Agricultural practices are becoming increasingly essential for climate change because of their influential role in carbon sequestration. For example in cultivated lands carbon remains captured within the soil; if afforestation or reforestation practices are in place, carbon becomes subject of long-term sequestration as well as in the case of land or forestry rotation practices. When land is converted for fuel crops, the amount of GHG reductions depends on the net effects that the biofuels feedstock production releases on the yields (see also Section 2.3). The occurrence of positive benefits for climate change mitigation from agricultural biofuels practices is mostly not recognised by the society. On the contrary, various projects aiming at improving energy efficiency or reducing emissions generated by the industrial sector receive emission permits under the requirements of the Kyoto Protocol. Furthermore, even though the Protocol addresses carbon permits for bioenergy production, current practices to account for these mechanisms are similar to those of energy generation from grids. This leaves developing countries, where technology level is limited, incapable of contributing to GHG emission reductions and generating income from bioenergy credits. Similarly, afforestation and reforestation accounting practices for carbon payments in developing countries still remain too complex to be implemented. On the other hand, these practices have not yet been incorporated into the existing European Union Emission Trading System (ETS).

The Kyoto Protocol established three main mechanisms for carbon reductions: (1) International Emission Trading System; (2) Joint Implementation (JI) allowing carbon trading projects between developed countries and economies in transition; and (3) Clean Development Mechanism (CDM) allowing the trading of carbon reductions between developed and developing countries. The latter is an essential tool for developing countries to generate carbon credits. However, while most of current projects consist in reducing GHGs from energy efficiency, wind and solar or biomass energy projects, agricultural land-use change (including biofuels feedstock production) and afforestation and reforestation activities are not yet eligible for certified emissions in CDM. Future scenarios may be possible under post-Kyoto negotiations after 2012. These should include land-use changes (as well as afforestation and reforestation policies) to compensate countries for the carbon credits gained under land conversion for biofuels feedstock and biomass production.

Similarly, the possibility to develop a carbon trading system for bioenergy activities is under scrutiny. Brazil is moving toward the establishment of a domestic carbon market based on a cap-and-trade system for ethanol. The sugar cane industry believes that numerous advantages for the country exist (Brazil Institute, 2009). Firstly, the system would grant the industry to trade on sugar cane by-products and therefore providing opportunities to capture carbon emissions. Secondly, it would also support value-added creation encouraging the international market to purchase differentiated agricultural products and increase the supply chain worldwide. Brazil is also pushing toward an afforestation trading system to allow land-use change and forestry management to account for carbon reductions. This argument is based on Brazilian commitment to reduce deforestation by 75% by 2017 and the possibility that the United States could soon adopt a voluntary cap-and-trade mechanism on bioenergy and afforestation. The consequent realisation of a bilateral trade between Brazil and United States on these new carbon markets would decrease carbon emissions and distribute the benefits of carbon credits from bioenergy sources across farmers.