Implementation options for partial ETS variants for the agri-food sector

Context Emission trading systems (ETS) have long been considered an efficient strategy to reduce greenhouse gas emissions and have been discussed and analysed also as an option for the agricultural sector. However, such system comes with different costs regarding the monitoring, reporting and verification (MRV) of agricultural emissions cost depending if larger group of farmers or small numbers of processors are considered. In addition, the proposed system may perform different if the permit rights are granted to the farmers or the processing industry. Objective This study analyses different versions of the ETS for application to agricultural emissions. The focus is put on the comparison of different options for the point of obligation which relates to MRV options and the distribution of emission allowances. Main goals are to quantify the potential income effects of different ETS variants with respect to the point of obligation and emission allowances and the environmental effects with respect to the monitoring system. Methods Using the Common Agricultural Policy Regional Impact Analysis (CAPRI) model, a detailed agricultural sector model, the study simulates impacts of different versions of ETS in Europe. The model facilitates an evaluation of the potential changes in income, production, market prices, trade dynamics, and environmental indicators, providing a comprehensive view of the policy's potential effects. Results and conclusions We illustrate that the degree of monitoring technical mitigation measures in agriculture is critical for the abatement effects as well as for the regional seller or buyer position of regions. The income effects are shown to depend critically on the point of obligation, if the permit entitlements are granted for free to agent subject to the ETS.