With the ‘Fit for 55’ package, need to revise the LULUCF Regulation to mitigate both climate and biodiversity crises

Climate action

The ways we use our land and forests require urgent changes which should be in line with the speed and scale of the climate emergency we are facing. The upcoming presentation of the EU’s ‘Fit for 55’ legislative package, with the revision of the LULUCF Regulation, is the right moment for such a far-reaching revision – argues Senior Climate and Land Use Policy Coordinator, Ulriikka Aarnio from Climate Action Network (CAN) Europe.

This article was first published in Energy Post.

While drastic emission reductions are key in averting catastrophic climate change, diverse and resilient lands and forests have long been recognised as equally important. The EU legislation fails to incentivise changes needed on forests, peatlands and other natural ecosystems to both increase carbon sequestration and support biodiversity.
Significant loss of carbon sinks and stocks

The EU’s current Regulation for the Land Use, Land Use Change and Forestry (LULUCF) goes back to 2018. It was adopted as part of the 2021–2030 energy and climate policy framework which, at that time, aimed to implement the EU’s emissions reduction target of at least –40% by 2030. Following an agreement on a more ambitious 2030 target of at least –55% net emission reductions, the European Commission will present in July proposals to revise the EU’s climate and energy legislation for the period 2021–2030. A far-reaching revision of the LULUCF regulation should be an important part of this upcoming legislative package.

The core component of the current Regulation is a ‘no-debit’ rule, requiring Member States to ensure that accounted emissions (debits) from all categories within the LULUCF sector do not exceed accounted removals (credits) from 2021 to 2030. However, the accounting rules for determining debits or credits allow for significant loss of carbon sinks and stocks that are not visible in the accounting books by setting baselines that incorporate future harvesting levels that ‘bake in’ past emissions and that exclude emissions from wetlands. So in reality, the regulation allows the EU’s sink to decrease.

The carbon sink by the LULUCF sectors has been decreasing significantly in the last years to current -265 Mt of CO2 in 2019. This last figure consists of ca. 135 Mt of emissions (mainly from croplands, wetlands and land conversion to settlements) and of -400 Mt of removals (mainly from managed forests). Under the current policy the sink is allowed to further decrease to -225 Mt by 2030 without Member States accumulating any debits. This is what is expected if Member States move on with their plans to increase forest harvesting and continue to drain peatland soils for agriculture, forestry and peat extraction.

This kind of ‘business as usual’ must not be accepted under the revised regulation. To meet the long-term goals of the Paris Agreement, the LULUCF sectors need to urgently increase the amount of CO2 that is removed from the atmosphere and stored in landscapes. This must be done while restoring ecosystems in order to support and enhance the long-term viability of natural resources, ecosystem services, biodiversity and ecological food production. If the EU wants to contribute towards limiting warming to 1.5°C without significant overshoot, there is a pressing need for the land sector to be part of the solution over this current decade.

An ambitious target for the LULUCF sector

Civil society organisations call on the EU to aim to increase the LULUCF sector’s net contribution to -600 Mt of CO2 annually by 2030. The basis for that is a number of academic studies assessing the potential size of an ecologically viable LULUCF sink in the EU, aligned with the adaptation needs and the EU’s Biodiversity Strategy. Öko Institute’s exploratory analysis, which reviews a wide range of studies, assesses a potential for an EU net sink up to -600 Mt annually by 2030. The EU Transition Pathways Explorer EUCalc, put together by a large academic consortium, shows a potential for the LULUCF sink of -570 Mt per year in 2030, and -787 Mt in 2050.

To achieve a -600 Mt net LULUCF goal for 2030 there need to be radical changes to how we use land across the EU. Most importantly forest harvesting rates must be reduced significantly and forests must be managed with a close-to-nature approach, as the forests’ ability to absorb carbon is closely related to harvesting rates. There needs to be a significant reduction in the consumption and production of animal products, such as meat and dairy, a reform of the EU’s bioenergy rules, and a shift to a more circular economy. Emissions from organic soils need to be drastically reduced, through careful application of re-wetting approaches, and carbon stocks on cropland dramatically increased, through a major expansion of agroforestry and other climate and biodiversity-friendly farming practices.
ETS, ESR and LULUCF – no fungible targets

Net removals by the LULUCF sector need be additional to emissions reductions in other sectors and kept under a separate target with no flexibility with the Emissions Trading System (ETS) and Effort Sharing Regulation (ESR) sectors. This is critical because emission reductions and removals in the LULUCF sector are not equal to emissions in other sectors and the two cannot simply be considered fungible. Measuring emissions and removals in the land sector is less accurate and land-based carbon stocks cannot be considered permanent in the same way as reducing fossil fuel emissions and keeping fossil fuels in the ground can. The climate and ecological crisis requires all sectors to do their maximum effort without progress in one undermining progress in the other. Under the current regulation, the LULUCF sink’s contribution toward the now old 40% emissions reduction target was capped to an overall -280 Mt over ten years.

Honest accounting and biodiversity restoration

The current LULUCF Regulation fails to provide transparency on how Member States set their forest reference levels. This can lead to large amounts of unaccounted emissions. Setting an overall LULUCF target of -600 Mt by 2030, with individual targets at the national level, will allow for accounting in relation to a future goal instead of an historical point in time or a constructed future baseline.
The LULUCF sector is fundamental, not just to climate change mitigation, but also to the EU’s natural environment, its wildlife and people. Changes in the incentives for forestry and land use can have either negative or positive consequences for biodiversity. The revised legislation must remain mindful of the impacts to biodiversity and ensure that concrete links will be drawn between the LULUCF Regulation and the EU’s biodiversity objectives, including those set out in the Biodiversity Strategy, in the Restoration Law and the Birds and Habitats Directive. A complementary carbon stock reporting system will allow the EU to address these gaps and ensure there are no incentives for a conversion of biodiversity rich ecosystems.

Keeping in line with the path towards climate neutrality

The revision of the LULUCF Regulation is an important opportunity in the EU’s aim to mitigate both climate and biodiversity crises. For that, more adequate targets as well as better-defined and transparent rules are needed for the LULUCF sector to keep in line with the path towards climate neutrality. Protecting and restoring forests, peatlands, and other natural ecosystems remains the cheapest, most effective and most readily available way to accomplish that.