Department European and International Public Law

Findings: Towards a regulatory framework for climate smart agriculture

Experiences carbon farming Australia

As a first step, we researched whether good regulatory practices can be found at domestic level in Australia under the Carbon Farming Initiative that facilitate the conversion to climate smart farming. 

Both desk study and empirical research led to the conclusion that the Australian Carbon Credits (CFI) Act 2011 provides an elaborate legal framework that seems well suited to assess project applications and issue credits to participating farmers who, through these projects, generate real and additional emission reductions. The 2015 amendments leading to the creation of the Emissions Reduction Fund increased participation by farmers by reducing uncertainty about the revenue to be generated through the projects. The experiences in Australia form a reliable basis for recommendations to policymakers and regulators around the world who wish to develop a regulatory framework aimed at stimulating farmers to convert to farming practices that reduce greenhouse gas emissions or even to broaden climate-smart practices. The following lessons were drawn:

  • The first and possibly most important lesson is not a purely legal one. A policy aimed at stimulating carbon farming has to be reliable and provide certainty for at least ten to twenty years. Farmers who want to introduce carbon farming have to implement structural changes to their farming practices with long-term impacts on their business. The policy environment, as well as the financial environment of agribusiness, have to accommodate such long-term impacts. This implies that relying on the carbon market for funding should only be done when there is long-term certainty that carbon credits will earn an acceptable minimum price.
  • The next lesson also concerns the broader policy background. A policy that has a wider focus on adaptation, food security, resilient and sustainable farm businesses, and securing and creating jobs in the agribusiness sector is likely to be more successful than one that only focuses on reducing emissions from agriculture. Several of the methods accepted or under development in Australia, such as those dealing with soil carbon, show that such co-benefits can indeed be achieved.
  • Developing climate-smart methodologies that not only deliver real, additional, measurable, and verifiable emission reductions but also foster long-term innovation and create economic, social, and environmental co-benefits is essential for the success of any policy aimed at stimulating climate-smart agriculture. Science has to be central in the development and adoption of methods that are accepted under the regulatory framework. In Australia, much research effort has already gone into method development. International collaboration in method development is important for efficiency reasons. When developing methodologies, special attention must be paid to small farms.
  • Regulation should focus on projects and should not set uniform rules or simply require farmers to hand in allowances under an ETS. Given the fact that potentially large numbers of farmers should be able to participate, much attention has to be focused on developing automated systems for all phases of the process: from project application to monitoring, reporting, and verification. Project development according to accepted methods needs to be guided by experts. Agribusiness organizations have a role to play here, but most work will be done by the private (consultancy) sector.
  • Having a robust and reliable MRV system in place is, as with the ETS, essential. The regulatory framework will have to comprise detailed legal rules on MRV. By contrast with most sectors, in agriculture, MRV is very site-specific and can be labour-intensive, especially in the case of carbon sequestration. Again, private consultancy businesses will have to play a major role here. Research is needed to develop reliable and less labour-intensive methods to assess the amount of emission reductions achieved or carbon sequestered.

Despite its fairly poor overall climate change policy, Australia has shown that it is possible to regulate for the reduction of emissions from agriculture and for increased sequestration in agricultural soil and vegetation on agricultural lands. In order to achieve the Paris Agreement objectives, the rest of the world has to start developing policies and laws fast to unlock the potential of the agricultural sector, so that climate-smart agricultural practices are commonplace before production levels increase following the expected dramatic increase in demand for food products.

Constraints from current international law

A review of the international frameworks for domestic climate smart agriculture policies finds that UNFCCC unfortunately does not provide a powerful stimulus to adopt and implement climate smart agriculture policies, and there is little attention to reducing emissions from agriculture within that framework. The current framework focuses on adapting rural areas in developing countries to climate change, particularly through financial instruments. Yet even in that area progress is painfully slow. Much more concrete action is needed to facilitate the transfer of adaptation knowledge and technologies, as well as funds to finance adaptation measures in developing countries. For developed countries, the UNFCCC does not make much of an attempt to address climate change and food security issues. This is a pity, as the developed country agriculture sector plays a major role in addressing the increasing global demand for food. Developed countries, should not wait for the UNFCCC process but instead seize the opportunity the Paris Agreement offers to unilaterally adopt climate smart agriculture policies and laws. International trade law sets boundaries for the most common domestic and regional instruments aimed at stimulating climate smart agriculture: subsidies, and offset schemes under a carbon pricing mechanism, especially the Agreement on Agriculture and the Agreement on Subsidies and Countervailing Measures. Within the WTO framework, more room for manoeuvre for domestic policymakers needs to be created.

Options for the EU

An assessment of current and proposed EU climate law and the legal instruments associated to the common agricultural policy whether and in how far climate smart agriculture is or can be promoted through the use of these current or proposed instruments shows that current and proposed policies and instruments are completely inadequate to stimulate large scale adoption of climate smart practices and technologies across Europe. That is why an alternative approach needs to be developed. The first element of this new approach is focused on EU climate policy: the inclusion of agriculture in the EU ETS through allowing regulated industries to buy offsets from the agricultural sector, following the examples set by California, Alberta, Australia. The second element is aimed at the CAP. The CAP, generally, needs to be much more focused on climate change mitigation and adaptation. Shortcomings that need to be addressed are: 1) the commitment period is too short: 1-7 years; should be: 100 years or longer. 2) accounting is not based on quantification of carbon sequestration/emission reduction. 3) payments are based on amounts of hectare under a certain management scheme, not on amount of carbon sequestered. 4) rules generally have a generic character and cannot be sufficiently tailored to individual farms. 4) member states have too much “flexibility” which allows them to pay for insufficiently climate smart projects. 5) the CAP has insufficient funds for deep and full transition of Europe’s agriculture sector.

Findings: lessons from Australia