The goals of the Paris Agreement and the Convention on Biological Diversity call for a global transition to sustainability. To achieve these goals, subsidies can be implemented. Subsidies are pervasive especially (but not only) in the agricultural sector. The agricultural sector plays an important role in the transition to sustainability as agriculture can both benefit and harm climate and biodiversity. Some agricultural subsidies seem environmentally beneficial, but the majority appear environmentally destructive. Against this background, this article applies a qualitative governance analysis—including aspects of legal analysis—to provide a comprehensive review of agricultural subsidies in the EU and to discuss the role of subsidies in transitioning towards sustainability. Results show that agricultural subsidies need to be substantially downscaled and implemented as complementary instruments only because other policy instruments such as quantity control instruments are more effective in addressing the drivers of non-sustainability, i.e., fossil fuels and livestock farming. However, subsidies remain a useful complementary instrument to remunerate the provision of public goods (e.g., in nature conservation) as long as they are constructed in a way that they do not suffer from typical governance problems. In addition, data and transparency need to be improved, subsidies for research and development increased, and environmental objectives streamlined through EU law to ensure all agricultural subsidies are in line with global environmental goals.

Spatially separated locations may differ greatly with respect to their electricity demand, available space, and local weather conditions. Thus, the regions that are best suited to operating wind turbines are often not those where electricity is demanded the most. Optimally, renewable generation facilities are constructed where the maximum generation can be expected. With transmission lines limited in capacity though, it might be economically rational to install renewable power sources in geographically less favourable locations. In this paper, a stochastic bilevel optimisation is developed as a mixed-integer linear programme to find the socially optimal investment decisions for generation expansion in a multi-node system with transmission constraints under an emissions reduction policy. The geographic heterogeneity is captured by using differently skewed distributions as a basis for scenario generation for wind speeds as well as different opportunities to install generation facilities at each node. The results reinforce that binding transmission constraints can greatly decrease total economic and emissions efficiency, implying additional incentives to enhance transmission capacity between the optimal supplier locations and large demand centres.