Comparison of downstream market-based policies to reduce agricultural emissions

Abstract

This report compares three downstream policy options to reduce greenhouse gas emissions in the EU agrifood sector, all of which require regulated entities to cut farm-level emissions embedded in the products they handle or sell. It evaluates their design, efficiency, costs, and carbon leakage risks, highlighting key trade-offs. Retailer-level systems cover more emissions but are complex and costly, while processor-level options are either simpler to administer or more cost-efficient when trading is included. Carbon leakage is a concern across all options, though its magnitude remains uncertain. The report concludes by outlining how these policies could evolve or be sequenced over time.