This paper reviews the debate on the proposal to introduce a green payment in Pillar 1 of the CAP since the publication of the Commission’s legislative proposals for the EU’s Common Agricultural Policy post-2013 in October 2011 to June 2012. Both arms of the legislative authority have begun to formulate their positions in response to stakeholder reactions. Many relevant details of how the proposals will be implemented remain unclear, but an attempt is made to examine their potential contribution to environmental improvement. Increasing the ambition of agri-environment measures in rural development programmes in Pillar 2, combined with strengthened cross-compliance standards, could offer more effective environmental protection at a lower cost in terms of foregone food production. The legislative process to date indicates that the final outcome will be based on the Commission’s original ideas but there is still scope to improve the environmental impact of CAP spending in the next MFF period.