COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Regulation of the European Parliament and the Council amending Regulations (EU) 2018/841 as regards the scope, simplifying the compliance rules, setting out the targets of the Member States for 2030 and committing to the collective achievement of climate neutrality by 2035 in the land use, forestry and agriculture sector, and (EU) 2018/1999 as regards improvement in monitoring, reporting, tracking of progress and review
Date: 2021-07-14
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Member State, EU environmental policy, European forestry policy, adaptation to climate change, carbon neutrality, environmental monitoring, farming sector, greenhouse gas, land use, pollution control measures

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   EUROPEAN COMMISSION  Brussels, 14.7.2021  SWD(2021) 610 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a Regulation of the European Parliament and the Council amending Regulations (EU) 2018/841 as regards the scope, simplifying the compliance rules, setting out the targets of the Member States for 2030 and committing to the collective achievement of climate neutrality by 2035 in the land use, forestry and agriculture sector, and (EU) 2018/1999 as regards improvement in monitoring, reporting, tracking of progress and review {COM(2021) 554 final} - {SEC(2021) 554 final} - {SWD(2021) 551 final} - {SWD(2021) 609 final}  
 
 
Executive Summary Sheet (Max 2 pages) 

Impact assessment on the review of the Land Use, Land Use Change and Forestry (LULUCF) Regulation  

A. Need for action 

What is the problem and why is it a problem at EU level?  

The  main  problem  is  that  the  capacity  of  the  LULUCF  sector  to  remove  CO2  from  the  atmosphere  has 
been  decreasing:  a  fifth  of  net  removals  from  the  sector  were  lost  between  2013  and  2018.  The  main 
drivers  are  increasing  wood  harvests,  continued  emissions  from  organic  soils,  and  lack  of  incentives. 
According  to  the  Commission’s  projections,  reversing  this  trend  in  the  next  decade  is  feasible,  but  the 
current  regulatory  framework  does  not  provide  sufficient  incentives.  Other  problems  are  the  lack  of  an 
integrated  policy  framework  to  enhance  synergies  in  the  land  sector  (agriculture  and  LULUCF),  the 
complexity of the LULUCF accounting rules, and the quality gaps in monitoring and reporting systems. 

What should be achieved? 

The  main  policy  objective  is  to  achieve  climate  neutrality  in  the  land  sector  by  2035  (i.e.  balance  of 
emissions and removals from LULUCF and agriculture); other objectives are to design a fair, flexible and 
integrated policy framework, to simplify implementation, and to improve monitoring and reporting. 

What is the value added of action at the EU level (subsidiarity)?  

Climate  change  is  a  transboundary  problem  where  coordinated  EU  action  supplements  and  reinforces 
national  and  local  action  effectively.  Coordinated  action  allows  for  high  EU  wide  ambition  while 
recognising different capabilities to act among Member States and allowing for increased cost efficiency 
through appropriate flexibilities between Member States and in relation to other sectoral legislation (ESR). 

B. Solutions 

What are the various options to achieve the objectives? Is there a preferred option or not? If not, 
why? 

Option  1  sets  a  more  ambitious  but  simplified  removal  target  for  the  LULUCF  sector  in  each  Member 
State.  Option  2  combines  simplified  LULUCF  targets  with  better  incentives  to  enhance  LULUCF 
removals via the flexibility with the Effort Sharing Regulation. Option 3 proposes a planning process and 
binding targets towards a climate-neutral land sector (LULUCF and agriculture) in 2035.  

The preferred option is to combine simplified and more ambitious LULUCF national targets in 2030 (as in 
Option  1.2 or Option  2, depending on the level  of the ESR targets) with an EU-wide objective of land-
based  climate-neutrality  in  2035.  It  also  features  a  planning  process  for  land-based  mitigation,  national 
land  targets  for  2035  (to  be  established  at  a  later  stage),  and  upgraded  monitoring  and  reporting 
requirements. 

What are different stakeholders' views? Who supports which option?  

Respondents  to  the  Open  Public  Consultation  had  a  preference  for  more  ambitious  LULUCF  targets, 
which  was  selected  by  45%  of  them  (mostly:  academia,  EU  citizens  and  NGOs).  In  second  place,  the 
integrated targets for the land sector were preferred by 40% of the respondents, mostly the private sector. 
A strengthening of flexibility with the ESR was the most preferred option among public authorities. 

 
 
C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise of main ones)?                                     

More ambitious LULUCF targets will bring clear environmental benefits besides climate neutrality in the 
land sector by 2035, such as co-benefits for climate change adaptation, biodiversity and the bio-economy, 
and  incentives  for  new  business  models  (“carbon  farming”)  that  generate  additional  revenues  for  land 
managers.  The  integrated  planning  process  for  the  land  sector  and  improved  monitoring  and  reporting 
systems will ensure more effective policymaking and policy implementation. 

What are the costs of the preferred option (if any, otherwise of main ones)?                                    

According to the Commission’s modelling (Policy scenario, also called MIX scenario), the most ambitious 
LULUCF  target  envisaged  in  the  Impact  Assessment  (-310MtCO2eq  in  2030)  could  be  achieved  at  a 
modest carbon price of no more than 10 EUR per ton of CO2.  

What are the impacts on SMEs and competitiveness?  

This initiative will not affect SMEs in the land sector in a direct way (i.e. no direct reporting requirements 
at the level of the individual land managers). The proposed targets will drive national mitigation policies 
in  the  land  sector,  which  can  improve  the  long-term  competitiveness  of  the  bio-economy  sectors  (e.g. 
more sustainable provision of food, feed and biomass, and increasing resilience to climate change). 

Will there be significant impacts on national budgets and administrations?  

The  simplification  of  the  compliance  rules  will  decrease  regulatory  costs.  Improving  monitoring  and 
reporting systems will entail some costs, but it will also result in a more efficient use of already funded 
and available datasets and technologies (e.g. remote sensing) and more cost-effective decision making. An 
integrated planning for the whole land sector can build on the existing National Energy and Climate Plans, 
and will result in policy synergies, e.g. with the CAP, the Farm to Fork Strategy, the Forest Strategy and 
the Biodiversity Strategy. Impacts on national budgets would also result from trading of LULUCF credits, 
which could create revenues for Member States who overachieve their targets. 

Will there be other significant impacts?  

The proposed targets are in line with the climate mitigation and carbon removal capacities of the Member 
States and should ensure a fair distribution of the benefits and efforts.  

Proportionality?  

The preferred option is considered proportional to the higher climate ambition of the Fit-for-55 initiative 
and the objective of climate neutrality in 2050.  

D. Follow up 

When will the policy be reviewed?  

A regular review will be foreseen in the legislation. It will be aligned with the review of other legislation 
such as for example in the proposal for the Effort Sharing Regulation.