COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry into the 2030 climate and energy framework and amending Regulation No 525/2013 of the European Parliament and the Council on a mechanism for monitoring and reporting greenhouse gas emissions and other information relevant to climate change
Date: 2016-07-20
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU environmental policy, European forestry policy, climate change, climate change policy, disclosure of information, economic accounts for agriculture, environmental monitoring, greenhouse gas, land use, pollution control

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   EUROPEAN COMMISSION  Brussels, 20.7.2016  SWD(2016) 246 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a  REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry into the 2030 climate and energy framework and amending Regulation No 525/2013 of the European Parliament and the Council on a mechanism for monitoring and reporting greenhouse gas emissions and other information relevant to climate change {COM(2016) 479 final} {SWD(2016) 249 final}  
 
 
Executive Summary Sheet 

A. Need for action 

Why? What is the problem being addressed?  
The European Council has confirmed that the LULUCF sector – including emissions from agricultural 
land and forestry - is part of the 2030 climate and energy framework and should contribute to the "at 
least  40%  domestic"  reduction  target  which  the  EU  has  committed  to  in  the  context  of  the  Paris 
Agreement.  This  IA  discusses  how  this  inclusion  could  be  done  and  sets  out  three  key  problem 
components: 

  Need  for  EU  governance  of  the  LULUCF  sector  after  the  end  of  the  Kyoto  Protocol 

regime.  

  Appropriate  accounting  of  emissions  from  biomass  use  through  LULUCF  accounts  is 

needed.  

  The  cost-efficient  mitigation  potential  of  agriculture  is  lower  than  for  other  sectors, 
while  LULUCF  offers  untapped  mitigation  potential.  Synergies  between  mitigation  on 
land and the agriculture non-CO2 sector therefore need to be developed further.  

What is this initiative expected to achieve?  
- Support progress towards the EU's objective to reduce domestic GHG emissions by at least 40% by 
2030 compared to 1990, and towards the 30% GHG reduction target in non-ETS sectors.  
- Reflect the EU's commitment to the long term vision for limiting temperature increase as outlined in 
the  Paris  Agreement,  as  carbon  removals  will  play  an  increasing  role  on  the  road  towards  2050. 
Specifically,  

 

further  reduce  greenhouse  gas  emissions  and  enhance  removals,  both  in  Effort  Sharing 
sectors and from land; 

  provide a framework for cost-efficient mitigation action on land, particularly with respect to the 

limited mitigation available in the agriculture non-CO2 sector.  

What is the value added of action at the EU level?  
Climate change is a trans-boundary problem which cannot be solved by national or local action alone. 
The  EU  competence  to  take  action  on  climate  change  derives  from  Article  191  of  the  TFEU.  The 
reduction of greenhouse gas emissions and the development of renewable energy sources are among 
the top 10 priorities of the European Commission. The EU has adopted a common emission reduction 
target  through  its  2030  Climate  and  Energy  Framework.  The  implementation  of  the  overall  policy 
framework and its sectoral building blocks require Union-wide legislation. As the EU addresses climate 
change commitments jointly, LULUCF also needs to be addressed in a coordinated manner. 

B. Solutions 
What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
Since 2008, the LULUCF sector is included in the EU's international climate policy commitments under the Kyoto 
Protocol. Since then, a well-functioning monitoring and accounting system with international oversight has been 
in place. For the post-Kyoto phase from 2021 onwards, two critical new design issues were assessed:   
1.  Choice and improvement of accounting rules for emissions and removals in different LULUCF categories:  

 
 
 

choice of base year or period for agricultural land;  
streamlining the reporting/accounting systems and switch to land-based accounting;  
criteria and robust governance for setting forest reference levels.  

2.  The need and extent for flexibility towards the Agriculture sector in the Effort Sharing Regulation (ESR): four 

different levels of flexibility, from zero to high flexibility, were assessed. 

Preferred  option:  a  stand-alone  LULUCF  policy  pillar  would  continue  to  be  utilised  based  on  improved  and 
simplified  accounting  rules.  A  limited  degree  of  flexibility  between  LULUCF  and  the  ESR  would  be  enabled, 
justified on the need derived from the agriculture sector share for each Member State in the ESR. Such a hybrid 
option  (combining  elements  of  the  3  original  policy  architecture  options)  would  be  optimal  for  incentivizing 
mitigation action in both agriculture and LULUCF. 
Who supports which option?  
On  policy  architecture  options:  half  of  respondents  had  no  clear  preference.  1/3  of  respondents,  mostly 

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environmental NGOs and forestry organisations, were in favour of keeping LULUCF as a separate pillar within 
the climate policy framework, making this the preferred option (excluding blank answers). The option of merging 
agriculture  and  LULUCF  in  a  separate  pillar  outside  the  ESR  received  the  least  support  (1/5).  National 
governments  showed  most  preference  for  a  separate  LULUCF  pillar,  possibly  with  flexibility,  or  to  merging 
LULUCF  into  the  ESR.  On  accounting:  strong  interest  of  Member  States  to  maintaining  only  land-based 
accounting  and  in  continuing  with  forest  reference  levels.  Interest  in  building  on  the  current  rules,  with  few 
improvements and streamlining, by all stakeholders. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
Environmental 
Improvement  of  the  accounting  rules  further  enhances  robustness  of  EU  governance  for  LULUCF.  The  IA 
quantifies the credit generation potential on afforested land and agricultural land under current rules (very high) 
and  improved  rules  (lower).  It  also  shows  that  credit  generation  potential  would  still  be  more  than  enough  to 
meet the flexibility needs of the agriculture sector. 
Economic  
It  strikes  the  right  balance  between  flexibility  and  protecting  the  environmental  integrity  of  the  ESR.  The  IA 
concludes  that  under  the  medium  flexibility  option,  the  overall  effect  of  the  reduction  effort  on  agricultural 
production,  consumption  and  net  trade  would  be  very  limited.  It  also  demonstrates  that  medium  flexibility  is 
preferable to full flexibility, as the full flexibility option would completely exempt the agriculture sector from further 
emission  reductions  (in  contrast  to  all  other  sectors  in  the  economy).    The  IA  also  evaluates  the  fairness  of 
distribution for each of the flexibility options (full, medium, low flexibility). It finds that distribution is optimal under 
the medium flexibility option. 
Social  
Distributional  and  social  impacts  mostly  depend  on  the  approach  chosen  by  Member  States  in  policy 
implementation;  on  EU-level,  impact  is  very  limited  if  the  mitigation  measures  are  implemented  with  flexibility 
provisions and with cost-compensating flanking support through the CAP. 

What are the costs of the preferred option (if any, otherwise main ones)?  
Depending  on  the  mitigation  measures  included  in  the  modelling,  marginal  costs  in  €/tCO2eq  for  non-CO2 
mitigation  in  agriculture  (annual  costs  in  2030)  are  projected  to  be  €7.3-31.4  under  the  preferred  option, 
representing  at  least  60%  reduction  in  costs  compared  to  baseline.  Given  the  limited  reduction  needed  by 
agriculture non-CO2 emissions under the preferred option, price increases for agricultural commodities would be 
very limited, and consequently production and consumption changes would be very modest and generally below 
1%  (and  as  low  as  0.1%  for  dairy  products  and  meat).  Net  trade  effects  would  be  below  1%  except  for  meat 
(which nevertheless decreases by just 5%, compared to over 25% in the baseline). Studies highlight that support 
from  flanking  measures  provided  for  instance  through  Rural  Development  Programmes  under  the  CAP  could 
further reduce negative impacts. 
How will businesses, SMEs and micro-enterprises be affected?  
The proposal is addressed to Member States and is to be implemented at national level. This is consistent with 
the  past  experience and  builds  on  existing  LULUCF  legislation which  already  takes  this  approach since  2008. 
The EU has previously successfully protected carbon stores and reduced emissions without directly regulating 
individual actors. 
Will there be significant impacts on national budgets and administrations?  
Additional  administrative  impacts  are  expected  to  be  minimal,  as  relevant  accounting rules  have  already  been 
set  up  in  the  LULUCF  Decision  529/2013/EU.  Member  States  are  already  annually  providing  information  on 
accounted  emissions  and  removals  for  afforestation,  forest  management  etc.  They  are  also  developing 
enhanced systems to account for agricultural land in order to be compliant with existing legislation.  
Will there be other significant impacts?  
No 

When will the policy be reviewed?  
In line with the 5-year review cycles established in the Paris Agreement, a first review would be proposed for 
2024. 

D. Follow up 

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