As part of the consultation on Developing the UK Emissions Trading Scheme (UK ETS), the UK Government is seeking evidence on how emissions from agriculture and land use can be measured, reported and verified. This is relevant to funds considering investing in agricultural land for the purpose of generating carbon credits.


It is not being proposed to include agriculture in the UK ETS at this time. Rather, the Government seeks to understand the potential role of measuring, reporting and verifying (MRV) emissions in agricultural business, barriers to MRV and opportunities for the sector, how to improve carbon auditing and how to reduce greenhouse gas (GHG) emissions from growing food (animal or plant based).

If a set of MRV standards for agriculture is estabilished, this is a step closer to be able to generate carbon credits from agricultural land in the future. 

Background

Emissions from agriculture in the UK total around 46 Mt of CO2 equivalent (based on 2019 figures) or roughly 10% of the overall emissions. Methane (CH4) and nitrous oxide (N20) dominate the sector, at 54% and 32% respectively.

To achieve Net Zero, the agriculture will need to reduce emissions and simultaneously enhance carbon storage and sequestration to compensate for unavoidable residual emissions.

Balancing unavoidable residual emissions with negative emissions from GGRs is already possible for some farm businesses, for eample, through creating woodland. There is also potential for farms to sell carbon services as a way of reducing carbon content of food products or compensating for unavoidable residual emissions in other sectors.

Government is committed to building a policy framework to support this form of economic cooperation, recognising that it must be safeguarded by robust systems to avoid double counting and greenwashing.

The challenges faced by GGRs - additionality, permanence, MRV and the interaction with wider environmental benefits, are equally relevant for agriculture and land use. See our article Developing the UK ETS - potential market for greenhouse gas removals for more discussion on this.

The importance of MRV

MRV plays an important role in ensuring transparency of traded carbon and maintaining confidence in the market.

In the agricultural context, improving understanding of the sources and scale of emissions can also inform decision making, help enhance technical performance, increase business efficiency and prioritise mitigation efforts - investment in new technology and infrastructure, sharing of best practice, design of government schemes and education campaigns.

Key challeneges to MRV

The Government has identified two key challeneges to improving the MRV of emissions in agricultrure:

  • the lack of an accurate, nation-wide carbon auditing framework; and
  • the readiness of farms to use a tool to measure and report their emissions.

Carbon calculator auditing tools

Although the UK has a national-scale accounting systems for agricultural GHGs, there is currently no system for farm-level MRV of emissions. This is because emissions produced at low levels per unit area of land are difficult and expensive to monitor. However, they are cumulatively significant where produced across a large area and by geographically dispersed sources, such as livestock.

The limited number of farm carbon assessment tools currently available have had low uptake due to the lack of standardisation and significant variability in results.

The Publicly Available Specification (PAS) 2050 standard, co-developed by Defra, provides guidance on how to create specific MRV standards for agricultural products. It could facilitiate farm-scale auditing of emissions, but is rarely adhered to by the commercial carbon auditing.

To ensure that farms have scientifically robust carbon counting tools that are trusted and practical for use at the farm level, Government is proposing to harmonise commercial auditing solutions with common standards or to develop a new government-backed tool.

Business readiness to adpot carbon auditing

Due to poor record keeping within agriculture, there is insufficient data for a carbon audit. Improving data collection could increase productivity and inform a holistic business management plan.

Whilst using average emission factors from across the sector could be helpful in identifying areas for emissions management, Government believes that the system should operate as close as possible to the level of individual farms, so that underperforming farmers would not benefit at the expense of those who reduce their emissions at a faster pace. To be affordable, such system should be fully aligned with existing record keeping, so that core data could be used for carbon calculators and the business in general.

Developing techniques for MRV of agricultural emissions could unlock investment for farmers to decarbonise the agricultural sector.

To better measure agricultural emissions, a number of options is being considered:

  • focusing enhanced MRV on larger farms, since they generally have better record keeping and more management capacity. This has potential to capture a significant proportion of emissions through a minority of the sector and to reduce the total cost of administration;
  • focusing enhanced MRV on specific sectors which are more consolidated than others, such as pig and poultry production - this would afford economies of scale and keep transaction costs down. An alternative approach would be to focus on the highest emitting sectors;
  • using earth observation data to monitor land use change or changes to farming practices; and
  • incorporating a requirement to provide, or achieve, de minimis emissions data or performance in the supply chain contractual conditions. This would increase sector engagement and baseline data, but would need to take account of commercial sensitivities.

Government support

Government is considering a range of measures to support farmers in adopting low carbon practices and technologies, including incentives and regulation.

A number of schemes is already underway, including the Countryside Stewardship Scheme [1] and the Environmental Land Management schemes [2].

Next steps

Understanding if and why MRV is a challenge in agriculture will inform the Government's approach to overcoming these challenges and helping the sector to decarbonise.

Since agriculture policy is a devoted area, the UK nations' policies and strategies will need to ensure that systems are joined up and do not impose undue burden on businesses.

Conclusion

A set of common, transparent, science based MRV standards for agriculture would help investors fully understand the risks involved and would improve confidence in the projects that are financing. This has potential to unlock capital for emissions reductions in agriculture and land use.

This will be of interest to landowners and farmers looking to adopt sustainable agricultural practices, as well as financiers seeking to expand or diversify their portfolios.

Key Contacts

Alexander Sarac

Alexander Sarac

Partner, Infrastructure Projects & Energy
UAE / Germany

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Inga Aryanova

Inga Aryanova

Managing Associate, Infrastructure Projects & Energy
London

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Michelle Headrige

Michelle Headrige

Partner, Environment & Sustainability; Construction & Engineering
Manchester, UK

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Carl Baker

Carl Baker

Legal Director, Finance
London

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