The Carbon Removals and Carbon Farming (CRCF) Regulation (EU/2024/3012) aims to support the European Union’s efforts to tackleclimate change by introducing a voluntary certification framework forcarbon removals, carbon storage in products and carbon farming. Alignedwith the EU’s evolving Vision for Sustainable Agriculture, the Regulationreflects a shift towards prioritizing incentives (“carrots”) over regulatorymandates (“sticks”), emphasizing economic opportunities as key drivers ofsustainability It tries to address challenges in carbon market credibility bysetting out EU-wide quality criteria and monitoring processes that seek toenhance transparency and reduce the risks of greenwashing. The Regulation encourages investment in innovative carbon removal technologies and sustainable carbon farming, aiming to create economicopportunities for farmers, foresters, and businesses while maintainingenvironmental integrity.

The CRCF Regulation attempts to organize carbon removals into distinctcategories, including permanent carbon removals, carbon storage inproducts, carbon farming, and soil emission reductions. It proposesstandardized procedures for third-party verification, certification, andregistration to improve reliability and consistency across the EU. Some of theapproaches it highlights include permanent carbon removals throughtechnologies like Direct Air Carbon Capture with Storage (DACCS),Bioenergy with Carbon Capture and Storage (BECCS), and chemicallybinding CO2 into products to secure long-term carbon storage. Carbonfarming encompasses practices that seek to increase carbon sequestrationin soil and forests or to cut emissions, such as agroforestry, peatlandrestoration, use of cover crops, reducing fertilizer application, andbiodiversity-conscious reforestation. The certification process builds on the Renewable Energy Directive, looking to streamline compliance throughaudits, registries, and standardized baselines. Monitoring is expected tobecome more cost-effective with the use of Copernicus satellite technologyand remote sensing, helping to lower reporting costs while ensuring dataaccuracy. The Regulation also introduces group certification to easeparticipation for small-scale farmers and foresters.

The CRCF Regulation seeks to create new financial opportunities forfarmers, foresters, and businesses by allowing them to generate verifiedcarbon credits through sustainable land management and technologicalinnovations. Carbon farming has the potential to offer an additional incomestream, while certification scheme owners involved in permanent carbonremovals could attract sustainability-focused investors. The Regulation triesto reduce the administrative burden by enabling group certification anddrawing on existing bioenergy certification models, making compliancemore feasible for smaller landowners. Ensuring alignment with EU climatepolicies, the certification process aims to integrate smoothly withagricultural and environmental frameworks. Additionally, climate-friendlypractices in the agri-food sector could enhance resilience and competitiveness. To build on these developments, the Directorate-Generalfor Climate Action has commissioned a study to further assess policyoptions for encouraging climate action within the agri-food value chain,particularly with a view toward the post-2030 period.

The CRCF Regulation is expected to benefit farmers and foresters byproviding financial incentives for adopting sustainable land managementand emission reduction techniques. Agri-food businesses may use marketbased climate policies to reinforce sustainability across their supply chains. Investors and carbon market stakeholders could find a more credibleframework for supporting certified carbon removal initiatives. Policymakersand advisory services may use the Regulation as a foundation for informeddecision-making on climate and agricultural policy, e.g. nature credits. By working toward a transparent, science-based framework, the CRCF Regulation hopes to establish a reliable and scalable carbon removal marketin Europe, contributing to the EU’s broader climate goals while offeringpractical advantages to land managers and industry stakeholders.

Farmer face numerous positive and negative effects on the climate and adaptiveness to climate change. Using two sorts of policy approaches— those of “carrots,” or “sticks”—broadly speaking, legislators and the private sector can inspire farmers to adopt measures regarding climate change effects mitigation (i.e., lower emissions or enhance carbon removals) and adaptability to climate change. “Sticks” comprise taxes, regulatory restrictions or prohibitions, quotas or quantitative limitations, and taxes—all of which penalise or make it unlawful to carry out negative activities, therefore changing behaviour. On the other hand, legislators or the private sector might pay farmers for doing good deeds, therefore encouraging positive change – “carrots”.
We focus on these so-called “carrots,” which we see as rewarding mechanisms, in this Practice Abstract. Rewards for agricultural activities that lower or avoid emissions, remove carbon from the atmosphere, adapt to climate change are defined as mechanisms that reward farmers in return for implementing a desired action or delivering a desired outcome and can be sourced from public or private entity or even a mix of both. Aiming to promote a behavioural change, using positive incentives, and their voluntary character define rewarding systems. Among other things, these motivating systems can take the following format: regulatory
responsibilities (that are rewarded), voluntary public money, R&D, voluntary carbon markets and price premiums/labelling.
Furthermore, on EU agricultural land, there is a wide spectrum of climate action on plot, field, and landscape level which are captured to different degrees in the several present or proposed rewarding systems. One can classify them as follows:
1. emission reduction which is mainly methane (CH4) from enteric fermentation and N2O emissions from managed agricultural soils, which together represent over 80% of agricultural emission in the EU.
2. the removal of CO2 from the atmosphere by converting between land cover types and managing the agricultural soils to increase carbon sequestration and
3. the response to climate change by increasing the adaptive capacity of the agricultural sector.
Moreover, two basic types define rewarding sources: public and private ones. While most of the current systems rely on monetary financing, both might entail both financial and non-financial benefits. With public rewarding we refer to financing or help from the international community, EU, State or regional level e.g. Common Agricultural Policy (CAP), R&D initiatives, etc. Any kind of funding from the private sector—companies, private groups, and consumers—through carbon markets or price premiums and labelling qualifies as private rewarding. Public/private funding sources include market-based strategies whereby the Government plays a major role either supplying or distributing the funds also exist.
There are several ways to reward land users and farmers for their environmental activity. They can be generally divided between the delivery of result-based or action-based results. Action-based rewarding gives the farmer in line with generally quite particular agricultural methods satisfying results. Independent of the outcome of those designated management activities, farmer or landowner gets a compensation or incentive for carrying out such activities. Result-based rewarding is linked to a confirmed outcome and calls for a direct, explicit relationship between the result delivered—e.g., emission decreased or avoided, carbon sequestered—and the incentive the farmer gets.
Lastly, there are several design choices about the timing of the rewarding, that is, when and how often the rewarding is occurring. Ex-ante rewarding is the (typically financial) prelude to climate action. While the real result of climate change might take years, long-term initiatives requiring significant upfront expenditures may find relevance for this payment mechanism. Expost rewarding is done following the farmer’s generated climate action.
Over the course of the project, the rewarding might be one-off or continuous, multi-year. Also, combinations of the timing of rewarding are feasible.