Certification, markets and implementation

Although globally the voluntary carbon market (VCM) size was around 2-billion-do- llars in 2021, with increasing financial flows and demand, several recent studies and media reports on the low quality of carbon credits and their exaggerated additionality claims have left the VCM open to criticism. This has resulted in a fall in trust among the general public and key stakeholders in carbon markets as part of the solution to tackling the climate crisis. In this sense, the first European Carbon Farming Summit in Valencia in March 2024, highlighted the necessity of a harmo- nised and credible approach to carbon credit certification across Europe. As Christian Holzleitner (Head of Unit for Land Economy and Carbon Removals at DG Clima) stated, the success depends on building trust while finding methodologies that are at the same time mature and simple to implement.

“The success of carbon farming depends on building trust while finding methodologies that are at the same time mature and simple to implement” - Christian Holzleitner

Edouard Lanckriet (Head of Low Carbon Agriculture Division at Agrosolutions) pointed out that several financing mechanisms already exist in the agri-food sector, such as public subsidies, carbon credits, and premiums paid by compa- nies committed to their Science-Based Targets (SBTs). However, to scale carbon farming in agriculture, clear and harmonised rules are needed, so that agricultural business models can work with multiple and complementary financial flows, to reduce the financial burden and business operating risks generally placed on farmers in transitioning to carbon farming.

According to Lanckriet, two main aspects that need to be addressed are the price of carbon credits and the adequate criteria for their certi- fication. In France, after 6 years of the Label Bas-Carbone initiative, –sales volumes are not taking off fast enough for removal projects, and carbon credit prices are considered very high by the market but not sufficient by the farmers to incentivize the transition. As a consequence, farmers are losing interest in carbon farming projects, because they consider them not remunerative enough and too constraining.

The other issue is the need to adequate the certification criteria to the realities of agricultu- re, in particular regarding double counts and permanence. Lanckriet underscored that we should create a finance system adapted to the biochemical realities of agricultural carbon cycles, such as the non-permanence of bioge- nic carbon. Additionally, an adequate measurement of carbon within the agricultural system is needed to reduce the risk of double-counting of climate claims from agro-industry and enhan- ce the provision of carbon finance for farmers. Not doing so will generate the risk of getting trapped in a system that is not made for agricul- ture, and which at the slightest scientific con- troversy can tip over and put in question an es- sential transition for agriculture and the climate.

During the Breakout Sessions it was also pointed out that the tension between seeking environmental and climate benefits and attrac- ting private investment that guarantees its long-term implementation must be resolved to foster successful carbon farming initiatives. A policy mix that includes both result and acti- vity-based strategies might be the best way forward by capitalising on the strengths and avoiding the problems of both approaches, at least in the initial phase until MRV technology can fully support result-based schemes.

Additionally, soil carbon removal schemes need to adequately complement a strong central public sector role, both at national and EU-level, with the local and regional dimensions. Even though a European carbon certification framework is required and expec- ted to enhance trust in investments in carbon farming projects, a high degree of centralisa- tion could neglect regional specificities and necessities. A good balance between the two extremes must be found, enabling harmo- nisation of practices and requirements, while allowing for local needs to be addressed.

In this sense, Christian Holzleitner and Valeria Forlin presented the vision of the Commission on how the European Union’s adopted Carbon Removal Certification Framework (CRCF) is de- signed for providing measures to overcome the challenges facing Europe’s VCM. By improving quality, cost-efficiency and harmonisation at the EU-level, the goal is to provide more robust guidelines for certification and to develop an MRV framework which would drive down costs and improve the quality of carbon credits.

In particular, the recently approved CRCF Regulation keeps the main aspects of the initial proposal of late 2022 of net benefits, standar- dised baseline and additionality, temporary nature of carbon farming sequestration, “do no significant harm” to environmental objectives principle, and rules for the certification process. Nevertheless, it also includes a more explicit architecture with four types of certified units: permanent carbon removals, temporary carbon storage in products, temporary carbon farming sequestration and permanent emission reduc- tion. Additionally, temporary certified units are only generated during the activity period, which is the period over which soil carbon is monitored and has a minimum of five years.

The CRCF Regulation also mandates the creation of a unique marketplace in Europe for carbon farming credits, which aims to increase trust in the system by enabling a transparent follow-up of what is happening in the farms. Altogether, the goal is to support an increased uptake and roll-out of carbon farming in the EU.

Download the magazine Voices from the First European Carbon Farming Summit prepared by Project Credible’s coordinator SAE INNOVA to learn more about the outcomes of the Summit or read the following articles: