Will European Agriculture Face Carbon Pricing?

The EU's independent environmental science advisers just made a bold case: bring farming into the bloc's carbon pricing system—and start preparing now.

A farmer in the EU overseeing a modern farm, with technology and renewable energy transforming food production for the carbon emissions market. Ai generated picture.

The European Scientific Advisory Board on Climate Change has urged the European Commission to use its scheduled 2026 review of the EU Emissions Trading System (ETS) Directive to expand carbon pricing into agriculture. The move would mark a seismic shift in how Europe regulates farm emissions, though the road ahead is complicated.

Right now, most European farms sit outside the carbon pricing system. That's about to change, at least according to the scientists. The first step would target on-farm energy use—the CO 2 from machinery, heating, and irrigation systems. Eventually, these emissions would fall under ETS2, the new carbon market launching in 2028 that already covers road transport and building heating.

'The scheduled 2026 revision of the EU ETS Directive … presents a critical opportunity to incorporate agricultural fossil fuel emissions into the existing regulatory framework,' the board stated.

The scale of what that means is staggering. The EU has over nine million farms. The current ETS covers roughly 9,000 installations. Expanding to agriculture would be, quite literally, unprecedented.

There's a catch. EU leaders have already hesitated once. They delayed ETS2's launch by a year, spooked by energy costs and competitiveness concerns. Some member states have even questioned whether the existing ETS should continue at all.

The scientists acknowledged the obstacles but pushed back on delay. 'Undue delays to extend the ETS to some emitters in the agriculture sector must be avoided due to the pressing nature of the environmental crisis,' they said.

Rather than a sudden overhaul, the board proposed rolling out carbon pricing in stages. The first wave would focus on direct fossil fuel emissions from farms. The second phase would introduce separate pricing for non-CO 2 agricultural emissions—methane from livestock and nitrous oxide from fertilisers. But here's the twist: it would target large farms first, plus fertiliser makers and meat and dairy processors further down the chain.

This approach spreads the administrative load across the value chain instead of overwhelming farms with compliance requirements.

Here's where it gets real. One modelled scenario showed that carbon pricing at €245 per tonne of CO 2 could push beef prices up by 40% and dairy products by 15–20%. That's a significant hit for consumers and producers alike.

'These challenges may limit its practical feasibility and public acceptance and must be carefully considered in the design and evaluation of such a scheme,' the scientists cautioned.

The 2026 ETS review is a pivotal moment. The EU can either embrace a more comprehensive approach to farm emissions or stick with the status quo. The scientific case for acting is strong; the practical roadmap is on the table. Whether policymakers follow through is another question entirely.