Which farms and agrifood supply chains will be impacted (directly or indirectly) by the EU ETS and the UK ETS?
The “direct” impact of the ETS on primary agriculture is generally less common, but the “indirect” impact can be strong and very tangible. The issue is input carbon cost: electricity and heat used for irrigation, drying, refrigeration, and industrial inputs with high embedded emissions such as fertilisers and lime. This is where indirect emissions and Scope 3 come into play, because the cost of CO₂ is passed along the chain even if the farm itself is not an ETS installation. In practice: if the carbon cost rises in the EU ETS industrial sector, someone passes it on to the buyer.
CBAM, from 1 January 2026, is a bridge between the ETS and the agricultural supply chain. The European Commission (the EU’s executive body) describes CBAM as a mechanism that requires a CBAM declaration and that, in the definitive regime, links the cost to embedded CO₂ and the ETS price, with a key issue: default values vs real data and the role of the authorised CBAM declarant/importer. For EU agrifood buyers and processors, this translates into more pressure on traceability of embedded emissions and on contractual clauses with suppliers, especially for “in-scope” goods such as fertilisers.
Energy-intensive food processing is where exposure can become more “front-facing”. It’s not the farmer, but the processor or packager with stationary installations: steam boilers, ovens, cogeneration (cogeneration, steam demand). The typical question here is operational: “I have a plant that burns fuels—do I need a serious energy audit and to understand how much ETS cost risk hits my energy bill or my compliance obligations?”
Logistics—especially maritime—is already inside the EU ETS and tightens in 2026. The European Commission notes that shipping has been included since 2024 for ships above 5,000 GT, with 100% of intra-EU emissions and 50% of emissions between the EU and non-EU, and with a phase-in that reaches full coverage in 2026. From 2026, methane (CH₄) and nitrous oxide (N₂O) are also included. For agrifood this means ETS bunker surcharge, maritime MRV, and freight carbon pass-through on import/export routes and refrigerated containers.
On the UK side, UK ETS rules matter even if you are in the EU, because they influence prices and cross-border contracts. According to Norton Rose Fulbright, the inclusion of maritime in the UK ETS starts on 1 July 2026 for domestic voyages, with a 5,000 GT threshold and a shortened first compliance year (July–December 2026). In addition, the second phase of free allocation has been postponed to 2027. Useful procurement keywords here are UK ETS free allocation period 2026, carbon leakage, cap reset, allowance price pass-through.
Buyers’ real questions are always the same—just more urgent. “How much does CO₂ cost me in fertilisers?”, “Can my supplier provide verifiable data like EPD/LCA?”, “How does the price change if the CO₂ cost rises?”. The practical answer runs through decarbonised procurement and supplier engagement, not slogans.
What changes in 2026 for producers: energy costs, fertilisers, logistics and the CO2 price along the supply chain
The clearest shift is CBAM moving into its definitive regime from 1 January 2026. The European Commission’s official CBAM page is clear that, in the definitive period, the cost component depends on embedded emissions and declaration rules. If you don’t have primary data, the risk is being pushed onto standard values, with economic and negotiating impact. For those buying fertilisers or importing “in-scope” materials, the 2026 priority is to build into contracts data availability and accountability for embedded emissions in fertilisers and supplier contracting.
The second driver is shipping ETS. The European Commission and Norton Rose Fulbright indicate that 2026 brings full emissions coverage under the maritime scheme, and that CH₄ and N₂O are also included from 2026. This creates a “mechanical” increase in CO₂ cost in transport, often passed through as a surcharge. Even without putting numbers on it, the B2B calculation is always the same: fuel consumption, emission factor, surrender percentage, EUA price. If you import coffee, cocoa, rice, or feed, it’s worth asking the carrier how it applies pass-through and which MRV data it uses.
The CO₂ price remains a budgeting variable. A 2025 EU ETS summary published by Instrat points to an order of magnitude for the 2025 average around €73/t. This is not a forecast, but it is a useful recent reference for understanding why in 2026 price risk is not “theoretical”. In practice: if you have indexed energy or input contracts, you need to treat the EUA as a line item that can move margins.
ETS2 is more of a medium-term risk, but it needs to be put on the data agenda now. Norton Rose Fulbright notes that ETS2 has been postponed to 2028 and that it targets fuel suppliers, with costs that can be passed on to consumers. The European Commission confirms that ETS2 covers buildings, road transport and small industry. For agrifood, this means preparing data now on fuel consumption and logistics, because when the cost arrives “upstream” it will be too late to reconstruct it.
Vietnam and new carbon markets: opportunities and risks for agricultural exporters and projects in Asia
Vietnam is building market infrastructure, not just policy. Vietnam Briefing describes Decree 29/2026 as the operational framework for the first domestic carbon exchange, integrated into the country’s financial-market infrastructure. The decree regulates registration, domestic coding, transfer of ownership, custody, trading and settlement of eligible allowances and credits. The detail that matters for anyone with assets or suppliers in Vietnam is the non-replicable unique ID system, designed to prevent double counting and improve traceability.
Governance is “exchange-like”, and that changes expectations. Vietnam Briefing explains that the Ministry of Agriculture and Environment manages the national registry and assigns codes; the Hanoi Stock Exchange provides the trading infrastructure; the Vietnam Securities Depository and Clearing Corporation manages custody and settlement with a delivery-versus-payment logic. Participants must have segregated accounts dedicated to carbon transactions. For agrifood groups with centralised procurement or a trading desk, this implies carbon trading governance, controls and processes such as KYC/AML and custody management.
For exporters to the EU, the risk is not so much “direct ETS”, but buyer requests around disclosure and product carbon footprint. If buyers start asking for more robust evidence, the differentiator is data and verifiability, not narrative. And if the supply chain includes CBAM inputs, the request for “carbon pricing evidence” becomes more concrete.
For carbon projects in Asia, opportunities exist, but quality determines bankability. Types such as methane reduction in rice (rice methane reduction, AWD rice) or biochar carbon removal require credible MRV and management of permanence and double-counting risks. If Article 6 is involved, the distinction between voluntary credits and transferable credits such as ITMOs—and the corresponding adjustment topic—becomes central for acceptance by EU/UK buyers and for reputation.
How to integrate carbon credits and real reductions on-farm without greenwashing (strategies and KPIs)
The credible hierarchy is simple: reductions first, then credits. If you start with credits, you expose yourself to green claims challenges. If you start from a reduction roadmap, credits become a targeted tool, not a shortcut. In agriculture this means working on N₂O and methane where relevant, and using credits as a complement, not as “Plan A”.
KPIs must be measurable and repeatable. In the field: kg N/ha, yield per unit of N, diesel consumption (L/ha), kWh per tonne, tCO₂e per tonne, indicators on fertiliser management and, cautiously, soil organic carbon change (soil organic carbon change), knowing uncertainty is high. The keyword is agriculture MRV: without activity data and quality controls, neither an audit nor a buyer request will hold up.
On credits, the rule is to reduce the risk of non-acceptance. Standards, third-party verification, rules on additionality and permanence, reversal-risk management, and transparency on vintage and retirement. In procurement, it is often more defensible to prioritise removal credits over pure avoidance, but the choice must be tied to the claim and customer expectations.
Tokenisation should be treated as a data layer, not magic. If you tokenise, you must link serial number and status (issued, transferred, retired) to a recognised registry, with registry bridging and proof of retirement. The value is the audit trail and anti-double counting—not “putting a token” on something and calling it a credit.
Operational checklist: data to collect in the field and at the plant for audits, reporting and access to carbon markets
Field data are the foundation for a GHG inventory and any project. You need plots and crops, operations with dates and machine hours, fuel consumption, fertilisers with type and quantity of N and application timing, irrigation, crop residues, yields and moisture, and for livestock manure and slurry management. If you don’t have tracked activity data in a field operations log, everything else becomes a fragile estimate.
Plant data are needed for footprinting and customer requests. Collect kWh, gas, steam, refrigeration and refrigerant losses, water, waste, packaging per SKU, energy invoices, and information on energy contracts. If you are asked for a product carbon footprint or an EPD, the difference is a coherent, verifiable energy balance.
Logistics data are increasingly requested. Routes, modes (road, rail, sea), tonne-km, cold chain, incoterms, carrier, and how ETS cost is applied to freight. Frameworks like GLEC help estimate consistently when you don’t have direct fuel consumption.
Traceability must be audit-ready. Keep documentary evidence (invoices, delivery notes), define roles and responsibilities, run data quality checks and versioning. For soil, if you measure organic carbon, you need a clear sampling protocol (method, depth, frequency) and chain of custody.
Buyer outputs arrive as questionnaires and specifications. Be ready for PCF by product or batch, cradle-to-gate LCA, Scope 1-2-3 declarations, evidence of reductions and, if you handle in-scope goods, the ability to support CBAM data requests on the importer or customer side.
