In a Nutshell

The Common Agricultural Policy (CAP) aims to support farmers and ensure Europe’s food security. It sets out the EU legal framework and funds the support member states can provide to agriculture, forestry, and rural development. It has a double objective of ensuring Europe’s food security and incentivising environmentally friendly agriculture. 

The CAP has greatly evolved since its creation in 1962. In its latest iteration, the CAP 2023-2027 pursues 10 overreaching objectives aimed at ensuring agricultural productivity and farmers’ income while encouraging environmentally friendly practices.  

The total budget of the CAP 2023-2027 amounts to EUR 386.6 billion. The budget is divided into two funds, which are often referred to as the two pillars of the CAP:  

Each country implements the CAP 2023-2027 at their national level through a CAP Strategic Plan. These plans operationalise the numerous targeted interventions each country undertakes while contributing to the ambitions set by the European Green Deal 

Direct payments to support farmers are granted on the condition that they implement “good agricultural and environmental conditions” (GAEC). Around 90% of the total European utilised agricultural area (UAA) is covered by this conditionality. Furthermore, 25% of direct payments are optional and require farmers to implement eco-schemes (specific to each country) rewarding environmentally friendly farming. 

Carbon dioxide removal (CDR) and the CAP interact closely in several important ways. Practices that improve carbon sequestration in soils and ecosystems have many overlaps with soil health and agriculture and thus the CAP. The CAP provides an array of measures aiming to incentivise agroforestry practices, as well as the maintenance and restoration of land ecosystems. Finally, enhanced weathering and biochar are two novel CDR methods that also intersect with farming and may thus interact with the CAP in the future. 

There is, however, a dual dynamic within the CAP. On the one hand, some measures within the CAP still indirectly promote intensive farming practices depleting soil carbon stocks. On the other hand, more and more measures are targeted towards improving soil carbon stocks. The significant leeway provided to member states in their implementation of national measures means that the contribution of CAP to carbon removals varies across the EU.

What's on the Horizon?

As a response to the farmers’ protests across the EU, the Commission proposed a targeted review of the good agricultural and environmental conditions (GAEC) of the CAP. This review would reduce administrative burdens for farmers and but also waters down some of the CAP’s environmental criteria. The EU Parliament plenary will vote on the targeted review on 24 April.

The CAP 2023-2027 and the national CAP Strategic Plans entered into force on 1 January 2023. In 2024, countries will have to report to the EU Commission on their performances. In 2025, the national CAP Strategic Plans will be reviewed by the EU Commission.  

A new obligation to protect wetlands and peatlands will be included in the CAP by 2025 at the latest; wetlands and peatlands are part of the conventional CDR methods.  

The Commission will propose an improved methodology to ensure that the contribution of the CAP to climate action is correctly measured and accounted for by 2026 at the latest. 

Deep Dive

National Strategic Plans and support mechanisms  

Within the CAP 2023-2027, CAP National strategic plans operationalise the CAP’s policy objectives at the national level.  

The CAP amounts to 20% of the total EU budget and plays an enormous role in the EU’s intervention in the land sector. It provides different support mechanisms:  

  • income support through direct payments, among others, to incentivise environmentally friendly practices; 
  • market measures to deal with difficult market situations; 
  • rural development measures (national and regional programmes to address specific needs and challenges). 

Each member state has relative freedom to distribute funding across these three types of support mechanisms and can freely allocate up to 25% of its budget between income support and rural development. The CAP Strategic Plans outline this allocation and describe which measures will be supported within each member state. The CAP 2023-2027 puts higher emphasis on tracking outcomes by setting an annual performance report and a biannual review process for national plans, assessing progress towards their goals and the 10 CAP overarching objectives. 

Direct payments use the biggest share of the CAP funding and are conditional to Good Agricultural and Environmental Practices (GAEC), which include measures on maintaining a minimum soil cover, limiting erosion and maintaining soil organic matter, and requiring farmers to save at least 3% of their arable farmland for non-productive areas/features with the possibility to get support to extend it to 7% of the arable land. The new CAP introduces a requirement prohibiting drainage, burning or extraction of peat from peatlands. This prohibition could have a favourable impact on peatlands, allowing them to serve as carbon sinks rather than as sources of carbon emissions.  

While a large share of utilised agricultural area (UAA) is set to be farmed under GAECs, only a limited share is set to be under commitments to reduce emissions or to maintain or enhance carbon storage, which includes permanent grassland, permanent crops with a permanent green cover, agricultural land in wetland and peatland. Moreover, this share varies dramatically between countries, from 0% to 85%. The metrics used in the strategic plans are also not the same; some mention the peak coverage year (note: peak year also varies between countries) while others use the average over the 2023-2027 period. It is quite concerning to see that several states currently have no measures to increase soil carbon storage. Experts have also raised the question of whether the measures proposed are enough to reach the objectives set in the strategic plans. 

Eco-schemes 

Additional subsidies in the form of eco-schemes can be made available to states as a reward for more environmentally friendly practices. Eco-schemes support various types of voluntary actions that go beyond the CAP’s obligation of conditionality. These include practices related to agro-forestry and carbon farming among others. The Commission has published an extensive list of examples. However, it includes only a handful of practices linked to CDR. Member states are not exploiting this opportunity to the fullest, as only a minority of them plan to use eco-schemes in relation to CDR. Some environmental NGOs raised concerns questioning the eco-schemes’ true environmental benefits. 

Carbon farming and related debates 

The recent communication by the EU Commission on “Sustainable Carbon Cycles” has highlighted that the CAP should be one of the primary mechanisms to promote carbon farming at the European level, together with LIFE and Horizon Europe’s “Soil Deal for Europe”. The Commission encouraged states to include measures to incentivise carbon farming in their strategic plans. The current efforts on the Carbon Removal Certification Framework (CRC-F), among others, aim to clarify what good carbon farming practices mean. 

There are, however, several issues related to carbon farming that need to be discussed and tackled with high priority.  

Firstly, carbon farming is a very loaded term. The EU defines it vaguely as “a green business model to reward farmers for adopting practices leading to carbon sequestration”. Therefore, carbon farming as an economic concept and the underlying practices it encompasses should be separated in order to differentiate the business model from the underlying practices.  

Secondly, there is a strong opportunity in the CRCF to make clear that the durability of carbon sequestration in soil is lower than for other CDR methods. Any market-facing claims need to be strictly regulated to ensure that fossil emissions are not compensated for through such practices.  

Thirdly, soil carbon sequestration comes along with many co-benefits besides carbon removal. These include improved soil quality, positive biodiversity impacts and better water retention. These practices should thus be incentivised. However, key questions remain, such as who should pay, and be paid, to implement these practices and what the basis for payment should be. 

Finally, the measuring, reporting and verification (MRV) of soil carbon fluxes is still very much a work in progress. There is currently a trade-off between the accuracy of results and the costs/scalability of methodologies. The EU has yet to determine how best to deploy MRV and at which geographical scale and granularity. The purpose of MRV deployment should be better defined. Furthermore, the commodification of sequestered soil carbon requires more strenuous MRV. 

Timeline

1962
1984
1992
2003
2014-2020
2021
2021-2022
2 December 2021
January 2023
December 2023
2024
15 March 2024
15 April 2024
24 April 2024
2025
2026
2027
1962

Launched in 1962. 

1984

First big reform of the CAP to bring production closer to what the market needs. 

1992

Shift from market support to producer support through direct payments to farmers. Farmers are incentivised to endorse more environmentally friendly practices. 

2003

The CAP introduces income support tied to environmental, food safety and animal health and welfare requirements

2014-2020

The CAP is once again reformed to increase the competitiveness of the sector, promote sustainable farming and support rural areas. 

2021

The EU Parliament, the Council and the Commission agree on the need to reform the CAP again and shift implementation responsibilities.

2021-2022

A transitional agreement is put in place while the reform is negotiated. 

2 December 2021

Adoption of the CAP 2023-2027.  

January 2023

The CAP 2023-2027 and the CAP strategic plans enter into force. 

December 2023

The EU Commission will submit a report to assess the joint CAP strategic plans in reaching Green Deal targets.

2024

Each country will present an annual performance report. 

15 March 2024

The EU Commission proposed a targeted review of the CAP

15 April 2024

Adoption of the targeted review by the AGRI Committee (Committee responsible)

24 April 2024

EU Parliament plenary vote on the targeted review

2025

The Commission will conduct its first performance review of the CAP strategic plans. 

2026

The Commission will conduct an interim evaluation of the CAP 2023-2027.

2027

The Commission will conduct a second performance review of the CAP strategic plans.

Status

Unofficial Title

CAP

Year

1962

Official Document

Last Updated

24/07/2023