Under EU legislation adopted in May 2018, EU Member States have to ensure that greenhouse gas emissions from land use, land use change or forestry are offset by at least an equivalent removal of CO₂ from the atmosphere in the period 2021 to 2030.
The Regulation on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry (LULUCF) into the 2030 climate and energy framework was adopted by the Council on 14 May 2018, following the European Parliament vote on 17 April 2018.
The Regulation implements the agreement between EU leaders in October 2014 that all sectors should contribute to the EU's 2030 emission reduction target, including the land use sector.
It is also in line with the Paris Agreement, which points to the critical role of the land use sector in reaching our long-term climate mitigation objectives.
The Regulation sets a binding commitment for each Member State to ensure that accounted emissions from land use are entirely compensated by an equivalent removal of CO₂ from the atmosphere through action in the sector. This is known as the “no debit” rule.
Although Member States already partly undertook this commitment individually under the Kyoto Protocol up to 2020, the Regulation enshrines the commitment for the first time in EU law for the period 2021-2030.
Moreover, the scope is extended from only forests today to all land uses (and including wetlands by 2026).
The new rules provide Member States with a framework to incentivise more climate-friendly land use, without imposing new restrictions or red tape on individual actors.
This will help farmers to develop climate-smart agriculture practices and support foresters through greater visibility for the climate benefits of wood products, which can store carbon sequestered from the atmosphere and substitute for emission-intensive materials.
Emissions of biomass used in energy will be recorded and accounted towards each Member State's 2030 climate commitments, through the correct application of accounting in LULUCF.
This breakthrough addresses the earlier broad criticism that emissions from biomass in energy production were not accounted for under previous EU law.
As forest management is the main source of biomass for energy and wood production, more robust accounting rules and governance for forest management will provide a solid basis for Europe's future renewables policy after 2020.
The LULUCF Regulation
The Regulation allows some flexibility for Member States.
For instance, if a Member State has net emissions from land use and forestry, they can use allocations from the Effort Sharing Regulation to satisfy the "no debit" commitment.
Moreover, Member States can buy and sell net removals from and to other Member States. This can encourage Member States to increase CO₂ removals beyond their own commitment.
On the other hand, a Member State may choose to enhance removals or reduce emissions in the LULUCF sector, thereby helping compliance of the agriculture sector in the Effort Sharing Regulation where emissions from fertilizer and livestock are accounted.
Stakeholders were involved at various stages in the development of this proposal.
Consultations were carried out in 2015, including:
Following these consultations and the analysis of EU climate policy targets for 2030, the Commission carried out an impact assessment.
The public had the possibility to provide feedback on the legislative proposal after it was adopted by the European Commission. A summary of the feedback was presented to the European Parliament and the Council.
In October 2014, the EU agreed on a clear commitment: all sectors, including land use and forestry, should contribute to the EU's target to reduce greenhouse gas emissions by at least 40% by 2030 compared to 1990 levels. The proposal on land use and forestry sets out a binding commitment for each Member State and the accounting rules to determine compliance and covers CO₂ from forestry and agriculture.
Together with the proposal for the revision of the EU Emission Trading System (ETS) and the Effort Sharing proposal on national emissions targets for all other sectors not covered by the EU ETS (see fact sheet), this will contribute to the achievement of the EU's commitments under the Paris Agreement on climate change. The new regulatory framework is based on the key principles of fairness, solidarity, flexibility and environmental integrity.
The Commission proposes a careful balance between more incentives to capture carbon in soil and forests and the need to maintain the environmental integrity of the EU climate framework, so as to incentivise emission reductions in the buildings, transport and agriculture sectors.
Land use and forestry include our use of soils, trees, plants, biomass and timber, and are in a unique position to contribute to a robust climate policy. This is because the sector not only emits greenhouse gases but can also remove CO₂ from the atmosphere. EU forests absorb the equivalent of nearly 10% of total EU greenhouse gas emissions each year.
By helping to preserve and strengthen the capacity of our forests and soils to capture CO₂ in a sustainable way, this proposal benefits all Europeans. Member States and the EU will be able to better assess climate change benefits related to agriculture and forestry, get a better understanding of effective climate protection measures in these sectors, while at the same time securing food production, protecting biodiversity, and encouraging the development of a bio-based economy.
Emissions of biomass used in energy will be recorded and counted towards each Member State's 2030 climate commitments. This addresses the common criticism that emissions from biomass in energy production are not currently accounted for under EU law. As forest management is the main source of biomass for energy and wood production, more robust accounting rules and governance for forest management will provide a solid basis for Europe's future post-2020 renewables policy.
The new rules will support farmers in developing climate-smart agriculture practices, which seek synergies between productivity, resilience and emissions reductions, without imposing restrictions or red tape for individual farms. It will support foresters and forest-based industries through greater visibility for the climate benefits of wood products which have a longer life-time and which store carbon from the atmosphere for long periods. It will provide a framework for Member States to incentivise more climate-friendly land use.
The proposal requires each Member State to ensure that accounted CO₂ emissions from land use are entirely compensated by an equivalent removal of CO₂ from the atmosphere through action in the same sector. This commitment is referred to as the "no debit rule". In essence, if a Member State cuts down their forests (deforestation), it must compensate the resulting emissions by planting new forest (afforestation) or by improving the sustainable management of their existing forest, croplands and grasslands. In this way the "no-debit" commitment incentivises Member States to take actions that increase the absorption of CO₂ in agricultural soils and forests. Although Member States undertook this commitment under the Kyoto Protocol up to 2020, the proposal enshrines the commitment in EU law for the period 2021-2030.
The proposal also contains the accounting rules to be used by all Member States so that compliance with the "no-debit" commitment is calculated consistently across all Member States. The accounting rules regulate how emissions and removals – i.e. the absorption of CO₂ by agricultural lands and forests – are to be recognised, measured and compiled in a standardised way.
The more robust accounting rules in the Commission proposal build on those previously established at international level under the Kyoto Protocol, which commits its Parties by setting internationally binding emission reduction targets. The modifications that the Commission proposes today will make the accounting rules fit for purpose for the period from 2021 to 2030.
The technical rules are simplified and updated, with the current methodology regarding land use accounting mostly kept, but upgraded and made relevant for a post-Kyoto protocol period (post-2020) to improve environmental integrity. The main updates are:
In order to improve both accuracy and the identification of new mitigation action, the proposal updates the base period to average accounts for the years from 2005 to 2007. This creates a stable benchmark more closely aligned with the non-ETS 2005 base year.
Simplifying and streamlining the reporting and accounting systems to the internationally recognised approach based on tracking emissions and removals associated with different categories of land use (e.g. forest land, cropland, grassland). In the EU a standard accounting period of 20 years will be introduced for land use change, except for afforested land where Member States may choose a 30 year period, based on national justifications such as forest conditions.
The proposal also introduces a new EU governance process for monitoring benchmarks, called "forest management reference levels" that Member States will use to calculate emissions and removals from managed forests. This new EU governance approach will increase transparency and comparability across Member States, while fully taking into consideration national forest circumstances and priorities.
The proposal provides several flexibilities to Member States to meet their "no-debit" commitment while maintaining environmental integrity. If the net removals of CO2 are greater than the net emissions of CO₂ from land use in the first compliance period (2021-2025), these can be banked and used in the next compliance period (2026-2030). This gives Member States the flexibility to deal with fluctuations caused by growth cycles or other variable conditions.
If a Member States has net emissions from land use and forestry, it can use allocations from the Effort Sharing Regulation to satisfy its "no debit" commitment. They can also buy and sell net removals from and to other Member States. This encourages Member States to increase CO2 removals beyond their own commitment.
Where a Member State generates net removals beyond their commitment by increasing forest area (i.e. afforestation) or through good practice in agriculture (i.e. managed grassland and managed cropland) a number of these credits can be used to comply with national targets in the Effort Sharing Regulation, although this amount is strictly limited to ensure the environmental integrity of these targets. Only net credits generated domestically by afforested land, managed grassland and managed cropland can be transferred and used for compliance under the Effort Sharing Regulation. Before a similar flexibility is considered for managed forest land, the robustness of the reference levels for all Member States based on the new EU governance process should be evaluated.
The proposal establishes two compliance periods from 2021-2025 and from 2026-2030 respectively. A five year cycle is appropriate for land use because absorptions and emissions in the sector can vary significantly from year to year, due to weather and other natural phenomena. This closely aligns the proposal with the 5-year review cycle set out in the Paris Agreement and is in line with the Commission commitment to Better Regulation.
Member States are nevertheless expected to report on their emissions and removals annually, applying the standardised accounting rules, and on policies and measures undertaken in the sector every second year. The Commission will carry out a comprehensive review of the data after each 5-year period and determine compliance with the "no debit" commitment.
Where a Member State does not meet its commitment in either period, the shortfall is deducted from their allocation in the Effort Sharing Regulation.
Certain natural events can cause trees to fall during storms, die (for example from infection and pests) or burn in wildfires. In the last 25 years, globally, forest fire seasons have already become 20% longer and more severe and this trend is expected to worsen in the coming decades due to increasing global temperatures.
The scale of emissions associated with extreme events that are driven by nature – i.e. natural disaster – can be substantial. Emissions that are outside the control of Member States may be excluded from the accounts for land use and forestry. Clear rules limit this exemption to ensure that it does not create a loop-hole.