditure  to  support  afforestation/creation  of  woodland  and  the  establishment  and 
maintenance  of  agro-forestry  systems  amounted,  respectively,  to  EUR  121 199 081  and  to 
EUR 3 501 516. 
Under the reformed CAP (2023-2027), based on a new delivery model16, the Member States 
will  have  a  larger  flexibility  in  designing  their  support  schemes  by  combining  the  different 
policy instruments within their national CAP Strategic Plans. The green architecture under the 
new  CAP  provides  for  different  tools  to  support  climate  and  environmental  objectives,  i.e. 
enhanced conditionality and eco-schemes as Pillar  I direct payments and rural development 
(RD) interventions in the context of Pillar II. 
The CAP will benefit from a budget of EUR 387 billion from two main funds: the European 
Agricultural  Guarantee  Fund  (EAGF)  that  allocated  EUR  291.1  billion  for  Pillar  I  and  the 
European Agricultural Fund for Rural Development (EAFRD) that, including Next Generation 
EU funding, will make available EUR 95.5 billion for RD interventions17. 

The  conditionality  defines  the  basic  standards  including  obligations  of  good  agri-
environmental conditions (GAEC). Several GAECs contribute directly to climate mitigation, 
with  main  objectives  on  the  GAEC  referring  to  preserving  carbon  stock  (GAEC  1  - 
Maintenance of permanent grassland), protection of carbon-rich soils (GAEC 2 - Protection of 
wetland  and  peatland),  and  maintenance  of  soil  organic  matter  (GAEC  3  -  Ban  on  burning 
arable stubble). Other GAECs, even if not explicitly mentioning climate-relate objectives, will 
have beneficial effect on soil organic carbon (GAEC 5 - Tillage management reducing the risk 
of soil degradation; GAEC 6 – “Minimum soil cover to avoid bare soil in periods that are most 
sensitive;  GAEC  7  -  Crop  rotation  in  arable  land,  except  for  crops  growing  under  water). 
GAECs on landscape features will also represent an opportunity to increase storage of carbon 
in biomass (GAEC 4 - Establishment of buffer strips along water courses; GAEC 8 - Minimum 
share of agricultural area devoted to non-productive features or areas). 
The respect of these basic standards is based on a sanction system that reduces the payment. 
Member States need to set their own sanction system. In the CAP 2023-2027, Member States 

14 https://ec.europa.eu/eurostat/documents/3217494/12069644/KS-FK-20-001-EN-N.pdf/a7439b01-671b-80ce-
85e4-4d803c44340a?t=1608139005821. 
15 https://www.eca.europa.eu/Lists/ECADocuments/SR17_21/SR_GREENING_EN.pdf; 
https://ec.europa.eu/info/sites/default/files/food-farming-fisheries/key_policies/documents/factsheet-newcap-
environment-fairness_en.pdf 
16 The new delivery model creates a shift from a compliance-based to a performance-based governance system. 
17 https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultural-policy/new-cap-2023-
27_en 

14 

 
 
                                                 
can define their GAECs to better address their specific needs and situations on the ground so 
as to improve their effectiveness. 

Eco-schemes are a new instrument introduced by the reformed CAP, constituting payments per 
hectare granted to farmers who undertake practices contributing specifically to environmental 
and climate objectives. The payment may either (i) compensate the additional costs linked to a 
given practice and the income foregone, or (ii) consist of an incentive payment additional to 
the  basic  income  support.  It  can  also  cover  transaction  costs.  Eco-scheme  payments  are  in 
principle granted on an annual basis (but multiannual payments can be set up by the Member 
States for environmental purposes) and only to agricultural area eligible for direct payments. 
As  CAP  direct  payments  are  made  up-front,  eco-schemes  generally  qualify  as  action-based 
schemes. Farmers will be paid for undertaking certain practices, i.e. actual carbon sequestration 
or emission reduction effects inherent to those practices will not constitute the basis for the 
payment.  The  possibility  to  use  either  forms  (incentive  payments  or  cost  incurred/income 
foregone) for the calculation of the payment gives Member States enough flexibility to build 
tailored  supporting  schemes  with  a  range  of  eligible  agricultural  practices  beyond 
conditionality. In order to help Member States when dealing with this new support instrument, 
the Commission published a list of potential agricultural practices that can be financed as eco-
schemes under the CAP 2023-202718.  

Within  the  rural  development  interventions,  payments  for  environmental,  climate  and  other 
management  commitments  include,  among  others,  agri-environment-climate  commitments, 
support for organic farming and forest-environment-climate commitments. Support is granted 
for practices going beyond the baseline of legal requirements. Support for agri-environment-
climate  commitments  and  organic  farming  are  granted  per  hectare.  Depending  on  the 
intervention, agricultural land also beyond agricultural area eligible for direct payments and 
non-agricultural land can be supported. Payments are linked to multiannual commitments, but 
exceptions are possible: a longer period for commitments can be determined if this is necessary 
to achieve and maintain certain environmental benefits (e.g. commitments aimed at changing 
the land use from arable into nature conservation, such as creating a wetland ecosystem; or the 
maintenance of afforested areas). A shorter period is possible e.g. for the conversion to organic 
farming. Even though it is possible to establish periods for commitment that are longer than 
the period covered by the CAP Strategic Plans, the length of this period can be relatively limited 
compared to the potential timeframe required in case of carbon management. 
Payments are calculated based on the costs incurred and income foregone resulting from the 
commitments made, taking into account the targets set. Thus, payments take typically the form 
of an action-based scheme that can be complemented by the financing of transaction costs. In 
addition, Member States will have the possibility to promote and support result-based payments 
schemes to encourage beneficiaries to better deliver on climate action. Carbon farming could 
be supported through such a result-based approach. In such scenario, payments could be based 
on additional costs and income foregone of the hypothetical farming practices which would be 
necessary to achieve the results expected, leaving freedom for land managers to choose the 
management practices needed to achieve the results. Result-based approaches could also be 
combined with action-based schemes, e.g. a scheme with management requirements offering a 
bonus payment in case of achievement of results, or follow a “progressive” approach, whereby 
results to be achieved in the first year are lower, going up progressively over the years. Other 
schemes  use  thresholds  or  point  scales  according  to  which  beneficiaries  achieving  higher 
results receive additional payments. 

18 https://ec.europa.eu/info/news/commission-publishes-list-potential-eco-schemes-2021-jan-14_en#moreinfo.  

15 

 
 
 
                                                 
RD interventions can also support investments for afforestation (as well as forest management 
measures and commitments), and the establishment and regeneration of agro-forestry systems, 
non-productive  investments,  e.g.  for  the  restoration  for  wetlands  and  peatlands,  and  a  wide 
range of horizontal measures such as: 

-  advisory services, 
-  knowledge exchange,  
- 
training actions,  
-  collective and cooperation approaches and innovation actions, 

which are useful to promote the early involvement of land managers, promote the uptake of 
carbon farming and create synergies among different stakeholders. 

The  described  CAP  instruments  can  be  combined  for  increased  climate  effects  or  to  better 
target specific land issues. Land managers would have for example the possibility to combine 
RD  support  for  non-productive  investments  and  agri-environmental-climate  commitments: 
where non-productive investments support is provided to establish landscape features such as 
hedges or stonewalls but also wetland, support for agri-environmental-climate commitments 
would  cover  income  foregone  and  additional  costs  linked  to  multi-annual  management 
commitments carried out on those features in view of ensuring their further benefits for the 
environment (for instance no input around wetland to create valuable biotope). Wetland and 
peatland rewetting  could  also take the form of an eco-scheme  that  could  be combined with 
payments under RD interventions to cover the income foregone and the costs of losing arable 
land coming from drained peatlands/wetlands for its reconversion to its original status. 

In  its  recommendations  on  the  CAP  Strategic  Plans19,  the  Commission  highlighted  the 
measures that look more promising to achieve the mitigation potential in each Member State. 
Member States will have to ring-fence at least 25% of their direct payments budget for eco-
schemes and allocate at least 35% of RD funds to measures supporting climate, biodiversity, 
environment and animal welfare. Overall, 40% of the CAP budget is expected to contribute to 
climate-related objectives. 

The new CAP is particularly adapted for ensuring a basic protection of existing carbon sinks, 
such as carbon-rich soils with grasslands and peatlands, through the new list of GAECs, the 
possibility  to  target  them  to  local  needs  and  conditions,  and  the  combination  with  other 
voluntary interventions. The sanction system based on conditionality would ensure that farmers 
are  applying  the  requirements  set  in  the  GAECs,  without  the  additional  MRV  burden  for 
Member States in terms of costs and measurement obligations. 
Eco-schemes and RD payments can encourage the increase of carbon stocks and protection of 
sinks beyond the conditionality20. By being able to choose different forms of support for the 
calculation of the payment, Member States  can design  tailor-made  carbon farming schemes 
including  relevant  agricultural  practices  to  respond  to  local  farming  and  agro-economic 
conditions. This is of particular importance when the rewarding price for carbon on voluntary 
markets is not high enough to ensure that all costs or yield losses are covered. In this case, the 
support of the CAP is fundamental to ensure that practices are implemented. 

19 https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultural-policy/cap-strategic-
plans_en#cap-strategic-plans-recommendations. 
20 For example, for sinks that reached saturation. 

16 

 
 
 
 
 
 
 
                                                 
Nonetheless, CAP support has also some intrinsic limitations. Firstly, a certain portion of land 
which is not eligible for CAP payments will remain uncovered, especially woody areas and 
peatlands or wetlands which are not managed by farmers, even though certain management 
commitments under RD can also be carried out by non-farmers (other land managers, e.g. forest 
managers, NGO, municipalities). The effect of practices that increase carbon stocks is hardly 
evident in the timeframe of the CAP. Moreover, the EU farming system is extremely diversified 
while verification of compliance is only done on a sample not resulting in reliable estimations 
of credits. Furthermore, it would still require to be planned with the involvement of farmers 
and  national  authorities,  adding  administrative  burden.  In  addition,  liability  against  carbon 
reversal  is  difficult  to  implement  within  the  CAP  legislative  framework  considering  its 
timeframe  and  that  possible  estimations  of  carbon  sequestered  would  only  serve  for  policy 
monitoring purposes at EU level, with the exception of specific result-based schemes within 
individual CAP Strategic Plans. This would not be sufficient to ensure contractual guarantees 
for  carbon  credits  to  be  sold  on  the  markets.  The  legal  framework  and  administrative 
arrangements underpinning the implementation of the CAP may pose limits to the design of 
essential elements such as MRV, governance, liabilities, carbon registers, targeted services etc., 
which  in  addition  may  risk  imposing  an  excessive  administrative  burden  for  management 
authorities. The control and sanction system21 foreseen for CAP payments cannot ensure the 
level of accuracy, liability and responsibility required for the selling of carbon credits on the 
markets,  as  the  contractual  conditions  required  for  generating  carbon  credits  would  be 
constrained by the CAPs specific legal, financial and administrative arrangements.  

3.1.2  Support under other EU funds 

Carbon farming can be supported also through EU programs that can for example finance the 
costs related to monitoring, reporting and verification aspects, or pilot and research projects 
that  improve  the  effectiveness  of  carbon  farming  and  foster  collective  and  cooperative 
approaches.  Particularly  relevant  for  upscaling  carbon  farming  elements  is  research  and 
innovation, that can be supported under Horizon Europe. In the light of the potential of future 
initiatives under Horizon Europe for improved technologies for MRV, opportunities under this 
program have been described in section 3.2.2 below. 

LIFE budget can complement CAP funding, for instance to help set up and run the necessary 
governance pillars (advisory systems, methodology development, partnership building), or to 
test and pilot local initiatives that can then be scaled up via the CAP. The Commission is setting 
a main focus on carbon farming in the annual calls for projects: 

-  CARBON Farming22, testing a result-based mechanism in mixed crop livestock systems 
with the objective to reduce the carbon footprint of the project agricultural products by 15% 
in  6  years,  with  attention  to  monitoring,  reporting  and  verification  as  well  to  training, 
advisory and knowledge needs;  

-  Carbon Farming  Scheme23, testing an  incentive scheme enabling the  trading of removal 

certificates; 

21 Integrated Administrative and Control Systems of Member States (see section 3.2.1). 
22 https://webgate.ec.europa.eu/life/publicWebsite/project/details/5567 
23 https://www.st1.com/st1-life 

17 

 
 
 
 
 
  
                                                 
-  CO2PES&PEF24,  promoting  the  enhancement  of  forest  systems  through  different 

ecosystem services to increase carbon stocks; 

-  +REB25 intended to provide and implement a  new  climate forestry in the  oak forests of 
Castile  and  León,  to  enhance  removals  in  forests  and  wood  products  (expected  510 
tonnes/year of CO2 sequestered during 4 years), at the same time enhancing adaptation and 
biodiversity;  

-  MULTI PEAT26 aimed at restoring or improving 689 hectares of degraded peatlands and 

at developing strategies for paludiculture and its practical implementation; 

-  3 dedicated preparatory projects to start in 2021 focusing on better monitoring tools. 

Cohesion funds and in particular the Just Transition Fund support the social, economic, and 
environmental  challenges  of  Member  States  stemming  from  the  phasing  out  of  fossil  fuel-
related activities or decarbonising GHG-intensive processes or products. As the Just Transition 
Fund will support regions relying heavily on peat extraction in their transition away from fossil 
fuels,  this  could  a  relevant  instrument  for  example  for  the  restoration  and  conservation  of 
peatlands, which is one of the most effective carbon farming options. 
Several transnational INTERREG projects were co-founded through the European Regional 
Development Fund, some which have a clear focus on carbon farming: 
-  North Sea Region Carbon Farming27 developed four carbon farming business models with 
a view to supporting farmers’ participation: within the agri-food chain, outside the agri-
food chain, at farm level and including public institutions; 

-  North-West  Europe  Carbon  Connects28  supports  the  shift  towards  low  carbon  land 

management practices in the European North-West peatland regions. 

-  Geco229  introduces  innovative  measures  to  monitor  and  offset  CO2  emissions  through 

effective cross-border cooperation. 

3.1.3  State aid 

Member  States  might  consider  supporting  carbon  farming  initiatives  through  pure  national 
financing, i.e. State aid, to reduce net GHG emissions from the land use sector and meet targets 
under the LULUCF Regulation.  
EU  competition  rules  require  Member  States  intending  to  grant  aid  to  either  notify  the 
Commission  with  their  State  aid  schemes  or  to  cover  their  aid  through  a  block-exemption 
regulation3031. 

24 https://lifeco2pefandpes.eu/en/objectives/ 
25 https://webgate.ec.europa.eu/life/publicWebsite/project/details/5565 
26 https://webgate.ec.europa.eu/life/publicWebsite/project/details/5563 
27 https://northsearegion.eu/carbon-farming/ 
28 https://www.nweurope.eu/projects/project-search/cconnects-carbon-connects/ 
29 https://www.italy-croatia.eu/web/geco2 
30 Whenever the Commission has sufficient experience, it can adopt block-exemption regulations that exempt 
the given aid from the formal notification procedure with the consequence that block-exempted aid only needs 
to be submitted to the Commission, without the necessity of a formal approval decision. 
31 Member States can also grant de minimis aid under certain conditions. However, such funding, in the light of 
the lack of impact on competition and trade, is not considered to be State aid. 

18 

 
 
 
                                                 
The  existing  instruments  for  the  agricultural  and  forestry  sectors  are  the  European  Union 
Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 202032 
and the agricultural block-exemption regulation33. 
This State aid framework has already tools in place to contribute to environmental and climate 
performance. The aid measures that are particularly relevant for Member States to support their 
increased climate ambition are indicated in the table below34. 

Agriculture 

Forestry 

Investment aid for: 
- 
- 

sustainability of agricultural holdings 
improvement of the natural environment, 
hygiene, and animal welfare standards, beyond 
Union standards 
infrastructure related to supply and saving of 
energy and water 
achievement of agri-environment-climate 
objectives, including biodiversity, Natura 2000 
and other high natural value systems. 

- 

- 

Aid for agri-environment-climate commitments 
and animal welfare commitments 
Aid for disadvantages related to Natura 2000 and 
Water Framework Directive 
Aid for organic farming 
Aid for cooperation for joint actions undertaken 
with a view to mitigating or adapting to climate 
change 

the 

the 

and 

resilience 

Investment aid for: 
- 
- 
- 

afforestation and creation of woodland 
agro-forestry systems 
improvement  of 
environmental value of forests ecosystems 
Aid for disadvantages related to Natura 2000 
forest areas 
Aid for forest-environment, climate services and 
forest conservation 
Aid for maintenance and restoration of forest 
ecosystems, biodiversity, and traditional 
landscapes 
Aid for maintenance and improvement of soil 
quality and balanced and healthy tree growth 
Aid for restoration and maintenance of natural 
pathways, landscape elements and features and 
natural habitat for animals 
Aid for cooperation for joint actions undertaken 
with a view to mitigating or adapting to climate 
change 

Non-agricultural activities in rural areas 

Aid for agri-environment-climate commitments to land managers not active in agriculture 
Aid for disadvantages related to Natura 2000 areas to land managers not active in agriculture 
Aid for cooperation for joint actions undertaken with a view to mitigating or adapting to climate 
change 

State aid rules apply in principle to agriculture and forestry also with regard to CAP support. 
With  regard  to  agriculture,  the  legislator  has  nonetheless  decided  that  payments  to  farmers 
included  in  RD  programs  (and  the  future  CAP  Strategic  plans)  do  not  require  a  further 
assessment  by  the  Commission.  On  the  contrary,  any  aid  for  forestry  measures  regardless 
whether funded as pure national financing or in the CAP Strategic plans, must be approved or 
block-exempted by the Commission (State aid clearance). 

32 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02014XC0701(01)-20181109 
33 Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the 
agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 
107 and 108 of the Treaty on the Functioning of the European Union (OJ L 193 of 1.7.2014, p.1). 
34 Evaluation of the instruments applicable to State aid in the agricultural and forestry sectors and in rural areas 
(SWD(2021) 107 final of 11.5.2021). 

19 

 
 
 
 
 
 
                                                 
Member States have been widely using State aid to support schemes with green objectives35. 
Nonetheless,  there  is  scope  for  strengthening  the  incentives  for  farmers  and  foresters  to 
undertake carbon farming practices. 
The current State aid framework for the agricultural and forestry sectors does not cover result-
based  schemes  for  carbon  sequestration  and  storage.  Climate-friendly  practices  on  soil  and 
forest  management  that  can  qualify  as  carbon  farming  could  be  supported  through  the  aid 
measures indicated in the table above, in particular through aid for agri-environment-climate 
commitments,  aid  for  forest-environment,  climate  services  and  forest  conservation  or 
investment aid for afforestation and creation of woodland, for agro-forestry systems or for the 
improvement of the resilience and the environmental value of forests ecosystems. However, 
these  measures  proved  not  to  be  sufficient  to  create  the  necessary  incentives  to  support 
adequately  climate  action36.  Aid  for  agri-environment-climate  commitments  and  for  forest-
environment, climate services and forest conservation is currently limited to compensation of 
the income foregone and the additional costs that land managers incur for undertaking climate-
friendly activities, without any incentives going beyond such compensation. 
The revision of the current agricultural and forestry State aid rules that must enter into force at 
the beginning of 2023 is an opportunity to address the implementation challenges described 
above. The introduction in the Guidelines of aid for result-based schemes in the agricultural 
and  forestry  sectors  can  support  the  development  of  carbon  farming  initiatives,  leading  to 
financial opportunities for  its actors. Through  these new possibilities  public authorities will 
have targeted tools to contribute to their climate goals or to provide State aid clearance to result-
based approaches in co-financed forestry schemes. 
The  extension  of  the  scope  of  the  agricultural  block-exemption  regulation  to  cover  forestry 
measures financed by pure national money, or the possibility under the Guidelines of incentive 
payments for forest-environment and climate services could furthermore create an additional 
leverage effect to support carbon farming. 

3.1.4  Combined approaches for carbon farming  

While private markets are a clear avenue for the setting up of pure result-based schemes, their 
effectiveness  and  long-term  price  stability  depend  on  proper  support  from  either  private  or 
public sources. Based on the analysis of existing private initiatives, result-based carbon farming 
schemes without some form of ex-ante payments  to  land managers seem unlikely to attract 
sufficient uptake. To that end, public and private funding instruments can be combined to create 
stronger incentives and a synergic approach to address the limitations or weaknesses linked to 
a specific funding instrument.  
To  find  the  optimal  combination  of  support,  it  is  important  to  take  into  consideration  the 
objective of the scheme: whether it is aimed at carbon sequestration or emission reductions will 
likely  influence  the  choice  of  the  most  suitable  financing  instrument.  Another  element  to 

35 For instance, in the period July 2014 to August 2020, Member States notified or exempted 62 measures for 
agri-environment-climate commitments, 35 measures for forest-environment climate services and 55 measures 
for afforestation. These three categories of State aid measures alone disbursed in the period 2014-2018  EUR 1 
315 million, representing some 8% of total State aid expenditure under the current rules in this period 
((SWD(2021) 107 final of 11.5.2021, p.28). 
36 During the public consultation to support the “Evaluation of the instruments applicable to State aid in the 
agricultural and forestry sectors and in rural areas” (SWD(2021) 107 final), around 60% of respondents 
considered climate change mitigation and adaptation to be objectives pursued by the granting of State aid of 
very high importance, whereas only 36% of respondents found that aid to the agriculture sector had until present 
contributed to climate change mitigation and/or adaptation. 

20 

 
 
 
                                                 
consider are the limitations of the different sources of financing, in order to target support to 
cover the different necessary elements of a carbon farming scheme in the most effective way.  
As  mentioned  in  section  3.1.1,  the  reformed  CAP  has  the  potential  to  incentivize  carbon 
sequestration and to ensure the protection of sinks that reached saturation, e.g. after some years 
in a carbon accumulation scheme. However, with regard to result-based farming schemes, the 
CAP poses several limitations linked to its duration and lack of the necessary mechanisms to 
ensure a high degree of robustness, reliability, verification, and liability to prevent reversal of 
sequestered  carbon.  Result-based  carbon  farming  requires  also  a  more  sophisticated 
governance  and  service  infrastructure,  which  the  CAP  may  help  to  set  up  but  not  entirely 
ensure. 
State aid financing or private carbon farming initiatives can offer additional and, in some cases, 
more  performing  mechanisms.  Additional  revenues  from  carbon  markets  or  higher  budget 
under State aid can make an important difference.  

Example of different support avenues – The Danish peatland schemes 

DK peatland restoration and rewetting 
Primary  objective  is  to  reduce  CO2e  emissions  from  carbon  rich  organic  soils  through  the  rewetting  and 
restoration of soils with > 6 % organic carbon. 
Potential: total area of cultivated organic soil in Denmark: 170.000 ha = 7 % of the total cultivated area. 
The Government proposal towards 2030 is to restore, rewet or set aside at least 100 000 ha of carbon rich peat 
soils for an expected climate effect of 0,8m tons CO2e in 2030. 
Landowners are compensated for the loss of income through different instruments: 
(a)  CAP RD support 
(b)  Two schemes 100% financed under State aid (SA.57978 (2020/N) and SA.58791 (2020/N) 
(c)  Climate-Forest Fund financed through national funds. 

The CAP, private schemes and State aid can act in complementary mode. This will have the 
effect of reducing risks for land managers which is crucial to increase uptake. As highlighted 
in section 2, this could be achieved through different strategies, e.g. through the use of hybrid 
schemes, where land managers receive a basic action-based payment for employing climate-
friendly management practices (be it under the CAP or State aid) and an additional result-based 
payment if climate benefits can be demonstrated; or else through a combination of payments 
under CAP RD interventions or State aid and result-based revenues coming from the sale of 
credits on private markets, after addressing double-funding concerns.  

21 

 
 
 
 
 
Example of result-based private/public carbon farming scheme – The French Label Bas Carbone 

The Label Bas Carbone (Low Carbon Label) is an arm of French Ministry of Ecological 
Transition that provides a transparent framework for funding local projects to reduce GHG 
emissions  and  increase  carbon  removals,  by  rewarding  behaviors  that  go  beyond  usual 
practices. Projects that on a voluntary basis ensure such additionality, but also quality and 
environmental integrity, can be offered guarantees and direct financing.  
To  benefit  from  the  Label,  projects  must  refer  to  a  method  previously  approved  by  the 
Ministry. So far, 11 methodologies have been developed, out of which 3 for forestry and 6 
for agriculture. They specify for a given type of project how the baseline is to be determined 
and how the emission reductions/removals are to be calculated. Approved methodologies 
provide  for  different  durations  of  the  responsibility  window.  Emissions  reductions  are 
calculated for the entire period of the project, but they are issued by anticipation at year 5 
when a verification is performed by an independent third party. The results achieved through 
the  projects  are  then  certified  and  recorded  in  the  dedicated  register,  where  they  can  be 
accessed by the potential private funders. 
Approved methodologies also introduce discounts that can be applied at each step of the 
calculation to compensate for different uncertainties, whether they are related to the lack of 
data, additionality or to address the risk of non-permanence. 

CAP support or State aid would hence constitute a fundamental source of financing to cover 
the  costs  of  setting  up  a  carbon  farming  scheme  including  investments,  targeted  advisory 
services,  collective  and  cooperative  approaches,  training  for  in-farm,  soil  sampling  and 
analysis,  transaction  costs,  investment  on  new  machinery,  measurements,  and  verifications 
costs of MRV tools that would facilitate land managers to enter in pure result-based carbon 
farming schemes. Land managers would then benefit from the revenues sold through private 
schemes that would provide the contractual requirements and guarantees, including governance 
and  trade  management  of  the  credits.  This  could  especially  be  justified  if  the  activities  for 
increasing the sinks are costly as compared to the rewards that the market may provide (when 
CO2  price  is  still  low).  Due  to  the  time  needed  to  generate  and  correctly  measure  carbon 
removals, the different forms of CAP support will be decisive in order to support farmers and 
foresters in building up their carbon removal business. 
In all cases where different sources of finance are being used it is important to avoid double 
funding, for example when a result-based carbon farming scheme is operating in parallel with 
another environmental land management scheme, since an individual management action may 
have  multiple  benefits  and  might  be  rewarded  through  more  than  one  scheme.  The  CAP 
architecture  provides  for  strict  requirements  for  cross  checks  to  avoid  double  funding  on 
schemes run using CAP funding. Similarly, State aid financing is subject to rules on cumulation 
so that even for combined support any double funding should be avoided. 
In  light  of  the  above,  it  is  possible  to  conclude  that  there  exists  an  important  financial 
complementarity and a high potential for synergies between CAP support, private schemes, 
and State aid for carbon farming initiatives. The CAP or State aid can create the right conditions 
for a private scheme to develop, help wider land managers’ uptake, secure their long-lasting 
engagement, and help operate more conveniently and efficiently.  

Synergies of funding under the CAP, private carbon farming initiative and State aid  

Design elements 

CAP 

Private markets 

State aid 

22 

 
 
 
 
 
 
 
Governance 

CAP structure  

Eligibility 

Payments 

Monitoring Reporting 
Verification 

Baseline 

Permanence 

Limited to CAP rules on 
eligible lands and 
beneficiaries 

Hectare-based payments, 
cost incurred and income 
forgone. Practices can be 
used as proxy for the 
quantification of carbon 
sequestered. 
Possibility for result-
based payments under 
Rural Development.  
Not possible to have a 
homogeneous payment 
system across the EU.  
Limited in setting robust 
MRV for result-based 
payments and the 
estimation of carbon 
credits. 
Verification capacity is 
limited. 
Possibility to support the 
use of MRV tools, 
knowledge transfer, soil 
analysis, transaction 
costs. 

Based on practices, 
defined by conditionality 
and the payments for 
eco-schemes and rural 
development.  
Eco-schemes and RD can 
set multiannual contracts 
within the CAP 
programming period. Not 
possible to establish long 
periods with liabilities. 

Possibility to put in place 
several and suitable 
governance structures 
and build a chain of 
service suppliers 
All lands, potentially also 
other actors, such as 
public and private forest 
owners 
With a regulation in 
place, homogeneous 
system across the EU 

More flexible than under 
the CAP, but has to 
follow State aid 
procedures  

Flexibility allowed 
through EU ex ante 
checks 

Result-based payments 
for carbon units 
sequestered.  
Budget allocated can be 
higher than under the 
CAP. 

Robust MRV system is 
possible. Carbon credit 
calculations are basic 
requirements and 
embedded in private 
schemes. 

Possibility to combine 
support for the use of 
MRV tools as aid for 
knowledge transfer with 
aid to cover MRV as 
transaction costs. 
Verification to take place 
through annual reporting   

Can be assessed by the 
definition of carbon 
fluxes at the beginning of 
the scheme.  

Based on practices, rules 
mirror CAP 
conditionality  

Ensure long-term 
permanence in line with 
standards. 
Include mechanisms to 
deal with intentional and 
unintentional carbon 
reversals 

Limitation to multi-
annual payments up to 
the duration of the State 
aid instrument (normally 
seven years) 

3.2  Improving  monitoring,  reporting  and  verification  (MRV)  methodologies, 
data management and tailored advisory services to land managers  

Providing land managers with improved knowledge, tools and methods for a better assessment 
and optimisation of the carbon benefits is key for cost-efficient implementation of mitigation 
action and to securing  their  engagement in  carbon farming. This is particularly relevant for 
European small farmers or forest holders that often lack know-how and expertise for adjusting 
their  businesses,  face  important  administrative  burdens  and  the  complexity  of  required 
measurements  and  monitoring.  The  CAP  and  State  aid  can  finance  advisory  services, 

23 

 
 
 
 
 
knowledge  exchange,  training,  information  actions  or  interactive  innovation  projects  with 
farmers and foresters.  
A strengthened Agricultural Knowledge and Innovation Systems (AKIS) will be part of the 
new  CAP  Strategic  Plans.  It  will  gain  from  the  links  among  research,  innovation  and 
knowledge-sharing  under  the  Horizon  program  and  the  CAP  with  the  European  Innovation 
Partnership  for  agricultural  productivity  and  sustainability  (EIP-AGRI)  and  its  growing 
numbers of Operational Groups and Focus Groups, some of them already testing and analysing 
carbon farming elements. In this context, Member States must ensure advice and knowledge 
transfer on a broad number of domains, including environmental ones which may serve for the 
purpose of carbon farming. 
Such EU and national financing can also support cooperation approaches and the establishment 
of  producer  organisations  that  could  facilitate  the  provision  of  relevant  knowledge  through 
technical advice to their members.  

3.2.1  Boosting user-friendly tools and database integrations 

User-friendly  on-farm  calculation  tools  have  great  potential  for  helping  land  managers  to 
engage  in  carbon  farming  schemes.  Such  tools  facilitate  MRV,  detect  areas  with  high 
mitigation potential (by emission reduction or enhanced removals) and assist in selecting the 
most  appropriate mitigation  strategy.  They  integrate  existing  databases,  compare  the  land 
manager’s  performance  against  past  averages  or  common/default  benchmarks,  and 
facilitate tailor-made expert  advice.  Moreover,  methodologies  and  data  improvement  often 
proved to be a significant factor to affect changes in the land sector. 
Carbon farming support tools and MRV systems should be based on existing data sets, surveys, 
inventories and tools.  Target developments, such  as higher  granularity  of data in space and 
time, for carbon budget accounting or monitoring land management practices may be needed. 
By  implementing  carbon  farming  this  way  the  Commission  ensures  a  cost-effective 
implementation via two avenues: 

 

the  overall  development  costs  are  lowered  as  carbon  farming  benefits  from  already 
existing data and tools with no additional investments but additional benefits for carbon 
farming land managers; 

  developments or improvements specifically made for carbon farming, e.g. with regards 
to  granularity  and  accuracy  could  also  feedback  to  existing  policies,  such  as  on 
improving GHG inventories of Member States, and possibly into new ones, thus trigger 
cross fertilization among different policy fields with shared additional investments. 

Under  the  reformed  CAP,  Member  States  will  need  to  implement  by  2024  the  Farm 
Sustainability  Tool  for  nutrients  (FaST)  within  the  elements  covered  by  Farm  Advisory 
Services.  The  Commission  may  provide  support  to  the  Member  States  in  the  design  of  the 
FaST,  in  order  to  ensure  a  level  playing  field  between  farmers  and  across  the  Union.  The 
Commission is working on the integration of a module for the calculation of GHG balance at 
holding level, complementing the assessment of the nutrient balance. 
Besides  improving  the  accuracy  of  inventory  data,  digital  technology  will  be  essential  to 
develop  granular  and  site-specific  monitoring  of  carbon  farming  actions.  For  example,  the 
period  that  carbon  is  stored  in  soils  and  plants  is  an  important  prerequisite  in  ensuring 
permanence of the mitigation measure. In particular EU SMEs will play a critical role in the 

24 

 
 
 
 
continued  development  of  tools  and  services  for  carbon  farming  monitoring  and  providing 
innovative solutions for agricultural monitoring overall. 
Several tools are available or under development that could improve the quality and further 
reduce  overall  MRV  costs.  For  agricultural  land  falling  under  the  scope  of  the  CAP,  the 
Member States are required to establish and operate an integrated system, known as Integrated 
Administration and Control System IACS (notably the geospatial aid application used by the 
CAP  beneficiaries)  to  manage  and  control  CAP  payments.  It  provides  for regular  and 
systematic observation, tracking and assessment of agricultural activities and practices and the 
monitoring using Copernicus Sentinels (or other, equivalent) satellite data (currently known as 
Checks by Monitoring and as Area Monitoring System in the next CAP).  
This specifically includes geographically explicit data of agricultural parcels in Member States, 
the Land Parcel Identification System or LPIS, and geospatial aid application (GSAA). The 
systems as a whole are a very strong database that should serve the implementation of carbon 
farming and its MRV. The Commission will continue through the IACS data sharing exploring 
with  Member  States  new  ways  to  solve  interoperability  issues  and  facilitate  relevant  data 
sharing across the EU37. 
The Land Use and Coverage Area frame Survey (LUCAS), a Commission initiative, is the first 
systematic  sampling  of  soil  organic  carbon  across  the  EU.  It  applies  one  a  harmonized 
methodology  with  an  approximately  three-year  revisit  cycle  which  holds  the  potential  to 
spatially extrapolate soil carbon with a good approximation and could serve to assess trends 
and developments when more measurements become available. 
Moreover, the Commission will continue its support to develop remote sensing-based methods 
for annual monitoring of greenhouse gas emissions and removals from land. This work will 
have the potential to improve for example mapping and monitoring of peatland and wetland 
areas, thus contributing to the implementation of carbon farming on such highly priority areas 
for climate and biodiversity.  
Peatlands and organic soil areas, in particular, are not evenly distributed across the EU, and 
many  countries  do  not  have  recent  soil  mapping  information.  Therefore,  before  making 
decisions  on  fallowing  organic  soils,  first  reliable  soil  information  must  be  obtained.  In 
Member States where soil mapping has not been conducted recently, old soil data can provide 
wrong information as the organic soil might be oxidized already.  
Nonetheless,  the  role  of  Member  States  in  improving  monitoring  on  the  ground  remains 
important, at least in the first years of monitoring system development for calibration purposes. 
As  part  of  the  Farm  to  Fork  strategy,  the  Commission  will  propose  to  convert  the  Farm 
Accountancy Data Network (FADN) into a Farm Sustainability Data Network (FSDN), with a 
view to expand the collection of data to also serve environmental policies such as assessing 
targets of the Biodiversity Strategy and supporting sustainability indicators. The initiated work 
for including more variables linked to environment and climate will provide the possibility to 
collect more activity data from representative farmers in the EU.  
Forest  monitoring  systems  mainly  build  on  field-based  observations  such  as  national  forest 
inventories  and  in  a  few  cases  also  specific  national  forest  soil  inventories.  Most  of  those 
systems are based on regular systematic sampling grids with revisits every 5 to 10 years. Forest 
inventories are then updated, either by adding new data annually, e.g. update 20% of the plots 
for a five-year revisit cycle, or once the revisit has been completed for all sites, i.e. after five 
years. Forest inventories and forest soil inventories measure a wealth of parameters ranging 
from general environmental conditions to specific elements on biodiversity and climate.  

37 The Commission launched the ‘IACS data sharing under INSPIRE process’ to ensure better discoverability, 
efficient access (single entry point) and effective re-use of spatial IACS data (interoperability and use cases) in a 
coherent policy environment. 

25 

 
                                                 
On-site visits, sampling, parameters assessment possibly followed up with laboratory analysis 
make  such  systems  inherently  expensive.  For  instance,  in  metropolitan  France,  the  national 
forest inventory directly mobilizes about 91 full-time jobs and represents an estimated budget 
between  EUR  8.2  and  10.4  million  (2020  campaign)38.  Such  elevated  costs  –  for  manifold 
applications  in  forestry,  including  the  forest  industry,  environmental  monitoring,  and 
ecosystem assessment with a multitude of societal benefits – and practical limitations make 
more  frequent  revisits,  e.g.  annual  revisit  of  all  plots,  prohibitive.  Besides  the  bottom-up 
measurements  taken  in  national  inventories,  top-down  approaches,  for  instance  by  remote 
sensing,  can  complement  forest  information.  High  frequency  image  acquisition  provides 
comprehensive and harmonized information about the state of the land and thus contributes to 
densifying information on forests in space and time. For instance, Copernicus39 Sentinel 2A 
and 2B revisit the whole globe every 5 days with a spatial resolution of 10m and acquiring 
information  in  the  optical  and  thermal  domain.  Radar  systems  like  Sentinel  1A  and  B 
complement  and  enrich  this  data  set  independent  of  atmospheric  conditions  and  have  the 
potential to reveal the forest structural parameters by penetrating the canopy.  
In many ways, the richness in such systems based on remotely sensed data holds an untapped 
potential for operational forest monitoring. Remote sensing can close the gap in the frequency 
for forest observation going from 5 to 10 year intervals in ground based inventories to annual 
data. Even more, remote sensing provides insights into the seasonal development of forests40 
and which may serve as an early warning for adverse effects or anomalies compared to the long 
term  average  conditions  or  as  a  means  to  assess  trends  in  seasonal  developments  as  a 
consequence of climate change or other regional drivers for a changing environment. Satellite 
imagery also provides a higher grid density (e.g. 10 m) through a coherent set of information 
across large areas (also known as wall-to-wall approach) compared to the distance of several 
km  between  ground-based  sampling  plots.  Linking  the  high  spatial  resolution  of  satellite 
imagery with ground based observation networks holds the potential to bring sample-specific 
information into space. 
The  uptake  and  use  of  remotely  sensed  information  for  timely,  operational  monitoring  lags 
behind  the  developments  in  the  agriculture  sector  under  IACS  and  GSAA.  Therefore,  the 
Commission strengthened the monitoring requirements in the proposal for a revised LULUCF 
Regulation41  and  announced  in  the  New  EU  Forest  Strategy  for  2030  its  intentions  to  put 
forward  a  legislative  proposal  on  EU  Forest  Observation,  Reporting  and  Data  Collection42, 
which would also enable carbon farming to benefit from inventory based and remotely sensed 
information. 

38 Commission Territories of the National Council for Statistical Information. Meeting on 20 May 2021. Fiche 
descriptive for an application for an opinion of opportunity. National Forest Inventory Survey. 
https://www.cnis.fr/wp-content/uploads/2021/01/Enqu%C3%AAte-Inventaire-forestier-national.pdf. 
39 https://www.copernicus.eu/en 
40 EEA vegetation phenology. 
41  Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 
2018/841 as regards the scope, simplifying the compliance rules, setting out the targets of the Member States for 
2030 and committing to the collective achievement of climate neutrality by 2035 in the land use, forestry and 
agriculture sector, and (EU) 2018/1999 as regards improvement in monitoring, reporting, tracking of progress 
and review (COM(2021) 554 final of 14.7.2021,  https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:52021PC0554). 
42 New EU Forest Strategy for 2030 (COM/2021/572 final of 16.7.2021, https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:52021DC0572)  

26 

 
 
 
                                                 
3.2.2  Role of research and innovation 

Research work is still necessary in several areas, such as measuring actual fluxes, deriving a 
diversified set of emission factors reflecting the complexity of the interaction between practices 
and local conditions, as well as integrating these factors and soil sampling in models. It will 
also be important to explore the potential of remote sensing and new measuring instruments, 
integrate  existing  local  databases  built  under  diverse  policy  contexts,  and  analyse  different 
methodologies in order to have a single, comprehensive monitoring and certification system 
for carbon farming in the Union. Furthermore, Innovation actions under Horizon Europe offer 
an opportunity for testing and demonstration of large-scale carbon farming projects within the 
Union territory. 

Horizon Europe’s research and innovation activities 

In  line  with  the  EU  Green  Deal  objectives,  Horizon  Europe  and  its  thematic  clusters,  in 
particular  Cluster  6  “Food,  Bioeconomy,  Natural  Resources,  Agriculture  and  Environment” 
and  Cluster  5  “Climate,  Energy  and  Mobility”,  will  support  research  and  innovation  (R&I) 
activities in the area of carbon sequestration and the preservation of carbon stocks. Targeting 
climate neutrality, they will help to deploy and optimise solutions based on ecosystems, while 
supporting  biodiversity  and  providing  renewable  resources  for  a  circular  and  sustainable 
bioeconomy. Horizon Europe will hence be a powerful tool in the upscaling of carbon farming 
as it will contribute to:  

 

 
 

the progress in the certification and authenticity verification of carbon removals from 
ecosystems;  
advancement in soil carbon stock changes monitoring, remote sensing and modelling; 
the creation of a knowledge platform intended to share information on relevant research 
activities  and  their  outcomes  concerning  methodologies  for  soil  carbon  balance 
monitoring, and practices increasing soil carbon;  

 

  promoting agroforestry as a sustainable farming practice that can foster climate change 
mitigation  and  carbon  sinks  in  the  primary  sector  (including  development  and 
demonstration of practical examples); 
increased forest-based carbon removals through forest management practices and uses 
of long-lived wood products;  
strengthening the ocean-climate nexus by reinforcing the understanding of the natural 
ocean carbon sinks and their potential;  
the  restoration  of  natural  wetlands,  peatlands,  and  floodplains,  through  rewetting  as 
well as paludiculture; 

 

 

  defossilisation  of  farming,  through  land-use  strategies  and  rewilding  landscapes  for 

carbon sequestration. 

The Work Programme for 2021-2022 of Horizon Europe’s Clusters 6 and 5 include several 
calls for carbon farming-relevant topics. This is the case for example of: 
-  HORIZON-CL6-2021-CLIMATE-01-04:  Demonstration  network  on  climate-smart 

farming – linking pilot farms; 

-  HORIZON-CL6-2021-CLIMATE-01-08:  Agroforestry  to  meet  climate,  biodiversity  and 

farming sustainability goals; 

-  HORIZON-CL6-2021-CLIMATE-01-09:  Enhancing  science-based  knowledge  on  the 

EU’s forests, including old-growth forests, capacities to mitigate climate change; 

27 

 
 
 
 
 
-  HORIZON-CL6-2021-BIODIV-01-05:  The  economics  of  nature-based  solutions:  cost-

benefit analysis, market development and funding; 
-  HORIZON-CL6-2022-BIODIV-01-06:  Monitoring 

agrobiodiversity; 

and 

effective  measures 

for 

-  HORIZON-CL5-2021-D1-01-08:  Restoration  of  natural  wetlands,  peatlands  and 
floodplains as a strategy for fast mitigation benefits; pathways, trade-offs and co-benefits; 
-  HORIZON-CL5-2021-D1-01-09: The contribution of forest management to climate action: 

pathways, trade-offs and co-benefits; 

-  HORIZON-CL5-2022-D1-01-03-two-stage:  Social  science  for  land-use  strategies  in  the 

context of climate change and biodiversity challenges; 

-  HORIZON-CL5-2022-D1-02-05:  Let  nature  help  do  the  job:  Rewilding  landscapes  for 

carbon sequestration, climate adaptation and biodiversity support. 

The Horizon Europe mission “A Soil Deal for Europe” creates a network of 100 living labs 
and lighthouses to lead the transition towards healthy soils by 2030. This goal is substantiated 
with  eight  specific  objectives  that  address:  soil  carbon  sequestration  and  protection,  soil 
degradation, the protection and restoration of soil ecosystems and soil biodiversity, soil sealing, 
pollution  and  erosion.  Innovations  in  carbon  farming,  soil  pollution  (including  pesticides) 
mitigation  and  restoration,  soil  biodiversity  and  the  circular  economy  will  be  given  special 
attention.  R&I  will  be  key  to  increase  the  understanding  of  basic  processes,  drivers  and 
mechanics that affect soils as well as to deliver solutions for more sustainable soil management.  
Carbon farming has been identified as a priority, therefore, the mission is well placed to fund 
R&I, testing and demonstrations in this area. More fundamental R&I on soils will support the 
emerging  carbon  farming  business  on  ecosystems  by  developing  robust,  ready-to-use, 
harmonised indicators and methods for carbon measuring, monitoring and certification as well 
as  supporting  the  development  of  incentives,  business  models  and  advisory  services.  As  a 
result,  the  development  and  tracking  of  low  carbon  products  across  value  chains  will  be 
enhanced.  

The Commission will work to set the focus on carbon farming also in the coming Soil Mission’s 
and Clusters 6 and 5’s Work Programmes, in particular the ones for 2022 and 2023-2024. 

The  proposed  European  Partnership  “Accelerating  farming  systems  transition:  agroecology 
living labs and research infrastructures”43 has an objective to consolidate a network of living 
labs  and  research  infrastructures  that  will  accelerate  the  transition  towards  agroecology 
throughout  Europe.  It  will  deliver  ready-to-adopt  tools  that  are  going  to  support  farmers  in 
understanding and implementing agroecological practices. The Partnership will start in 2023-
2024. 

The European Innovation Council‘s (EIC) Accelerator is a funding instrument associated with 
Horizon  Europe,  dedicated  for  SMEs  and  start-ups  that  develop  breakthrough  innovation 
projects  with  high  growth  potential,  which  is  associated  with  Horizon  Europe.  The  EIC 
Accelerator Challenge “Technologies for Fit for 55" supports the development and upscaling 
of sustainable agriculture to increase climate resilience, abate nitrogen and methane emissions 
and increase carbon stock in the soil. 

43 https://ec.europa.eu/info/research-and-innovation/research-area/agriculture-forestry-and-rural-
areas/partnership-agroecology_en  

28 

 
 
 
 
 
 
 
                                                 
European Innovation Partnership for agricultural productivity and sustainability (EIP-AGRI)   

The  European  Innovation  Partnership  for  agricultural  productivity  and  sustainability  (EIP-
AGRI)44 is a major policy and networking initiative designed to close the gap between research 
and practice and to speed up innovation on the ground. 

The  EIP-AGRI  is  based  on  an  interactive  innovation  model  which  promotes  collaboration 
between  various  actors  (farmers,  foresters,  entrepreneurs,  product  users,  consumers, 
researchers, etc.) to identify the end-users’ needs and make best use of complementary types 
of  knowledge  in  view  of  co-creation  and  dissemination  of  solutions  ready  to  implement  in 
practice. 

Around  300  Operational  Groups  (OG)  work  on  innovative  solutions  to  address  challenges 
related to soil management. EIP-AGRI's financial support to OGs working on soils in the period 
2014-2020  amounted  to  about  EUR  90  million  or  even  EUR  200  million  when  taking  into 
account projects focusing on fertiliser applications and nutrient management, or on land and 
landscape  management.  Under  the  CAP  2021-2027  the  number  of  OGs  dealing  with  soil-
related issues is expected to increase significantly. 

Several  OG  projects  focus  on  carbon  sequestration  and  storage.  Some  examples  are  listed 
below, but more information is available in the comprehensive EIP-AGRI Operational Groups 
database45.  

The Italian “Stream Management to increase Carbon stock in Soil-SMACS” targets optimizing 
the use of wood biomass to increase the carbon stock of agricultural and forest soils. 
The project “Accelerating  the  pathway to carbon  zero farming by measuring  and managing 
carbon  flows”  based  in  Northern  Ireland  focuses  on  producing  an  accurate  individual  net 
carbon  position  for  the  participating  farms,  using  a  whole  farm  carbon  balance  sheet  to 
articulate the results of the precise measurement of the on-farm carbon stocks. 

The Italian “Farm CO2Sink” project is intended to quantify the carbon sequestration potential 
at  farm  level  and  the  reduction  of  GHG  related  to  the  adoption  of  a  series  of  sustainable 
agricultural practices.  

The French “Carbone ‘N’ Caux” explores and develops various sustainable farming techniques 
to achieve a  positive carbon footprint. Along carbon sequestration, it strives to enhance  the 
understanding  of  the  interactions  between  carbon  and  nitrogen  in  the  soil  to  improve  input 
management, targeting a more autonomous system with optimized use of resources. 

Over  the  past  few  years,  the  EIP-AGRI  Network  has  furthermore  organised  several  events 
related to climate change  mitigation  and carbon  removals in the land sector. They included 
workshops, seminars, and dedicated Focus Groups on topics such as grazing for carbon, soil 
salinization,  soil  contamination,  soil  organic  matter  content  in  Mediterranean  regions  and 
nutrient recycling. 

44 https://ec.europa.eu/eip/agriculture/en 
45 https://ec.europa.eu/eip/agriculture/en/eip-agri-projects/projects/operational-groups 

29