Carbon Credits in Latvia: Money for Carbon Sequestration – Do Farmers Know About It?

From Climate Policy to a New Opportunity for Farmers

Reducing carbon emissions and increasing carbon sequestration are increasingly becoming practical issues for business and agriculture. The European Union is developing a common approach to certifying carbon removals, companies are facing a growing need to understand their climate impact, while farmers and forest owners are increasingly being offered opportunities to create not only environmental but also economic value through sustainable land management practices.

As a result, carbon credits are gradually moving beyond the narrow climate policy debate. They are becoming an issue that concerns land management, entrepreneurship, investment, data collection, and future financing opportunities.

These developments also increasingly connect sustainability and business development issues – CO₂ emissions calculations, ESG principles, sustainability strategies, data analysis, risk and opportunity assessment, and access to financing. These are also areas in which Amber Advisory offers its expertise, helping companies and organisations understand sustainability requirements and turn them into practical development solutions.

But How Ready Is the Sector in Latvia for Such a Future?

To better understand the situation, the Sustainability Cluster conducted a small-scale sectoral study, surveying companies involved in carbon credits, agriculture, forestry, and technology. The aim of the study was to identify the sector's views on the key challenges, opportunities, and preconditions for the development of a carbon credit system in Latvia.

The responses highlight several important trends – a lack of awareness, concerns about bureaucracy and regulation, the need for clear methodologies and guidelines, as well as questions about how to ensure sufficient trust and economic incentives to participate in carbon credit projects.

New Rules Are Being Developed in Europe

Until recently, one of the major challenges for the development of the carbon credit market in Europe was the lack of common methodologies. Different approaches were used in different countries and projects to calculate carbon removals, making results difficult to compare and reducing trust in the market.

The situation is changing. The European Union is developing a common framework for the certification of carbon removals and carbon farming – the Carbon Removal Certification Framework (CRCF). Within this framework, methodologies are being developed for different types of carbon removals and emission reductions, including agricultural and agroforestry practices, the restoration of organic soils, and afforestation.

In practical terms, this means that Europe is gradually establishing a methodological basis for a more reliable and transparent carbon credit system.

This process is particularly important for Latvia. The country has significant areas of agricultural land, forests, and organic soils whose management can provide a substantial climate contribution. Therefore, the question is not simply whether Latvia will participate in this process, but how prepared the sector will be to make use of the new opportunities.

Awareness Remains Insufficient

One of the clearest conclusions from our study is the issue of awareness. According to the surveyed sector participants, overall awareness of carbon credit opportunities and the practical functioning of the system in Latvian agriculture and forestry remains insufficient. Awareness was assessed as somewhat higher in forestry than in agriculture, but there is still significant room for improvement in both sectors.

And there are many questions. What exactly qualifies as carbon sequestration? How can it be measured? What data will need to be collected? How does verification work? What requirements will farmers or forest owners have to meet? What will the costs be, and what could the potential economic benefits be? If there are no clear answers to these questions, interest in carbon credits alone does not necessarily mean that stakeholders are ready to participate. This is why access to information and practical knowledge may become one of the most important prerequisites for the development of the market.

Carbon Farming Is Not Just About Credits

In the public debate, carbon credits are often viewed primarily as an opportunity to generate additional income. However, this perspective is too narrow. Carbon farming is largely connected with land management practices aimed at improving soil quality and increasing carbon storage. These may include the use of cover crops, diverse crop rotations, reduced tillage, the preservation of organic matter, the maintenance of permanent grasslands, and more thoughtful water resource management.

At the same time, such practices can help improve soil health, reduce erosion risks, retain moisture, and increase the resilience of farms to extreme weather events. Therefore, the economic benefits of carbon farming may extend beyond the sale of carbon credits. They can also include more efficient use of resources, more stable farm operations, and lower long-term risks.

From this perspective, a carbon credit is not the end goal, but rather one of the instruments through which more sustainable farming practices can also generate additional economic value.

The Main Problem Is Not a Lack of Interest, but a Lack of Practical Opportunities

Our study focused not only on whether the sector sees potential in carbon credits, but also on what currently prevents stakeholders from making use of these opportunities. Awareness and education were repeatedly highlighted in the responses. Participants noted the need to explain more clearly what can and cannot be done within a carbon credit system, as well as to provide practical evidence and guidance for farms considering participation.

Financing is another important issue. In order to introduce new certifiable practices, farmers may need to invest in machinery, data collection systems, or changes to their farming processes. If there is insufficient economic incentive, the motivation to change established practices may be limited.

The study also highlighted concerns about public and landowners' trust in the carbon credit system. Some sector participants emphasised the need to educate the public more about the nature and benefits of carbon credits.

Others focused on bureaucracy and the complexity of the regulatory environment. In the forestry context in particular, concerns were raised that overly detailed regulation could restrict forest owners' ability to participate in voluntary carbon credit projects and reduce Latvia's competitiveness compared with other European countries.

The question, therefore, is not simply whether carbon credits are possible. The question is whether the system will be sufficiently simple, understandable, and economically attractive for land managers themselves to be willing to participate.

Does Latvia Need More Regulation?

An interesting aspect of the study was the question of what type of regulatory framework would be needed to develop the carbon credit system. Among the responses from sector participants, the need for practical guidelines and methodological materials stood out particularly strongly.

At the same time, some respondents expressed the view that additional regulation is not necessarily needed in itself. This leads to an important conclusion: what the sector may need at this stage is not increasingly complex regulation, but rather a clearer and more practically usable framework.

Farmers and forest owners need to understand what exactly they have to do, what data they need to collect, how the results are calculated, and how they can qualify for certification. Practical guidelines and methodological materials could play a key role in reducing the gap between regulation at the European level and its practical implementation in Latvia.

What Should Be the Role of the State and State-Owned Companies?

There was also no complete consensus in the study regarding the involvement of the state and state-owned companies. The majority of respondents considered that participation should be voluntary.

At the same time, participants highlighted the need for a more active public-sector role in developing knowledge, research, and practical solutions. In forestry, the potential role of Latvijas Valsts meži and scientific institutions was particularly emphasised – not only as market participants, but also as developers of knowledge, research, and practical solutions.

At the same time, from the sector's perspective, the interest of ministries and state institutions in developing the carbon credit system is currently insufficient.

This means that the role of the state is likely not simply a question of whether the state itself should actively participate in the carbon credit market. Equally important may be its role in ensuring clear rules, reliable data infrastructure, research, and practical support.

The Next Step for Latvian Agriculture

Our small-scale study does not claim to provide a comprehensive assessment of Latvia's carbon credit market. However, the responses from sector participants clearly highlight several issues that will need to be addressed if Latvia wants to realise the potential of carbon credits.

First, better awareness is needed. Second, clear methodologies and practical guidelines are necessary. Third, economic incentives and access to financing need to be considered so that the implementation of sustainable practices does not become simply an additional cost for farmers. Fourth, trust in data, monitoring, and certification processes needs to be strengthened.

It is precisely in these areas that demand for expertise in sustainability, climate data, CO₂ accounting, monitoring, certification, and access to financing is likely to increase in the coming years.

For farms, it will become increasingly important not only to implement sustainable practices, but also to demonstrate their results through reliable data. This means that preparation for the carbon credit system can begin even before a specific credit is sold – through high-quality data collection, documentation of farming practices, and an understanding of the farm's carbon balance.

Conclusion

The carbon credit system in Latvia is no longer simply an idea for the future. At the European level, a regulatory and methodological framework is being developed that could significantly change how carbon sequestration is assessed and certified in the coming years.

Latvia has significant potential – agricultural land, forests, organic soils, and sectors where practices that increase carbon sequestration can be implemented. However, resources alone are not enough.

Our study shows that the key issues at present are awareness, practical guidelines, financing, bureaucracy, and trust in the system. If these issues are addressed, carbon credits could become not only an instrument of climate policy, but also one of the ways in which Latvian agriculture and forestry can create new economic value.