Carbon credits from forests and agriculture

I carbon credits generated by forests, agroforestry systems and agricultural practices with high CO absorption capacity₂ they attract growing interest from landowners and investors. However, the legal framework has changed profoundly between 2024 and 2026, with the entry into force of the European regulation on carbon absorption certification, its first implementing acts, the interministerial decree that makes the Italian registry operational at CREA, and the tax reform of agricultural income.

This analysis reconstructs the actually effective rules — certification, additionality, permanence, taxation — and the real numbers of the Italian voluntary market, with the cautions that arise for those who intend to direct their investments towards this type of solution.

The European regulation on carbon absorption certification

Regulation (EU) 2024/3012, known as Carbon Removals and Carbon Farming Certification Framework (CRCF), effective from December 26, 2024, establishes the first harmonized voluntary framework of the European Union for carbon absorption certification. The certifiable activities belong to three categories:

• permanent removal technologies or long-lasting CO₂, through its storage in geological formations or in stable carbon forms (e.g. DACCS — Direct Air Carbon Capture and Storage, BioCCS — Bioenergy with Carbon Capture and Storage, biochar — biomass transformation by pyrolysis into a stable carbonaceous material, then incorporated into the soil or destined for other long-lasting uses);
• carbon storage in long-lasting products, for at least 35 years (with priority to wood-based and bio-based construction products, CRCF, article 8.2);
• carbon farming, that is, agricultural and forestry practices lasting at least five years that increase carbon sequestration in soils and biomass or reduce emissions from soils.

The activities of carbon farming generate temporary units, subject to a monitoring period defined by the methodologies of certification. The absorbed carbon is indeed considered released into the atmosphere at the end of the monitoring period, unless this is extended with a new certification (CRCF, article 6).

Quality criteria

Each activity must comply with the four so-called quality criteria QU.A.L.ITY:

• Quantification: quantifiable and measurable removal in terms of net climate benefit;
• Additionality: the removal is additional, relative to current practices and legal obligations;
• Long-term storage: the carbon is stored long-term with monitoring rules and responsibility for any releases;
• No double counting: the removal is verifiable and not counted twice (CRCF, articles 4-7).

Sustainability requirements

A transversal requirement is added to the quality criteria of sustainability, expressed in terms of not causing significant harm (do no significant harm) and generating one or more benefits, such as:

• protection and restoration of biodiversity and ecosystems, soil health soil e prevenzione del degrado del suolo (il requisito minimo, sempre necessario );
• mitigation and adaptation to climate change;
• sustainable use and protection of water and marine resources;
• transition towards a circular economy;
• prevention and control of pollution (CRCF, article 7).

The operator or group of operators intending to communicate collateral benefits that contribute to sustainability objectives, beyond the minimum requirement, must comply with the methodologies of certification applicable established in the delegated acts (CRCF, articles 7,8).

European implementing acts, 2025-2026

The full operation of the system established by the CRCF regulation depends on the adoption of further implementing and delegated acts:

• the implementing regulation (EU) 2025/2358 defines the rules on certification schemes, certification bodies (accredited according to the EN ISO/IEC 17065 standard) and audits;
• the delegated regulation (EU) 2026/285 establishes the first certification methodologies for permanent removals (DACCS, BioCCS, biochar);
• the methodologies for the carbon farming — agriculture and agroforestry, rewetting of peatlands, afforestation — are expected by 2026, with further delegated regulations;
• by December 2028, the single registry of the European Union will then be established to ensure full traceability of certified units and prevent double counting.

The Italian registry of agroforestry carbon credits

In Italy the public Register of carbon credits generated on a voluntary basis by the national agroforestry sector was established at the CREA (Council for Agricultural Research and Economics Analysis) by decree-law 13/2023, converted with amendments by law 41/2023 (article 45, paragraphs 2-quater–2-octies).

The interministerial decree MASAF-MASE 15 October 2025 adopted the implementation guidelines for the forestry section of the register. Activities admitted to generate credits — each credit equal to one ton of CO₂ absorbed and stored — include:

• sustainable forest management;
• afforestation and reforestation;
• wood arboriculture;
• agroforestry systems;
• long-lasting wood products.

The conditions are strict: the practices must be certified by accredited third parties and must be additional compared to European, national and regional regulatory obligations. Projects must have a minimum duration of twenty years, according to what was communicated by the ministry.

Italian guidelines also prohibit the planting and use of exotic and invasive species: a restriction that excludes from the national register investment models based on plantations of fast-growing alien species (e.g. Paulownia, Eucalyptus, Robinia pseudoacacia, the latter included among invasive species in Italy).

The credits registered in the register cannot be used in the EU ETS market (Legislative Decree 47/2020) nor in the international aviation CORSIA system: while contributing to the national absorption targets accounted by ISPRA, they are relevant exclusively for the voluntary market. The decree on the methods of registration, updating and control of credits, the regulation of the register and the guidelines for the agricultural section are still awaited.

The voluntary market in Italy

The CREA Carbon Monitoring Unit has been monitoring for over a decade voluntary forest market in Italy. The data cited in the guidelines indicate volumes traded up to about one million tons and average prices increased from €12/t in 2020 to €28/t in 2022, in an unstructured market, with heterogeneous calculation methods, scarce independent certification and a clear preference of Italian buyers for credits generated abroad, at lower prices. The credits from agricultural practices have recorded quotations even more modest.

This leads to a first operational indication: revenues from carbon credits currently constitute, at best, a supplement to agricultural and forestry income — subject to initial investments, certification costs and multi-year monitoring — and not an income able to replace income from timber or crops. The high profitability estimates circulating in some commercial proposals do not appear to be supported by available market data.

The tax regime, after the reform of agricultural income

The tax reform clarified the treatment of proceeds. Legislative Decree 192/2024, implementing Delegation Law 111/2023, introduced in article 32, paragraph 2, letter 'b-ter' of the TUIR a new category of agricultural activities producing agricultural income: the production of goods, including intangible ones, through cultivation, breeding and forestry, which contribute to environmental protection and the fight against climate change. Included are the carbon credits, provided that they are duly certified.

The consideration for the transfer of credits contributes to agricultural income, on a cadastral basis, up to the limit of the consideration of sales of agricultural goods registered for VAT purposes (the so-called agricultural limit). The excess part constitutes business income, determined on a flat-rate basis with a profitability coefficient of 25% (TUIR, article 56-bis, paragraph 3-ter), unless otherwise opted (i.e., the choice of the ordinary analytical regime). The Revenue Agency provided operational instructions with Circular 12/E of 8 August 2025.

Before the reform, the practice instead qualified such proceeds as business income (ruling no. 365 of 16.9.2020).

ETS, 2040 target and market outlook

The European Union Emissions Trading System (EU ETS, directive 2003/87/EC), operational since 2005, is the mandatory market of carbon where large energy and industrial plants, aviation and maritime transport must return allowances equal to their own emissions. It highlights two profiles here: agroforestry credits from the Italian registry remain excluded, as seen, and it is precisely in this system that the European Commission intends to integrate the permanent removals certified CRCF.

Regulation (EU) 2026/667 has introduced into the European Climate Law thebinding target By 90% net emissions reduction by 2040 (compared to 1990) and postponed to 1 January 2028 the start of theETS2 (Emissions Trading System 2), the second and distinct trading system, referring to fuels placed on the market for buildings and road transport, originally planned for 2027.

The amended legislation also commits the Commission to consider, in post-2030 legislation, the role of permanent removals in the ETS system to offset residual difficult-to-eliminate emissions and, from 2036, a contribution of high-quality international credits within the limit of 5% of net 1990 emissions (European Climate Law, article 4, paragraph 5).

On 17 July 2026 the European Commission then presented the proposal to revise the EU ETS for the post-2030 phase. The proposal provides for the integration into the system, between 2031 and 2040, of a maximum of 250 million units of permanent removal certified CRCF — only BioCCS e DACCS — through a centralized purchase mechanism financed by the auction of additional allowances.

The biogenic absorptions from forests and soils remain instead outside the ETS: their outlet remains the voluntary market, in addition to contributing to the national targets of the LULUCF sector (Land Use, Land-Use Change and Forestry). On this last front, Italy shows a favorable outlook: according to ISPRA 2026 scenarios, the sector's net removals would reach -42.8 MtCO₂eq by 2030, exceeding the target of -35.8 MtCO₂eq set for Italy by Regulation (EU) 2018/841 (LULUCF).

Risks to assess before investing

The new regulatory framework, although promising, requires operators to conduct a careful preliminary risk analysis:

• permanence and responsibility: the operator is liable for carbon emissions during the monitoring period (fires, plant diseases, land use changes) and temporary units expire at the end of the period, unless re-certified;
• additionality: practices that are already ordinary or legally required do not generate credits, and the reference baseline may penalize those already virtuous;
• double counting: traceability in registers (national and, from 2028, European Union) is a condition for the commercial validity of credits;
• prices and costs: low and volatile quotations despite multiyear certification, verification and monitoring costs;
• biodiversity: literature has found that several schemes of carbon farming lack adequate safeguards to ensure a net positive impact on biodiversity (Scheid et al., 2023), a profile that CRCF and the Italian guidelines aim to oversee with sustainability criteria;
• species constraints: the Italian registry excludes exotic and invasive species, with direct effects on planting selection.

Preliminary conclusions

Investment in forest and agroforestry projects aimed at carbon credits today has, for the first time, a defined legal framework at European and Italian levels. However, the conditions for success are stringent: native species, twenty-year commitments, independent certification, demonstrated additionality, continuous monitoring.

For the moment, credit revenues can now be planned as an integration of agricultural and forestry income, pending the European methodologies of carbon farming and the Italian implementing decrees complete the system and reveal its actual market depth.

Proactive compliance, supported by qualified legal and agronomic consultancy, remains the best guarantee to transform a climate obligation into a sustainable competitive resource.

Dario Dongo

Credit cover Fabio Savini

References

EU legislative sources

Commission Delegated Regulation (EU) 2026/285 of 3 February 2026 supplementing Regulation (EU) 2024/3012 of the European Parliament and of the Council by establishing the certification methodologies for permanent carbon removals activities. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AL_202600285

Commission Implementing Regulation (EU) 2025/2358 of 20 November 2025 laying down rules for the application of Regulation (EU) 2024/3012 of the European Parliament and of the Council as regards certification schemes, certification bodies and audits. OJ L, 2025/2358. https://eur-lex.europa.eu/eli/reg_impl/2025/2358/oj

Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’). Consolidated text: 07/04/2026. http://data.europa.eu/eli/reg/2021/1119/2026-04-07

Regulation (EU) 2024/3012 of the European Parliament and of the Council of 27 November 2024 establishing a Union certification framework for permanent carbon removals, carbon farming and carbon storage in products. ELI: http://data.europa.eu/eli/reg/2024/3012/oj

Regulation (EU) 2026/667 of the European Parliament and of the Council of 11 March 2026 amending Regulation (EU) 2021/1119 as regards the setting of a Union intermediate climate target for 2040. OJ L, 2026/667, 18.3.2026. ELI: http://data.europa.eu/eli/reg/2026/667/oj

Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework (‘LULUC Regulation’). Consolidated text: 11/05/2023. http://data.europa.eu/eli/reg/2018/841/2023-05-11

Italian legislative and administrative sources

Revenue Agency. (2025). Circular No. 12/E of August 8, 2025 — Irpef reform, revision of the regulation of land income and update of cadastral databases (articles 1 and 2 of Legislative Decree December 13, 2024, No. 192). https://www.agenziaentrate.gov.it/portale/documents/d/guest/circolare-redditi-terreni-08-08-25

Decree-law February 24, 2023, No. 13, converted with amendments by Law April 21, 2023, No. 41 — Urgent provisions for the implementation of the National Recovery and Resilience Plan (PNRR) and the National Climate Plan (PNC), as well as for the implementation of cohesion policies and the Common Agricultural Policy (article 45, paragraphs 2-quater–2-octies). Normattiva. Last update to the act: 04/20/2026. https://www.normattiva.it/uri-res/N2Ls?urn:nir:stato:decreto.legge:2023;13~art45

Legislative Decree December 13, 2024, No. 192 — Revision of the income tax regime (IRPEF-IRES). https://def.finanze.it/DocTribFrontend/getAttoNormativoDetail.do?ACTION=getSommario&id=%7B8BE74519-BFBF-4239-A4C6-476C1F6CEFD5%7D.

Ministry of Agriculture, Food Sovereignty and Forestry, in concert with the Ministry of Environment and Energy Security. (2025). Decree October 15, 2025 — Adoption of guidelines aimed at identifying criteria for the implementation of the public registry of carbon credits voluntarily generated by the national agricultural and forestry sector, forestry section. Official Gazette, General Series No. 268 of November 18, 2025. https://www.gazzettaufficiale.it/eli/id/2025/11/18/25A06145/sg

Institutional reports and literature

European Commission, DG CLIMA. (2026, February 3). EU sets world’s first voluntary standard for permanent carbon removals. https://climate.ec.europa.eu/news-other-reads/news/eu-sets-worlds-first-voluntary-standard-permanent-carbon-removals-2026-02-03_en

ISPRA — Higher Institute for Environmental Protection and Research. (2026). National Inventory Document 2026. Italian Greenhouse Gas Inventory 1990-2024 (Reports 428/2026). https://www.isprambiente.gov.it/en/publications/reports/national-inventory-document-2026-italian-greenhouse-gas-inventory-1990-2024

ISPRA — Higher Institute for Environmental Protection and Research. (2026). Greenhouse gas emissions in Italy: reduction targets and emission scenarios. Edition 2026. https://www.isprambiente.gov.it/en/publications/reports/greenhouse-gas-emissions-in-italy-reduction-targets-and-emission-scenarios-edition-2026

MASAF. (2025). Lollobrigida: the forest carbon credit registry is born. https://www.masaf.gov.it/Crediti_Carbonio_Forestali

Carbon Monitoring Unit, CREA-PB. Monitoring of the voluntary forest carbon credit market. https://www.nucleomonitoraggiocarbonio.it/it/

Scheid, A., McDonald, H., Bognar, J., & Tremblay, L.-L. (2023). Carbon farming co-benefits: Approaches to enhance and safeguard biodiversity. Ecologic Institute; Institute for European Environmental Policy. https://www.ecologic.eu/sites/default/files/publication/2023/Scheid-2023-carbon-farming-and-co-benefits-web.pdf