The Impact of Soil Carbon Sequestration on Adaptation in Europe's Agricultural Sector and the Potential Role of Regulatory Instruments

Abstract

This paper assesses current and proposed EU climate law and the legal instruments associated to the common agricultural policy to see whether and in how far soil carbon sequestration and associated adaptation is or can be promoted through the use of these current or proposed instruments. The assessment shows that current and proposed policies and instruments are completely inadequate to stimulate large scale adoption of soil carbon projects across Europe. Given the structural flaws that were found, it is highly likely that this is true for all climate smart agricultural practices. 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 Australia and others. Lessons learned from these experiences abroad will be helpful when drafting new EU rules and regulations aimed at setting up a reliable and robust regulatory offsets system under the EU ETS. The second element of a new approach is aimed at the CAP. The CAP, generally, needs to be much more focused on the specific requirements of climate change mitigation and adaptation. Such stronger focus does not take away the need to open up a new income stream for farmers from offsets under the ETS, as the CAP will never have sufficient funds for the deep and full transition of Europe’s agriculture sector that is needed.

Keywords: soil carbon, sequestration, adaptation, mitigation, common agricultural policy, climate smart agriculture

JEL Classification: K32, Q18