A Review of the Role of Agriculture in Mandatory and Voluntary Carbon Pricing Mechanisms
Date
2025-04
Authors
Wongpiyabovorn, Oranuch
Plastina, Alejandro
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Abstract
This article provides a systematic review of the role of agriculture as a source of carbon credits for major mandatory and voluntary carbon pricing mechanisms around the world, as well as of large-scale initiatives to limit greenhouse gases (GHG) emissions from the agricultural sector. Among the mandatory carbon pricing mechanisms, the emissions trading systems (ETSs) in the European Union and the United States of America (USA), Australia, and New Zealand are reviewed, along with the EU carbon border adjustment mechanism, Denmark carbon tax on agricultural emissions, and the EU greenhouse gas emission reduction targets for agricultural activities. Among the voluntary carbon pricing mechanisms, current trends in carbon markets in the USA, and the EU are discussed, including efforts to implement high-integrity standards for agricultural carbon credits. Overall, agricultural activities to mitigate climate change are playing a small role in current mandatory carbon pricing mechanisms, while voluntary uses of carbon credits from agricultural activities are competing against credits from other sources and are facing challenges over their integrity concerns.
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25-WP 671
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Working Paper