Carbon Farming Market (2026-2036)

The growth of this market is mainly driven by the establishment of a statutory certification framework in the European Union, which replaces self-declared quality with audited certification and makes carbon farming outcomes bankable for the first time; corporate scope 3 reporting obligations, which give food, beverage and agricultural companies a direct interest in reductions inside their own supply chains; public payment schemes that pay for practice change independently of carbon credit prices; and the reduction in measurement cost achieved by combining soil sampling with process-based modelling and remote sensing.

In addition, the extension of certification methodologies to peatland restoration and agroforestry, the shift of monetisation from voluntary credits toward supply chain insetting, and policy intervention in the cost structure of carbon farming programmes are further shaping the growth of this market. The pace of that growth depends on the cost of measurement, reporting and verification rather than on the availability of land or willingness among farmers, and both major policy regimes have now acted directly on that cost.

The Carbon Farming Market comprises the payments, services and systems through which changes in agricultural management are converted into quantified and verified carbon outcomes. The market includes outcome payments and credit origination, the measurement, reporting and verification activity on which any claim depends, the platforms and software through which field data, practice records and model outputs are assembled, the agronomic advisory and implementation support without which practice change does not occur, and the certification, audit and registry services that establish whether a claimed outcome meets a standard. The market ecosystem extends from farmers and landowners through aggregators, agronomic input and advisory companies, measurement and modelling providers and certification bodies to food, beverage and agricultural buyers, carbon credit purchasers, lenders and the regulators whose frameworks determine what may be claimed and sold.

The decisive development in this market is that carbon farming in the European Union has moved from a voluntary claim to a statutory certification framework. The Carbon Removals and Carbon Farming Regulation, Regulation (EU) 2024/3012, was adopted by the European Commission on 6 December 2024, and Implementing Regulation (EU) 2025/2358, introduced in November 2025, sets the technical standards for certification schemes together with the rules for appointing and supervising certification bodies and the audit processes they must follow. A regulation that prescribes how certification bodies are appointed, supervised and audited addresses the credibility problem that has limited this market since its inception, because it replaces the assertion of a project developer with the finding of a supervised third party.

The methodologies that give that framework practical effect have now been adopted. The European Commission adopted the delegated regulation establishing carbon farming certification methodologies in July 2026, document reference C(2026)4666, covering three certification methodologies for agriculture and agroforestry on mineral soils, peatland restoration and afforestation, with certification schemes able to apply for recognition once the delegated act enters into force. Three methodologies covering agriculture and agroforestry on mineral soils, peatland restoration and afforestation establish what may be certified and on what basis, and the ability of certification schemes to seek recognition converts an existing voluntary scheme into a potentially recognised one rather than displacing it.

The sequence in which this framework has been built is informative. The draft carbon farming delegated act was adopted on 22 January 2026 and open for feedback until 19 February 2026, and the first delegated act covering permanent carbon removals, namely direct air capture with storage, biogenic emissions capture with storage and biochar carbon removal, was adopted on 3 February 2026 with publication in the Official Journal expected in early April 2026 subject to no objection from the Council and the Parliament. Permanent removals were addressed before carbon farming, which reflects both the comparative simplicity of quantifying engineered storage and the greater difficulty of establishing baselines and permanence for soil carbon, and it means that the engineered removal part of the framework will be operating while the agricultural part is still being recognised.

What the framework does not yet supply is compliance demand. Under the same regulation the European Commission was required to assess by 31 July 2026 how permanently stored carbon removals can be accounted for within the EU Emissions Trading System. A requirement to assess how permanently stored removals might be accounted for within the Emissions Trading System, with that assessment due in mid-2026 and confined to permanent removals, means that the regulated buyer who would give certified agricultural outcomes a reliable price does not yet exist. The framework therefore arrives ahead of the demand that would monetise it, which is the central timing risk in this market.

The position in the United States moved in the opposite direction and for instructive reasons. On 14 April 2025, through Press Release No. 0071.25, the United States Department of Agriculture announced the cancellation of the Partnerships for Climate-Smart Commodities programme following a line-by-line review, stating that most projects carried high administration fees and that in many cases less than half of the federal funding reached farmers directly. A government finding that in many cases less than half of federal funding reached farmers directly is a judgement on the cost structure of aggregated carbon farming programmes, not on the agronomy, and it is the most consequential public statement yet made about how the economics of this market actually work.

The replacement initiative acted on that finding directly. The programme was reformed into the Advancing Markets for Producers initiative, under which existing grant agreements are reviewed against three criteria, namely that a minimum of 65% of federal funds must go to producers, that the recipient had enrolled at least one producer as of 31 December 2024, and that the recipient had made a payment to at least one producer as of 31 December 2024, with no new funding made available for the partnerships and eligible expenses honoured only where incurred before 13 April 2025. A minimum producer share of 65% of federal funds, combined with evidence requirements of actual enrolment and actual payment by a fixed date, compresses the share available for measurement, aggregation, platform operation and programme administration. For suppliers whose business is the intermediation itself, this is a structural change in available margin rather than a change in programme priorities.

Taken together, the two regimes are acting on the same constraint from different directions. Measurement, verification and aggregation cost, rather than land availability or farmer willingness, determines whether a carbon farming programme is viable, and the European Union is formalising that cost through audited certification while the United States has capped it as a share of public funding. The suppliers positioned for this environment are those able to quantify an outcome cheaply and defensibly at scale rather than those able to originate credits.

Monetisation is shifting accordingly, from the sale of credits to the claiming of reductions inside a supply chain. A food or agricultural company reporting scope 3 emissions has a direct interest in a reduction occurring among its own suppliers, because that reduction lowers its reported footprint without the additionality and permanence scrutiny applied to a purchased credit and without the discount that credit markets apply to agricultural soil carbon. The buyer in such an arrangement is a procurement function rather than a carbon trading desk, the price is set against the cost of the practice change rather than against a credit index, and the relationship persists across seasons. This route is growing faster than credit sale and is changing who the supplier in this market sells to.

The market includes carbon programme operators and measurement specialists, agricultural input and advisory companies and agricultural commodity buyers, among them Indigo Ag, Agreena, Soil Capital, Boomitra, Regrow Ag, Trinity AgTech, eAgronom, Varaha ClimateAg, Agoro Carbon Alliance, Truterra, Nutrien, Bayer, Corteva, Syngenta Group, Yara International, Cargill, Archer-Daniels-Midland and Rabo Carbon Bank. Participants compete on cost per hectare of measurement and verification, defensibility of quantification against a recognised methodology, recognition of their certification scheme under statutory frameworks, access to farmers through existing agronomic or commercial relationships, ability to deliver an audited outcome a corporate buyer can report, and the share of programme value that reaches the producer.

At the same time, the market faces challenges, including the absence of a compliance buyer for certified agricultural outcomes; the cost of measurement relative to the value of the outcome measured; permanence and reversal risk on soil carbon, which a single tillage pass can undo; baseline and additionality determination where practice history is poorly documented; farmer reluctance to accept multi-year commitments for payments that are small relative to input and output price variation; and the reputational discount that agricultural soil carbon carries in credit markets. As a result, suppliers combining low measurement cost, recognised methodologies, existing farmer relationships and a supply chain rather than credit market route to monetisation are expected to capture the largest share of growth over the forecast period.