Role of the land sector in meeting EU’s climate targets

The EU has signed up to the 17 UN Sustainable Development Goals to be achieved by 2030. Among these are Goal 13 to take urgent action to combat climate change and its impacts and Goal 15 to protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss.

The incoming Commission President-elect Ursula von der Leyen set out in her Political Guidelines for the new Commission her ambition that the EU should raise its commitment to reduce greenhouse gases (GHGs) in 2030 from 40% to 50% immediately and to 55% in the first half of the next decade compared to 1990. This is intended to put the EU on course to become the first climate-neutral continent with a net-zero emissions commitment by 2050.

The net-zero commitment refers to the aim in the Paris Agreement “to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century” in order to achieve the long-term temperature goal of holding the increase in average global temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.

Engineering solutions such as direct air capture of carbon dioxide do not yet exist at scale, and this has focussed attention on the potential for land-based solutions to remove carbon from the atmosphere.

The managed land sector can act either as a carbon source or sink. Some types of land use change, such as deforestation, wetland drainage or the ploughing of grasslands, release carbon to the atmosphere. In other ways, such as through afforestation and reforestation, the rewetting of peatlands or building up soil carbon, the land sector can sequester carbon and remove it from the atmosphere.

Including the land sector in the EU’s climate regime

The EU included the Land Use, Land Use Change and Forestry (LULUCF) sector in its domestic climate targets for the first time in its 2030 Climate and Energy Framework. Previously, the EU had only taken account of net emissions from elements of the land sector in its commitments under the Kyoto Protocol.

The Kyoto Protocol does not continue beyond 2020, leaving the rules that would govern LULUCF emissions unclear. In the absence of a common EU methodology, Member States would be able to report and account for LULUCF emissions differently. In October 2014 the European Council directed that the LULUCF sector should be part of the 2030 Climate and Energy Framework. This was accompanied by considerable controversy.

One reason was that the EU’s existing 2030 target of reducing emissions by at least 40% by 2030 had been set before the rules that set out how LULUCF emissions would be addressed were put in place. Because the land sector in the EU was presumed to be a net sink (and therefore a source of emission allowances), there was a fear that including the LULUCF sector in the 2030 accounting would result in weakening the level of ambition in reducing energy and agricultural emissions.

Scientists also pointed out that carbon stored in terrestrial (land-based) ecosystems including above and below-ground carbon stored in forests, vegetation and soils cannot be deemed to be equivalent to fossil carbon stored as fossil fuel  Carbon in fossil fuels is locked up for millennia unless exploited. Carbon stored in terrestrial ecosystems can be easily released if management practices change or due to natural disturbances such as wildfires or storms.

Finally, accounting for emissions from fossil fuel carbon is straightforward because consumption is easily measured. On the contrary, there are huge uncertainties in accounting for terrestrial carbon stored in forests, vegetation and soils as changes in emissions cannot be directly observed and must be estimated indirectly.

An issue specific to the LULUCF sector which the EU inherited from the Kyoto Protocol is that net emissions are determined by policy-based accounting rules rather than equated to the inventory totals reported annually to the UNFCCC. In particular, net emissions from forest management are not determined by simply subtracting the carbon contained in timber removed from the forest from the carbon absorbed by the growing forest. This is because some of the changes in net emissions from year to year reflect variations due to different historical planting rates in the past, rather than just the impact of human-induced changes in management practices which the policy is designed to incentivise.

Instead, net emissions are determined relative to a Forest Management Reference Level which captures the changes in emissions due solely to the legacy effects of differing planting rates in the past. The danger is that any discretion that countries have when establishing these Reference Levels could lead to the artificial generation of allowances rather than real efforts to reduce emissions.

The EU’s accounting framework agreed for the land sector takes some account of these issues. Following the Kyoto Protocol framework, emissions from the LULUCF sector are accounted separately from energy and agricultural emissions.

Member states are required at a minimum to ensure that net emissions of all GHGs from the land sector are in balance (the ‘no-debit’ rule) after accounting rules are applied. This means that emissions produced by the land sector, for example, through the ploughing of grassland or deforestation, should at least be balanced by the emissions removed, for example, through afforestation or forest management. In contrast to emissions covered by the Effort Sharing Regulation (ESR) which are subject to national emissions reduction targets on an annual basis, accounting for LULUCF emissions will be done at five-yearly intervals to avoid introducing too much year-on-year variability.

If there is a surplus of credits based on the accounting rules, some transfer of net credits from the land sector can be used to offset emissions in the ESR sectors. However, the amount of this transfer is capped at the individual country level, linked to the signficance of agricultural emissions in each country.

The Forest Management Reference Levels used to establish net emissions from forest management are subject to careful peer review by the Commission to ensure their realism and avoid the creation of ‘fake’ allowances. As an extra precaution, there is a cap on the volume of carbon credits generated by forest management that can be used to comply with the no-debit rule.

Sequestering carbon in soils, for example, by minimising tillage and practising crop rotation or by adding organic material through the use of cover crops or biochar, is a particularly benign form of carbon removal because it can also improve agricultural resilience, soil health, water retention capacity and biodiversity. Funding under the EU’s Common Agricultural Policy (CAP) could be used more effectively to incentivise farmers to sequester soil carbon.

Forest carbon sequestration is more controversial. The EU’s forest area is increasing but a big push to accelerate afforestation particularly to provide biomass for renewable energy would lead to the transfer of land from agricultural production. This could increase net imports in the absence of changes in food consumption patterns. Carbon sequestration in Europe could then lead to increased emissions abroad due to indirect land use change.

The Commissioner for Agriculture Phil Hogan has proposed that Member States could include schemes such as a Farm Carbon Scheme and a One Hectare Woodland Scheme in their CAP planning after 2020. Agricultural Ministers are willing to consider such initiatives but link them to agreement on a larger CAP budget than what the Commission has proposed. The cap on the transfer of LULUCF credits could mean that Member States would not get full credit for such sequestration.

Around 184 countries have submitted Nationally Determined Contributions (NDCs) under the Paris Agreement with emissions reduction targets. Of these, more than 100 contain explicit mention of the mitigation potential of the LULUCF sector.  LULUCF mitigation globally is expected to contribute 20-25% of the total mitigation indicated by 2030 in the NDCs. Because of the cap on the use of LULUCF credits, the land sector contribution to the EU reduction target for 2030 is much smaller and less than 4%.

Should the EU give more weight in future to land sector GHG removals?

The EU will forward a new and more ambitious revised NDC early next year. It is committed to revising upwards its level of ambition again in the Global Stock-taking under the Paris Agreement later in the decade. More ambitious targets may prompt a further look at the accounting rules affecting the LULUCF sector. This will likely give rise to a re-run of the controversies that preceded the adoption of the 2030 Climate and Energy Framework in 2018.

Important questions will arise around whether the 50%/55% reduction targets announced by Commission President-elect von der Leyen include net emission credits from the land sector or not and, if they do, at what level? Will Member States that use CAP funding to incentivise their farmers to sequester carbon in agricultural soils or to plant more trees be able to use these credits to offset their agricultural emissions or will they remain capped as at present? Will the EU continue to use the Reference Level approach to calculate net emissions from forest management, or will it revert to relying on the inventory figures it submits to the UNFCCC?

The way that the EU answers these questions will determine the importance attached to carbon removals in the land sector in its decarbonisation pathway to 2050. It will also send an important signal to other signatories to the Paris Agreement as they in turn come to revise their NDCs.

This post was written by Alan Matthews. It appeared in German in the online magazine Welternährung Das Fachjournal der Welthungerhilfe Issue 12/2019 under the title Wälder und Böden: durch die CO2-Brille gesehen.

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