COMMISSION STAFF WORKING DOCUMENT 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

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 14.7.2021  SWD(2021) 609 final  COMMISSION STAFF WORKING DOCUMENT  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) 610 final}  
 
 
Table of contents 

1. 

Introduction: Political and legal context ..................................................................... 5 

1.1.  The European Green Deal ................................................................................. 5 
1.2.  The “Fit for 55” package ................................................................................... 5 
1.3.  The LULUCF sector .......................................................................................... 6 
1.4.  The current LULUCF Regulation ..................................................................... 7 

2.  Problem definition ....................................................................................................... 8 

2.1.  What are the problems? ..................................................................................... 8 

2.1.1.  Specific problem #1: Decreasing carbon removals in the land 

sector ................................................................................................ 8 

2.1.2.  Specific problem #2: Insufficient integration of the land sector into 
climate policies .............................................................................. 10 

2.1.3.  Specific problem #3: Challenges to implement the accounting, 

monitoring and reporting rules as set out in the current LULUCF 
Regulation ...................................................................................... 10 

2.1.4.  Evaluation of the current policy framework ................................. 12 
2.2.  What are the problem drivers and how will the problem evolve? ................... 12 

2.2.1.  Drivers behind decreasing carbon removals in the land sector ..... 12 

2.2.2.  Drivers behind the insufficient integration of the land sector into 

climate policies .............................................................................. 15 

2.2.3.  Drivers behind the implementation challenges ............................. 17 

3.  Why should the EU act? ............................................................................................ 18 

3.1.  Legal basis ....................................................................................................... 18 
3.2.  Subsidiarity: Necessity of EU action ............................................................... 18 
3.3.  Subsidiarity: Added value of EU action .......................................................... 18 

4.  Objectives: What is to be achieved? .......................................................................... 19 

4.1.  General objectives ........................................................................................... 19 
4.2.  Specific objectives ........................................................................................... 19 

4.2.1.  A climate-neutral land sector by 2035 .......................................... 19 

4.2.2.  A fair, flexible and integrated climate policy framework for the 

land sector ...................................................................................... 21 

4.2.3.  Simplification ................................................................................ 22 

5.  What are the available policy options? ...................................................................... 23 

5.1.  What is the baseline from which options are assessed? .................................. 23 
5.2.  Description of the policy options .................................................................... 26 

5.2.1.  Option 1: Self-standing LULUCF target ....................................... 26 

5.2.2.  Option 2: Flexible LULUCF target ............................................... 28 

5.2.3.  Option 3: Fully integrated agriculture and LULUCF target ......... 29 

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6.  What are the impacts of the policy options? ............................................................. 31 

6.1. 

Impact indicators ............................................................................................. 31 

6.1.1.  Environmental impacts .................................................................. 31 

6.1.2.  Distributional impacts ................................................................... 33 

6.1.3.  Economic impacts ......................................................................... 34 

6.1.4.  Administrative impacts ................................................................. 36 
Impacts of Option 1: Self-standing LULUCF target ....................................... 37 

6.2. 

6.2.1.  Option 1.1: Changing the accounting rules for managed forest land37 

6.2.2.  Option 1.2: Setting a single removal target ................................... 39 
Impacts of Option 2: Flexible LULUCF target ............................................... 41 
6.3. 
6.4. 
Impacts of Option 3: Fully integrated agriculture and LULUCF target .......... 43 
6.5.  Summary of impacts ........................................................................................ 46 

7.  How do the options compare? ................................................................................... 48 

7.1.  Effectiveness.................................................................................................... 48 
7.2.  Efficiency ........................................................................................................ 49 
7.3.  Coherence ........................................................................................................ 50 

8.  Preferred option ......................................................................................................... 52 

8.1.  Methodological approach ................................................................................ 52 
8.2.  Policy interactions ........................................................................................... 52 
8.3.  Preferred policy option .................................................................................... 53 
8.4.  Coherence with other elements of the package ............................................... 54 
8.5.  REFIT (simplification and improve efficiency) .............................................. 54 

9.  How will actual impacts be monitored and evaluated? ............................................. 55 

9.1.  Operational objective of the monitoring.......................................................... 55 
9.2.  Monitoring data and technology ...................................................................... 55 
9.3.  Use of monitoring results ................................................................................ 57 

10.  Annexes ..................................................................................................................... 58 

10.1.  Procedural information .................................................................................... 58 

10.1.1.  Lead DG, Decide Planning / CWP reference ................................ 58 

10.1.2.  Organisation and timing ................................................................ 58 

10.1.3.  Consultation of the RSB ................................................................ 58 

10.1.4.  Evidence, sources and quality ....................................................... 60 
10.2.  Stakeholder consultation ................................................................................. 61 

10.2.1.  Introduction ................................................................................... 61 

10.2.2.  Feedback to the Inception Impact Assessment ............................. 61 

10.2.3.  Feedback to the Open Public Consultation ................................... 62 

10.2.4.  Feedback from expert workshop on reporting and accounting rules66 

10.3.  Who is affected and how ................................................................................. 68 

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10.3.1.  Practical implications of the initiative ........................................... 68 

10.3.2.  Summary of costs and benefits ...................................................... 68 
10.4.  Analytical methods .......................................................................................... 71 

10.4.1.  Overview of the modelling framework applied in this impact 

assessment ...................................................................................... 71 

10.4.2.  Approach to compute the targets ................................................... 80 
10.5.  Results of target computations ........................................................................ 87 
10.6.  Win-win solutions for climate, biodiversity, and bioeconomy ....................... 93 

10.6.1.  Biodiversity and climate change adaptation .................................. 93 

10.6.2.  A sustainable bioeconomy .......................................................... 100 

10.6.3.  A sustainable agricultural sector ................................................. 112 

10.6.4.  A sustainable food system ........................................................... 119 
10.7.  Carbon farming .............................................................................................. 120 
10.8.  Monitoring technologies and data standardisation ........................................ 123 

10.8.1.  Agricultural land ......................................................................... 124 

10.8.2.  Forest ........................................................................................... 126 

10.8.3.  Settlements .................................................................................. 129 

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Glossary 

Term or acronym 

Meaning or definition 

accounting 

biomass 

carbon pool 

carbon stock 

emission factor 

forest reference level 

forest management 

The use of standardised rules for taking into account emission and 
removal estimates in the context of target compliance. 

Organic material both above ground and below ground, and both 
living and dead, e.g. trees, crops, grasses, tree litter, roots etc. 

A system which has the capacity to accumulate or release carbon. 
Examples of carbon pools are forest biomass, wood products, soils, 
and atmosphere. 

Mass of carbon stored in a carbon pool. 

A coefficient that relates the activity data to the amount of chemical 
compound which is the source of later emissions. Emission factors 
are often based on a sample of measurement data, averaged to 
develop a representative rate of emission for a given activity level 
under a given set of operating conditions. 

An estimate, expressed in tons of CO2 equivalent per year, of the 
average annual net emissions or removals resulting from managed 
forest land within the territory of a Member State in the periods 
from 2021 to 2025 and from 2026 to 2030, based on the criteria set 
out in Regulation (EU) 2018/841. 

A system of practices for stewardship and use of forest land aimed 
at fulfilling relevant ecological (including biological diversity), 
economic and social functions of the forest. 

GHG 

Greenhouse gas 

harvested wood product 

Any product of wood harvesting that has left a site where wood is 
harvested. 

ILUC 

LULUCF 

natural disturbances 

Indirect Land Use Change 

Land Use, Land Use Change and Forestry 

Any events or circumstances that cause significant emissions in 
forests and the occurrence of which is beyond the control of the 
relevant Member State, and the effects of which the Member State 
is objectively unable to significantly limit, even after their 
occurrence, on emissions. 

NECP 

National Energy and Climate Plan 

LULUCF Regulation 

removals 

Regulation (EU) 2018/841 of the European Parliament and of the 
Council of 30 May 2018 https://europa.eu/!WC78xY  

any process, activity or mechanism that removes a greenhouse gas, 
an aerosol, or a precursor to a greenhouse gas from the atmosphere  

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 1.

INTRODUCTION: POLITICAL AND LEGAL CONTEXT 

1.1.

The European Green Deal 

The European Green Deal1 aims to transform the EU into a fairer and more prosperous 
society, with a modern, resource-efficient and competitive economy where there are no 
net  emissions  of  greenhouse  gases  by  2050  and  where  economic  growth  is  decoupled 
from resource use. The climate neutrality objective has been endorsed by the European 
Council2 and  Parliament3 and  is  laid  down  in  a  legally  binding  manner  in  the  proposed 
European Climate Law4.  

The  European  Green  Deal  also  aims  to  protect,  conserve  and  enhance  the  EU's  natural 
capital, and protect the health and well-being of citizens from environment-related risks 
and  impacts.  At  the  same  time,  this  transition  must  be  just  and  inclusive.  It  must  put 
people  first,  and  pay  attention  to  the  regions,  industries  and  workers  who  will  face  the 
greatest challenges.  

The necessity and value of the European Green Deal have only grown in light of the very 
severe  effects  of  the  COVID-19  pandemic  on  our  health  and  economic  well-being. 
Unprecedented near term investments will be needed to reverse the negative impacts of 
the  COVID-19  crisis  on  jobs,  incomes  and  businesses.  In  this  regard,  the  agreed  Next 
Generation  EU  recovery  instrument  and  its  centerpiece,  the  Recovery  and  Resilience 
Facility, with a budget of EUR 672.5 billion, will strongly support the green and digital 
transitions, with at least 37% allocation to the first and 20% to the latter. 

1.2.

The “Fit for 55” package 

With  its  Communication  on  stepping  up  Europe’s  2030  climate  ambition  (the  2030 
Climate Target Plan)5, the Commission proposes to raise the EU's ambition on reducing 
greenhouse  gas  emissions  to  at  least  55%  below  1990  levels  by  2030  in  a  responsible 
way. This is a substantial increase compared to the existing target of at least 40%. It is in 
line with the Paris Agreement6 objective to keep the global temperature increase to well 
below 2°C and pursue efforts to keep it to 1.5°C.  

The  December  2020  European  Council  (hereafter  referred  to  as  European  Council) 
confirmed these climate targets7. It asked for delivering the target collectively by the EU 
in the most cost-effective manner possible, preserving EU’s competitiveness and taking 
account of Member States’ different starting points, specific national circumstances and 
emission  reduction  potential.  It  gave  further  guidance  on  key  elements  for  a  2030 
Climate and Energy Policy Framework. The European Council invited the Commission 
to  rapidly  present  all  the  remaining  relevant  proposals  to  this  end  so  as  to  swiftly 
inaugurate the legislative process. To this end, the Commission has started the next steps 
towards  implementing  these  targets  and  will  review  the  relevant  climate-related  policy 
instruments.  

1 COM(2019)640, https://europa.eu/!uM68tX  
2 European Council conclusions, 12 December 2019, https://europa.eu/!yN48NG    
3 European  Parliament  resolution  of  14  March  2019  on  climate  change  and  resolution  of  28  November 
2019 on the 2019 UN Climate Change Conference in Madrid, Spain (COP 25), https://europa.eu/!tb49fv    
4 COM(2020)80 final amended by COM(2020)563 final, https://europa.eu/!GH37Bu  
5 COM(2020)562 final, https://europa.eu/!uR93tq  
6 http://unfccc.int/paris_agreement/items/9485.php 
7 European Council conclusions, 10 and 11 December 2020, https://europa.eu/!KU68MG  

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This Impact Assessment focuses on the revision of the Land Use, Land Use Change and 
Forestry  (LULUCF)  Regulation8,  which  covers  the  CO2  emissions  and  removals  and 
other GHG  emissions resulting  from  our management of  land,  forests and biomass, for 
the period 2021-2030. This Regulation has brought nature-based carbon removals in the 
EU  climate  framework  for  the  first  time,  to  reflect  their  role  in  reaching  climate 
neutrality. The importance of the LULUCF sector has been reinstated when the European 
Commission  proposed,  with  the  Climate  Target  Plan,  to  include  this  sector  in  the 
formulation  of  the  -55%  target  for  2030.  The  contribution  of  net  removals  to  the  2030 
Union climate target should be limited to 225 million tonnes of CO2 equivalent. In the 
context of the overall political agreement, the Commission reaffirmed in a corresponding 
statement its intention to propose a revision of the LULUCF Regulation in line with the 
ambition  to  increase  net  carbon  removals  to  levels  above  300  million  tonnes  of  CO2 
equivalent in the LULUCF sector by 2030. 

Therefore,  this  Impact  Assessment  aims  to  inform  three  policy  options  to  increase  net 
removals in the LULUCF sector, which were first identified in the Climate Target Plan: 
moving  towards  a  more  ambitious  contribution  from  the  sector,  looking  into  the 
flexibility between the LULUCF and the Effort Sharing sectors, and creating a combined 
target for agricultural emissions and LULUCF emissions and removals. 

Among  the  other  “Fit  for  55”  initiatives,  the  revision  of  the  Effort  Sharing  Regulation 
(ESR) is the one that can mostly affect the scope, choices or impacts of this initiative. In 
particular, the choice  about the scope of the ESR can directly affect the feasibility of a 
combined  target  for  the  LULUCF  and  the  agriculture  sector,  because  the  agriculture 
sector is currently within the scope of the ESR. 

1.3.

The LULUCF sector 

The  land  use,  land  use  change  and  forestry  (LULUCF)  sector  covers  anthropogenic 
greenhouse gas emissions and carbon removals occurring on land ecosystems, i.e. carbon 
stock  changes  in  soils  and  biomass,  as  well  as  carbon  removals  in  long-lasting  wood 
products. This sector provides the basis for human livelihoods and well-being including 
the  supply  of  food,  freshwater  and  multiple  other  ecosystem  services,  as  well  as 
biodiversity. 

Actions that  can  protect the stored carbon  or that can enhance the carbon sequestration 
capacity  of  the  land  include  planting  trees,  restoring  forests,  practicing  agroforestry, 
adopting  agricultural  and  forestry  practices  that  protect  and  enhance  soil  carbon, 
protecting  wetlands,  restoring  peatlands,  or  promoting  long-lasting  and  circular  wood 
products.  The  climate  impact  of  agricultural  activities  such  as  livestock  rearing  and 
fertiliser use are covered under the Effort Sharing Regulation9. 

The views of stakeholders  

Stakeholders  who  replied  to  the  Open  Public  Consultation  on  the  revision  of  the 
LULUCF  Regulation  expressed  their  opinion  on  which  kind  of  actions  should  be 
prioritised in the LULUCF sector. They considered the following actions as important 
or very important: Afforestation, reforestation and forest restoration (77%); Protection 
and  restoration  of  wetland  and  peatland  ecosystems  (69%);  Soil  carbon  increase  in 
agricultural  land  (69%);  Carbon  storage  in  long-lasting  wood-based  materials  and 

8 REGULATION (EU) 2018/841, https://europa.eu/!dD98cC  
9 REGULATION (EU) 2018/842, https://europa.eu/!NU43BG  

6 

 
 
 
                                                 
products  (66%);  Agro-ecology  and  agro-forestry,  as  well  as  grassland  management 
(55%). See Annex 10.2.3 for more details. 

The LULUCF sector is connected to all ecosystems and economic activities that rely on 
the  land  and  the  services  it  provides.  Therefore,  the  LULUCF  Regulation  presents 
synergies with many other EU policy initiatives that cover land-related activities. Figure 
1 shows such relationships in a schematic manner. 

Figure 1- Relationship between the LULUCF Regulation and other EU policy initiatives 

1.4.

The current LULUCF Regulation 

The LULUCF Regulation primarily addresses Member States by establishing a minimum 
level  of  climate  mitigation  performance  in  the  LULUCF  sector;  it  does  not  set  any 
reporting or compliance requirements for individual land managers.  

Under the current  LULUCF rules, the minimum amount of removals that the LULUCF 
sector should provide at the EU level in 2030 is around -225 MtCO2eq10; the minimum 
commitment levels in each Member State are designed to ensure that land management 
practices  do  not  become  worse  from  the  perspective  of  climate  change  mitigation.  If 
removals are smaller  than these levels,  a Member  State may  generate  LULUCF  debits, 
and  if  they  are  larger,  it  may  generate  LULUCF  credits.  The  LULUCF  Regulation 
commits  Member  States  to  avoid  creating  any  debit11;  if  this  happens,  a  Member  State 
must  step  up  emission  reduction  efforts  in  its  Effort  Sharing  sectors  to  compensate  the 
deficit12,  or  it  can  buy  LULUCF  credits  from  other  Member  States.  Finally,  Member 
States  can  use  a  limited  amount  of  LULUCF  credits  to  help  achieve  ESR  national 

10 See Section 10.4.2 for more information on how this number is computed. 
11 This  is  the  so-called  ‘no-debit’  commitment  enshrined  in  Article  4  of  REGULATION  (EU)  2018/841,  
https://europa.eu/!dD98cC 
12 If  LULUCF  accounted  emissions  exceed  accounted  removals,  ESR  annual  emissions  allocations  are 
deleted, de facto increasing the ESR target for the Member State. This governance is assured through Art 
9 of REGULATION (EU) 2018/842, https://europa.eu/!NU43BG 

7 

 
 
 
 
                                                 
targets 13  (so-called  ‘flexibility’).  More  details  about  the  LULUCF  Regulation  are 
provided in Section 5.1. 

 2.

PROBLEM DEFINITION 

2.1. What are the problems? 

This section identifies three specific problems related to the contribution of the LULUCF 
sector to a higher climate ambition in 2030 and to climate neutrality in 2050. These are: 

1.  The fact that net LULUCF removals have been significantly decreasing in recent 

years; 

2.  The  presence of unexploited  opportunities to address  climate action in the land 

sector in an integrated manner; 

3.  Challenges  to  implement  the  accounting,  monitoring  and  reporting  rules  as  set 

out in the current LULUCF Regulation. 

Figure 2 summarises these three specific problems (described in sections 2.1.1 to 2.1.3), 
their  drivers  (described  in  sections  2.2.1  to  2.2.3),  and  the  corresponding  objectives 
(described in sections 4.2.1 to 4.2.3). 

s
r
e
v
i
r
D

Increasing 
harvesting rates 

Emissions from 
organic soils 
Lack of incentives 

Separation 
agriculture / 
LULUCF (different 
legislation, no 
integrated target) 

Limitations of ESR 
/ LULUCF flexibility 

Process for 
establishment of 
Forest Reference 
Levels 

Gaps in monitoring 
and reporting 
systems 

s

l

m
e
b
o
r
P

Decreasing carbon 
removals in the 
land sector 

Insufficient 
integration of the 
land sector into 
climate policies 

Implementation 
challenges 

s
e
v
i
t
c
e
b
O

j

A climate-neutral 
land sector by 
2035 

A fair, flexible and 
integrated climate 
policy framework 
for the land sector 

Simplification 

Figure 2 – Summary of the specific problems, their drivers, and the corresponding objectives 

2.1.1. Specific problem #1: Decreasing carbon removals in the land sector 

Land-based mitigation action can have very long lead times, which means that it can 
take  years  or  decades  for  it  to  deliver  the  desired  mitigation  outcome;  for  instance, 
afforestation  put  in  place  now  will  only  provide  significant  carbon  removals  in  the 

13 REGULATION (EU) 2018/842, Article 7, https://europa.eu/!NU43BG 

8 

 
 
 
 
 
 
                                                 
 
 
 
 
next  decade(s).  This  fact,  and  the  fact  that  land-based  carbon  removals  will  play  an 
important role in achieving the EU’s 2050 climate neutrality objective, means that the 
next decade will be crucial to take the actions needed to put the LULUCF sector on 
the  right  trajectory  towards  a  climate-neutral  EU.  Such  trajectory  would  require  net 
LULUCF  removals  to  increase  from  their  current  level  to  around  -400  MtCO2eq  in 
2050 (depending  on the  parallel developments of technology-based  carbon removals 
and  of  lifestyle  changes 14).  Unfortunately,  the  recent  trend  has  been  going  in  the 
opposite  direction:  in  only  five  years,  from  2013  to  2018,  almost  a  fifth  of  the  net 
carbon removals in the LULUCF sector were lost (see more info in Box 1). Thus, the 
first  specific  problem  that  this  initiative  will  address  is  the  decreasing  carbon 
removals in the LULUCF sector. 

Box 1 – An overview of the LULUCF sector 

The LULUCF sector in the EU GHG inventory results in net carbon removals (that is, 
removals  outweigh  emissions,  or  the  amount  of  carbon  sequestered  from  the 
atmosphere is larger than the amount of stored carbon which is released back into the 
atmosphere). In terms of land use categories, only Forest land provides net removals. 
Cropland  is  the  largest  source  of  emissions,  followed  by  Settlements,  then  by 
Wetlands. In recent years Grasslands has been a small source of emissions.  

CO2 emissions due to the combustion of biomass for energy are also captured under 
the LULUCF sector (when and where the biomass is harvested); see Annex 10.6 for 
more  information  on  the  treatment  of  biomass  emissions  in  EU  law.  In  addition, 
Harvested  Wood  Products  store  the  carbon  fixed  by  forests,  delaying  its  emissions 
compared to wood used for energy. 

Between 2013 and  2018, the EU27 saw its net  LULUCF removals  decline  by 19%, 
from  -325 MtCO2eq  to  -264 MtCO2eq,  according  to  the  2020  national  GHG 
inventory submission to the UNFCCC. This decline in carbon removals is driven by a 
mix of factors, including an increase in wood demand, an increasing share of forests 
reaching  maturity  in  terms  of  production  management,  and  an  increase  in  natural 
disturbances such as insect infestations, storms, droughts and forest fires. This sharp 
decline  contrasts  with  the  general  increase  in  removals  that  could  be  observed 
previously: between 1990, the beginning of GHG inventories, and 2006, year of the 
maximum reached, removals had grown from -255 MtCO2eq to -336 MtCO2eq.  

Not all land categories contribute equally to these variations. Between 2013 and 2018, 
forest  net  carbon  removals  have  decreased  by  18%  (from  -425  to  -347  MtCO2eq) 
while  net  carbon  removals  in  the  Harvested  Wood  Product  carbon  pool  have 
increased  by  50%  (from  -28  to  -42  MtCO2eq).  Emissions  from  cropland  have 
decreased  by  10%  (from  59  to  53  MtCO2eq)  while  emissions  from  grassland  and 
wetlands  have  remained  stable  (respectively,  around  8-9  and  17-18  MtCO2eq),  and 
emissions from settlements have increased by 9% (from 41 to 45 MtCO2eq). Figure 3 
shows the evolution of LULUCF emissions and removals in the EU27 from 2005 to 
the latest reported year, 2018. 

14 More  precisely,  the  modelling  underpinning  the  “A  Clean  Planet  for  All”  communication  shows  that 
2050 climate neutrality would require net LULUCF removals around -350 MtCO2eq assuming a significant 
deployment of technology-based carbon removals, or -475 MtCO2eq with less technological solutions but 
changes  in  lifestyle,  including  diets.  See  Figure  87  in  the  in-depth  analysis  accompanying  that 
Communication. 

9 

 
 
 
                                                 
Figure 3 – Recent trends in the LULUCF sector, EU27. Unit: Mt CO2eq. 

2.1.2. Specific  problem  #2:  Insufficient  integration  of  the  land  sector  into  climate 

policies 

Besides  its  capacity  to  store  and  sequester  carbon,  land  provides  many  other  important 
products and services: it supplies the bioeconomy sectors with food, feed and feedstocks, 
provides  habitats for biodiversity and many ecosystem services vital for life (e.g. water 
and air purification), and protects us from some of the consequences of climate change 
(e.g. floods and  desertification). The interdependence between  these functions  and  the 
capacity  of  the  LULUCF  sector  to  sequester  carbon  from  the  atmosphere  calls  for  an 
integrated  approach  to  climate  action  in  the  land  sector,  in  order  to  optimise  land  use 
planning and identify win-win practices. 

The  potential  to  increase  land-based  carbon  removals  and  the  associated  costs  are 
unevenly distributed across Member States. A key factor is the area available for climate 
action, which depends on topographic or economic factors. Furthermore, the type of soil 
and land use, combined with other climate-related factors and latitude, all impinge on the 
potential to enhance removals.  The  mitigation potential and  costs also differ  within  the 
land sector; for instance, in the same Member State there can be more opportunities for 
increasing  removals than for  decreasing agricultural emissions, or vice versa. Thus,  the 
policy framework needs to provide some flexibility to address the climate performance of 
the  land  sector.  The  current  framework  addresses  this  need  by  allowing  to  use  the 
overachievement  of  ESR  targets  for  LULUCF  compliance,  or  vice  versa  (for  more 
information  on  the  current  framework,  see  Section  5.1);  however,  the  analysis  of  the 
National Energy and Climate Plans indicates that the current flexibility opportunities are 
not  an  integral  part  of  Member  States’  climate  strategies  (see  section  2.2.2  for  more 
details). This points to a need to revise the policy framework to make it more conducive 
to an optimisation of land use, and  to  promote  a  more strategic  view of the role  of the 
land sector in the achievement of Union and national climate targets.  

2.1.3. Specific  problem  #3:  Challenges  to  implement  the  accounting,  monitoring  and 

reporting rules as set out in the current LULUCF Regulation 

The  LULUCF  rules  determine  the  extent  to  which  mitigation  performance  in  the 
LULUCF sector can contribute to the current 2030 EU target (-40%). The current 2030 

10 

 
 
 
 
 
EU  target  is  expressed  in  terms  of  a  reduction  of  emissions  from  other  sectors  than 
LULUCF;  the  LULUCF  sector  can  affect  its  achievement  via  the  flexibility  with  the 
ESR.  Therefore,  the  LULUCF  Regulation  defines  a  set  of  accounting  benchmarks  to 
determine the threshold for this flexibility: this is the so-called “no-debit” target, whose 
under-  or  over-achievement  triggers,  respectively,  a  deletion  of  ESR  allowances  or  the 
(limited)  use  of  LULUCF  credits  for  ESR  compliance  (for  more  information  on  the 
current  Regulation,  see  Section  5.1).  The  preparation  for  the  implementation  of  the 
LULUCF Regulation has shown that these accounting rules create some regulatory costs; 
in  particular,  the  benchmark  for  Managed  Forest  Land,  the  so-called  Forest  Reference 
Level  (FRL) 15,  is  technically 16 and  politically  complex  (see  more  details  in  Section 
2.2.3).  A  study  analyzed  further  possible  challenges  with  regard  to  technical 
implementation in view of LULUCF compliance17. 

These accounting rules were originally designed in the Kyoto Protocol context, mainly to 
address  issues  such  as  lack  of  confidence  in  LULUCF  estimates,  additionality, 
permanence, and the risk to dilute efforts in other sectors. Importantly, these rules have 
always been applied when LULUCF was not included in the base  year upon which the 
economy-wide  emission  reduction  percentage  was  calculated  (i.e.  under  the  Kyoto 
Protocol and for the current –40% EU target in 2030). The “credits” or “debits” resulting 
from the application of the accounting rules were then added on top of the other sectors 
to  assess  compliance  towards  the  emission  reduction  target.  Therefore,  this  accounting 
approach may not be strictly needed anymore, given the way that the new 2030 target (-
55%) is expressed in the Climate Target Plan, and which is now under discussion in the 
context of the Climate Law. To be coherent with the economy-wide target recommended 
by the Paris Agreement and with the EU’s 2050 climate neutrality target, the new -55% 
target is expressed in terms of net emissions and thus fully includes the LULUCF sector. 
In this context, considering the full amount of LULUCF emissions and removals reported 
in  GHG  inventories  for  the  compliance  towards  the  2030  target  would  ensure 
methodological  consistency  with  the  way  LULUCF  is  included  in  the  1990  base  year. 
This hints at the possibility to treat the LULUCF sector like any other sector, subject to a 
single removal target rather than governed by a set of accounting benchmarks.18 

The  LULUCF  Regulation  also  introduced  new  monitoring  and  reporting  requirements. 
These  are  necessary  because  the  current  systems  used  for  monitoring  and  reporting 
LULUCF emissions and removals are not yet granular enough to pick up the impacts of 
measures  taken  at  the  individual  actor  level  (e.g.  measures  supported  by  the  Common 
Agricultural Policy); often the necessary data exist (especially in the CAP datasets) but 
they are not integrated in the climate inventories. This creates a policy gap; for instance, 
it is less important for a Member State to use budget from the CAP to promote climate-

15 More  information  on  the  concept  and  history  of  the  Forest  Reference  Level  is  provided  in  Box  2  in 
section 5.1 
16 For a summary of the main technical challenges of establishing Forest Reference Levels, see Korosuo, A. 
et  al.,  (2020)  Forest  reference  levels  under  Regulation  (EU)  2018/841  for  the  period  2021-2025,  EUR 
30403 EN, Publications Office of the European Union, Luxembourg, 2021, ISBN 978-92-76-32258-0, doi: 
10.2760/0521,  JRC121803.  (https://europa.eu/!rq47KN)  and  “Final  synthesis  report  –  Support  for 
capacity  building  in  Member  States  to  implement  Forest  Reference  Levels  and  improvements  of 
Regulation” 
greenhouse 
(https://data.europa.eu/doi/10.2834/890150) 
17 Study  on  the  requirements  for  compliance  with  the  regulation  on  Land  Use,  Land  Use  Change  and 
Forestry (LULUCF) and associated regulations (https://op.europa.eu/s/pjFW)  
18 More  information  on  the  drivers,  problems  and  options  related  to  LULUCF  accounting  rules  can  be 
found  in  the  note  “Amend  the  LULUCF  accounting  rules  to  make  the  no-debit  rule  more  stringent”, 
prepared 
COWI 
external 
(https://data.europa.eu/doi/10.2834/201100). 

consultants 

inventories 

requested 

contract 

support 

LULUCF 

under 

the 

gas 

led 

by 

by 

by 

as 

a 

11 

 
 
                                                 
friendly  action  related  to  LULUCF  if  this  action  does  not  appear  in  the  climate 
inventories and thus does not contribute to achieving national climate targets. Similarly, 
if monitoring and reporting systems do not provide specific climate information on areas 
of  special  importance  for  biodiversity  (e.g.  areas  covered  by  restoration  targets,  areas 
covered by primary and old-growth forest) or distinguish between monocultures and bio-
diverse  forests,  there  is  a  missed  opportunity  to  strengthen  synergies  between  climate 
action and biodiversity action. Approaches to further improve monitoring and reporting 
systems will be discussed in Section 9. 

2.1.4. Evaluation of the current policy framework 

In preparing for the implementation of the LULUCF Regulation (which only came into 
force in 2021), the Commission has carried out some steps. The analysis of the National 
Energy and Climate Plans  (NECPs)19 overall showed that the  LULUCF sector is  yet to 
be  treated  as  an  integrated  component  of  Member  States’  climate  strategies  (Specific 
problem #2). The process of establishing the Forest Reference Levels for each Member 
State has revealed the challenges behind the implementation of this complex accounting 
rule, and capacity building activities to support some Member States in preparing for the 
implementation of the  LULUCF Regulation have highlighted the challenges behind the 
gaps in national monitoring and reporting systems (Specific problem #3).  

2.2. What are the problem drivers and how will the problem evolve? 

2.2.1. Drivers behind decreasing carbon removals in the land sector 

Emissions and removals by forests are the largest components of the LULUCF balance. 
An  in-depth  analysis  of  the  recent  GHG  inventory20 highlights  that  the  forest  regrowth 
period that took place from 1960 to 2005 started to reverse in 2005 due to a combination 
of problems. Since about 2013, the annual removals on forest land have been decreasing 
at  roughly  12  MtCO2eq  per  year,  a  trend  that  emerged  in  a  number  of  EU  regions  (to 
varying  amounts).  The  change  since  2013  is  due  to  a  mix  of  factors,  including  an 
increase in wood demand, an increasing share of forests reaching harvest maturity and an 
increase in natural disturbances21. Already in 2017 and 2018 several European countries, 
in  both  Southern  and  Northern  Europe,  were  hit  by  unprecedented  forest  fires,  which 
coincided with record droughts and heatwaves. The last two decades have shown that an 
increasing  amount  of  forests  in  Europe  has  become  vulnerable  to  insect  outbreaks, 
especially  to  bark  beetles  attacks  in  Central  and  Eastern  Europe,  which  can  lead  to 
salvage  logging.22 Finally,  the  ageing  of  forests  leads  to  declining  forest  growth  rates. 
Afforestation  and  deforestation  play  less  of  a  role  in  the  total  LULUCF  performance, 
although afforestation has also decreased since 2010. 

In  addition,  emissions  from  organic  soils  have  still  not  decreased  significantly,  in 
particular due to the continuation of cropping practices that disproportionately contribute 
to  emissions;  an  example  are  drained  peatlands,  a  type  of  land  which  stores 
approximately five times more carbon than forests and about half of Europe’s total soil 
organic carbon. Wetlands in Europe have been suffering from a  continued degradation 

19 COM/2020/564 final (https://europa.eu/!xc64CH).  
20 Note “The decline in the forest carbon sink and its drivers”, prepared by external consultants under a 
support contract led by COWI (https://data.europa.eu/doi/10.2834/201100). 
21 Forzieri, G. et al. (2021), Emergent vulnerability to climate-driven disturbances in European forests. Nat 
Commun 12:1081 (https://doi.org/10.1038/s41467-021-21399-7).  
22 COM(2020)777, “EU Climate Action Progress Report 2020”, pp. 15-16 (https://europa.eu/!By94Yn).  

12 

 
 
 
 
 
                                                 
from multiple pressures. Finally, and despite a reduction in the last decade, land  take23 
in EU28 still amounted to 539km2/year  between  2012 and  2018  (EEA  201924); half  of 
the deforestation emissions results from the conversion of forest land to settlements.  

The views of stakeholders 

The  stakeholders  who  replied  to  the  Open  Public  Consultation  on  the  review  of  the 
LULUCF  Regulation  selected  the  following  as  the  most  important  drivers  behind  the 
decline  of  land-based  removals:  Conversion  of  carbon  rich  land;  Unsustainable  land 
management practices; Natural Disturbances. See Annex 10.2.3 for more details. 

Before  the  start  of  the  new  2021-2030  compliance  period  under  the  LULUCF 
Regulation, emissions from the LULUCF sector were not included in the national climate 
targets under EU law. This may have stopped Member States from internalising in their 
national policies some important positive and negative  climate externalities related to 
land management25. Examples of such externalities are the benefits of embedding carbon 
into  long-lasting  and  circular  bio-based  products,  or  the  emissions  from  the  burning  of 
biomass  for  the  production  of  bioenergy  (a  clear  issue  was  that  the  use  of  biomass  for 
energy  was  directly  incentivized,  as  the  corresponding  emissions  were  not  counted 
towards domestic climate targets until the LULUCF Regulation entered into operation in 
2021 26 ).  Furthermore,  the  potential  contribution  of  soil  protection  (e.g.  peatland 
protection and restoration) to reducing GHG emissions has not yet been incorporated into 
soil protection  law27, and the activities necessary  for soil protection under the  CAP  are 
generally  not  prioritised  due  to  the  low  level  of  awareness  among  national  and  local 
authorities28. 

This  lack  of  incentives  at  the  Member  State  level  has  trickled  down  to  the  individual 
land managers, who do not get any revenue from climate mitigation action: in particular, 
farmers are price takers in oligopolistic markets and have little ability (and incentives) to 
differentiate  products  according  to  their  climate  footprint.  Besides,  climate  action 
sometimes  comes  with  large  opportunity  costs  for  land  managers  (for  example,  the 
income  foregone  and  the  decrease  in  land  price  when  converting  agricultural  land  to 
forest land, or rewetting it if it was drained). Since there is no value assigned to carbon 
storage, there is also no incentive to protect this ‘carbon asset’ beyond some regulatory 
standards and subsidies (e.g. under the CAP). Negative externalities from land activities 
that create emissions are not sufficiently internalised in the final prices; a more ambitious 
“polluter-pays”  approach  would  trigger  the  price  signals  that  are  needed  to  also  drive 

23 EEA definition of land take: change in the area of agricultural, forest and other semi-natural land taken 
for urban and other artificial land development. 
24 https://europa.eu/!Nk49yx. 
25 For more analysis on the market externalities that constitute a barrier to more sustainable land use, see 
Note “Externalities and missing markets”, prepared by external consultants under a support contract led 
by COWI (https://data.europa.eu/doi/10.2834/201100). 
26 Emissions from harvests were however covered by the Kyoto Protocol commitments; a recent report by 
the JRC describes how contradictory incentives provided by LULUCF and the Renewable Energy Directive 
targets also apply to possibly contradictory stakeholder interests; Camia et al. (2021), “The use of woody 
biomass for energy production in the EU” (https://europa.eu/!Bn46df). 
27 Ekard  et  al.  (2020)  “Peatland  Governance:  The  Problem  of  Depicting  in  Sustainability  Governance, 
Regulatory Law, and Economic Instruments”, Land, 9, 83; doi:10.3390/land9030083 
28 J. Augier et al. (2020) “Evaluation study on the impact of the CAP on the sustainable management of 
soil. Final Report to DG Agriculture”, Alliance Environnement 

13 

 
 
                                                 
behavioural change at the level of consumers. Lack of technical knowledge and support 
at the level of farmers also hampers the uptake of new practices and technologies. 

Finally,  there  are  some  specific  barriers  to  change  related  to  forests.  For  instance,  one 
third  of  private  European  forests  consists  in  small  parcels  owned  by  multiple  small 
owners  who  do  not  actively  manage  their  forest,  and  forest  rotations  range  from  40  to 
140 years, which confers substantial inertia to forest management and its responsiveness 
to price signals. 

Likely evolution of this problem 

Climate change  and  biodiversity  loss  will  exacerbate  the natural disturbances  that have 
been  driving  LULUCF  emissions  in  recent  years,  such  as  forest  fires,  heatwaves, 
droughts, storms or pests. Slow onset events, such as land and ecosystem degradation or 
sea  level  rise  are  equally  destructive  over  the  long-term.  Forest  growth  is  generally 
projected  to  increase  in  northern  Europe  and  to  decrease  in  southern  Europe,  but  with 
substantial regional variation. At the same time, forest tree species are shifting towards 
higher altitudes and latitudes as a result of climate change. This migration – and indeed 
other  adaptation  actions  –  lags  behind  the  changes  in  climate,  which  may  lead  to  a 
decline  in  European  land  biodiversity  and  removals  due  to  increased  natural 
disturbances.  Global  warming  will  likely  increase  disturbances  from  fires  and  insect 
outbreaks  in  increasingly  large  areas  of  Europe;  the  probability  of  high-to-extreme 
wildfire  danger  is  projected  to  rise  as  a  result  of  changing  weather  patterns,  and  forest 
insect pests are projected to increase in most regions of Europe. These combined impacts 
affect forests considerably, as well as the functioning of related ecosystems and services. 
Overall,  both  the  current  and  the  projected  trends  of  the  carbon  removal  determinants 
(forest growth, natural mortality, harvest), as well as the Member State projections up to 
2025,  suggest  declining  net  forest  carbon  removals  in  the  short  term 29 .  Non-forest 
ecosystems  including  grasslands,  wetlands  and  soils,  are  also  affected  by  increasing 
impacts of climate change such as drought.  

On the more positive side, the 2018 EU inventory showed a slight rebound of removals 
compared  to  2017,  a  year  which  was  heavily  affected  by  forest  fires  in  Italy  and 
Portugal 30.  While  the  impact  of  natural  disturbances  will  be  noticed  at  the  level  of 
individual land managers and small Member States, the overall impact on total removals 
at  the  EU  level  is  expected  to  be  limited  over  the  next  10  years.  The  Commission’s 
Policy scenario, which considers changes in the biomass demand from the energy sector, 
projects that LULUCF removals could in the next decade remain around today’s level at 
no  additional  cost  (i.e.,  assuming  no  carbon  price).  Moreover,  a  much  higher  level  of 
removals (above -300MtCO2eq in 2030) could still be achieved via a range of relatively 
inexpensive near-term mitigation actions (e.g. improved forest management, set-aside of 
organic soils), even considering the likely increased pressures on forests and harvesting 
rates due to the higher demand for short-lived products and bioenergy (see Annex 4 for 
more details).  

In contrast, the national  projections provided by  Member States in the National Energy 
and  Climate  Plans  estimate  that  net  LULUCF  removals  in  2030 may  be  approximately 
one third smaller than they were in 2005. In addition, the minimum compliance level set 
out  in  the  LULUCF  Regulation  is  only  approximately  -225  MtCO2eq.  in  2030,  which 

29 Grassi, G., et al. Brief on the role of the forest-based bioeconomy in mitigating climate change through 
carbon storage and material substitution, European Commission, 2021, JRC124374 
30

Member 

States 

at 

 See 

of 
https://ec.europa.eu/clima/policies/strategies/progress_en#tab-0-1  

summaries 

reporting 

for 

these 

14 

 
 
                                                 
would  still  represent  a  loss  of  13%  of  the  average  removals  reported  in  2016-2018  
(-267.7 MtCO2eq) (see Figure 4). All in all, without a revised and more ambitious policy 
framework, there is a risk that national policies will not drive LULUCF performance to 
the  level  that  is  considered  feasible  in  the  Commission’s  modelling  scenarios,  with 
negative  consequences  also  for  adaptation,  biodiversity,  and  a  sustainable  and  circular 
bio-economy. 

Figure  4  –  LULUCF  projections  from  National  Energy  and  Climate  Plans  (NECPs,  orange  lines)  with  existing 
measures (WEM) or with additional measures (WAM) and from the Commission's Policy scenario (green), without a 
carbon  price  (MIX  0EUR)  and  at  a  carbon price  of  5  and 10  EUR/tCO2  (MIX  5EUR  and  MIX 10  EUR,  see  annex 
10.4.1 for more details). Unit: Mt CO2eq. The Figure shows that, if Member States carry out the planned policies and 
measures indicated in their National Energy and Climate Plans, they would collectively not meet the minimum level of 
removals required by the LULUCF Regulation (-225 MtCO2eq). However, the Commission’s Policy scenario projects 
that a better performance (above the minimum compliance level) is possible at no additional cost, and an increase of 
net removals above -300 MtCO2eq is feasible at a very low carbon price (MIX 5EUR and MIX 10EUR).  

2.2.2. Drivers  behind  the  insufficient  integration  of  the  land  sector  into  climate 

policies  

Separation of Agriculture and LULUCF 

The  current  policy  framework  maintains  a  regulatory  separation  between  Agriculture, 
which  is  fully  included  in  the  national  emission  targets  under  the  ESR,  and  LULUCF, 
which  only  contributes  to  the  EU-wide  climate  target  through  the  ESR-LULUCF 
flexibility  (as  explained  in  Section  2.1.3).  Thus,  emissions  from  agricultural  activities 
and emissions or removals from other land uses may take place on the same land parcel 
and  yet  be  recorded  under  two  different  pieces  of  legislation  and  with  two  different 
approaches.  This  separation  does  not  allow  for  a  fully  integrated  and  comprehensive 
view of the climate benefits and costs of land-based action at the Union level but also at 
the  Member  State  level;  it  creates  barriers  that  may  hinder  effective  policy  design  and 
implementation. 

Limitations of the ESR-LULUCF flexibility rules 

Most NECPs provided information on planned mitigation actions in the LULUCF sector, 
but  only  very  few  of  them  gave  indications  on  the  intended  use  of  the  ESR-LULUCF 

15 

 
 
 
 
 
flexibility rules to achieve national climate targets. Almost all plans mentioned that they 
intend  to  achieve  the  “no-debit”  (minimum)  commitment,  without  any  plan  to 
overachieve it and generate LULUCF credits.31  

Some  implementation-specific  drivers  (e.g.  uncertainty  about  LULUCF  estimates,  the 
fact  that  the  lengthy  FRL  process  was  not  yet  completed  by  the  time  of  drafting  the 
NECPs)  play  an  important  role  for  this  lack  of  an  integrated  approach  to  mitigation 
action  across  ESR  and  LULUCF  sectors32.  Another  fundamental  role  is  played  by  the 
expectation  that  the  demand  for  LULUCF  credits  will  be  quite  small,  which  depresses 
the incentives to produce such credits. This low demand is driven by three factors. First, 
LULUCF  targets  are  often  below  the  current  LULUCF  performance  in  most  Member 
States, so there is no expected need to buy LULUCF credits from another Member State 
for compliance with the  LULUCF target. Similarly, ESR targets are also considered by 
Member  States  to  be  attainable  without  any  need  for  LULUCF  credits.  Third,  even  if 
ESR targets were made more stringent with the current revision, the fact that a Member 
State can only use ‘domestic’ LULUCF credits for its ESR compliance (and not credits 
purchased  from  another  Member  State)  significantly  reduces  the  pool  of  potential 
‘buyers’ of LULUCF credits.  

Lack of a climate target for the land sector 

The land sector has no integrated climate target. The agricultural sector contributes to the 
overall  non-ETS  target  set  by  the  Effort  Sharing  Regulation  (ESR),  together  with 
transport,  buildings,  waste  and  F-gases,  while  the  LULUCF  sector  has  its  own 
accounting target. In its proposal for the next CAP, the Commission introduced several 
climate-related  elements33,  established  a  legal  obligation  on  Member  States  for  greater 
overall  ambition  on  environment  and  climate34,  and  indicated  that  the  CAP  Strategic 
Plans should be consistent with the overall national climate strategies and with measures 
as  described  in  the  National  Energy  and  Climate  Plans35;  however,  the  CAP  is  not  a 
climate  policy,  and  therefore  does  not  include  an  explicit  climate  mitigation  target.  A 
single  climate  target  for  the  land  sector  could  give  a  clearer  direction  to  the  climate 
ambition of the CAP Strategic Plans and to national land-related policies in general. 

Risks related to this problem 

Without  a  more  integrated  policy  framework,  and  without  stronger  incentives  to  use 
flexibility  rules  towards  a  cost-effective  creation  of  LULUCF  removals,  there  is  a  risk 
that  mitigation  opportunities  do  not  happen  where  they  are  the  most  cost-efficient,  and 
that the LULUCF sector continues to be considered as an outsider in climate policies and 
strategies.  Continuing  with  a  fragmented  policy  approach  to  land-based  climate 
mitigation  could  undermine  the  incentives  for  Member  States  to  act  on  land  use  and 
forestry, and hinder the potential of the LULUCF sector to deliver the carbon removals 
that are needed to put the EU on the path to climate neutrality in 2050. 

by 

consultants 

31 COM/2020/564 final, https://europa.eu/!xc64CH 
32 For more details, see note “Strengthening the linkages between the LULUCF Regulation and the ESR”, 
prepared 
COWI 
external 
(https://data.europa.eu/doi/10.2834/201100). 
33 See  section  6.1.3  for  more  details  on  CAP  support  for  the  take-up  of  climate-friendly  agricultural 
practices,  and  Annex  10.6.3  for  an  overview  of  the  climate-related  recommendations  for  CAP  Strategic 
Plans that the Commission published in December 2020. 
34 COM(2018) 392 final, Article 92 (https://europa.eu/!cy47Kc). 
35 COM(2018) 392 final, Article 97(2)b (https://europa.eu/!cy47Kc). 

contract 

support 

under 

led 

by 

a 

16 

 
 
                                                 
2.2.3. Drivers behind the implementation challenges 

In 2019, capacity building activities were conducted in eleven Member States to support 
the establishment of Forest Reference Levels (FRLs) and the improvement of monitoring 
and reporting systems. During this activity36, some clear challenges were identified.  

In  the  case  of  the  FRLs,  the  main  difficulties  encountered  by  Member  States  were: 
documenting  forest  characteristics  in  the  reference  period  (2000-2009),  selecting  and 
calibrating  the  right  modelling  framework,  ensuring  that  the  modelling  framework  was 
able  to  reproduce  the  historical  trends,  and  modelling  emissions  and  removals  in 
deadwood.  The  process37 for  laying  down  FRLs  for  the  first  compliance  period  of  the 
LULUCF  Regulation  (2021-2025)  took  two  years  with  another  year  of  preparations  of 
FRLs  in  Member  States38,  and  required  a  very  high  level  of  technical  competence  in 
Member  States.  The  process  to  review  and  assess  FRLs  has  been  time  consuming  (15 
meeting  days  of  the  LULUCF  Expert  Group  with  approximately  70  participants).  The 
Commission estimated at around EUR 4.5 Mio the  shared cost of this process between 
Commission  and  Member  States.  Despite  all  efforts,  there  is  still  ambiguity  in 
interpretations of specific components of the FRL, which results in heterogeneity among 
Member States FRLs. 

The main drivers behind the gaps in national monitoring and reporting systems include39: 
low  awareness  of  existing  datasets  due  to  weak  inter-institutional  arrangements,  data 
gaps (in particular for establishing historic baselines), lack of human resources and lack 
of  specialised  skills.  While  monitoring  and  reporting  systems  for  forests  are  quite  well 
advanced in all Member States, they may not be fully fit for providing a rapid indication 
of  changes  caused  in  particular  by  disturbances,  increasing  harvesting  levels,  or  even 
afforestation  and  reforestation.  Furthermore,  soil  data  is  scarce,  incomplete  and 
uncertain, due to the high costs of extensive and repeated soil monitoring, and to the fact 
that there have been little economic and policy incentives for improving these data so far. 
In particular, the policy incentives to invest in better monitoring of agricultural land have 
up until recently been weak because LULUCF was not yet part of the 2020 EU targets, 
and accounting for agricultural land was not mandatory under the Kyoto Protocol (only 
seven Member States included it in their Kyoto Protocol accounts). Analysis carried out 
to  support  this  Impact  Assessment40 estimated  that  very  large  carbon  gain  and  losses 
from soils go unreported; accurate estimates of emissions and removals, based on good 
information on land use activities and local emission factors, cover at most 37% of EU 
cropland,  because  most  Member  States  use  default  IPCC  methods.  As  long  as  soils 
remain  such  a  ‘blind  spot’  of  climate  policies,  it  is  challenging  to  design  effective 
policies and incentives.  
For more information on how to improve reporting systems in a cost-effective way, see 
Section 9 and Annex 10.8. 

36 “Final synthesis report – Support for capacity building in Member States to implement Forest Reference 
Levels  and  improvements  of  greenhouse  gas  inventories  as  requested  by  the  LULUCF  Regulation” 
(https://data.europa.eu/doi/10.2834/890150). 
37 For  more  information,  see  Korosuo,  A.,  et  al.  (2020),  ibid.,  “Forest  reference  levels  under  Regulation 
(EU) 2018/841 for the period 2021–2025” (https://europa.eu/!rq47KN). 
38 SWD(2020)  236  final,  “Assessment  of  the  revised  National  Forestry  Accounting  Plans  2021-2025”, 
(https://europa.eu/!WC47Yd). 
39 “Final synthesis report – Support for capacity building in Member States to implement Forest Reference 
Levels  and  improvements  of  greenhouse  gas  inventories  as  requested  by  the  LULUCF  Regulation” 
(https://data.europa.eu/doi/10.2834/890150).  
40 Note  “Soil  carbon”,  prepared  by  external  consultants  under  a  support  contract  led  by  COWI 
(https://data.europa.eu/doi/10.2834/201100).   

17 

 
 
 
                                                 
Likely evolution of this problem 

If the Forest Reference Level concept is maintained, the process to establish the national 
levels would have to be repeated in 2024-2025 for the 2026-2030 compliance period. If 
the accounting rules  are  not  simplified with the current  revision, there  is  a risk of high 
regulatory  costs  combined  with  a  difficulty 
implementing  and 
communicating about national LULUCF policies. 

in  designing, 

Without exploiting the opportunities offered  by digital and satellite-based technologies, 
and  in  the  absence  of  targeted  policy  interventions  to  build  capacity  and  simplify 
reporting  frameworks,  there  is  a  risk  that  gaps  in  monitoring  and  reporting  systems 
persist, which would undermine effective policy implementation and policy planning. 

 3. WHY SHOULD THE EU ACT? 

3.1.

Legal basis 

The proposal is based on Article 192(1) of the Treaty on the Functioning of the European 
Union (TFEU), which gives the Union the right to act in order to achieve objectives of its 
policy  on  the  environment.  The  objectives  of  the  Union  policy  on  the  environment  as 
defined  in  Article  191(1)  of  the  TFEU  include,  inter  alia,  preserving,  protecting  and 
improving the quality of the environment; a prudent and rational utilisation of the natural 
resources such as land and forests and promoting measures at international level to deal 
with  regional  or  worldwide  environmental  problems,  in  particular  combating  climate 
change. 

3.2.

Subsidiarity: Necessity of EU action 

Climate  change  is  by  its  nature  a  trans-boundary  problem.  Its  effects  are  global, 
irrespective of the location of e.g. sources of GHG emissions. Similarly, opportunities to 
remove  and  store  carbon  and  reduce  emissions  in  the  land  sector  are  unequally 
distributed  across  the  EU.  Therefore,  these  challenges  cannot  be  solved  by  national  or 
local  action  alone,  since  individual  action  is  unlikely  to  lead  to  optimal  outcomes. 
Coordinated EU action can effectively supplement and reinforce national and local action 
and  enhance  climate  action.  Coordination  of  climate  action  is  necessary  at  European 
level  and,  where  possible,  at  global  level,  and  EU  action  is  justified  on  grounds  of 
subsidiarity. Since 1992, the EU has worked to develop joint solutions and drive forward 
global action to combat climate change.  

3.3.

Subsidiarity: Added value of EU action 

The  coordination  of  the  reduction  of  greenhouse  gas  emissions  across  the  European 
Union  benefits  from  coordination  at  the  EU  level  given  the  EU’s  single  market.  An 
increase in the 2030 target for EU  GHG reductions will impact most, if not all, sectors 
across  the  EU  economy.  The  increase  of  that  target  may  furthermore  require  policy 
responses  in  many  fields,  including  beyond  climate,  forestry  and  land  use  policy.  The 
impacts  of  such  ambition  increase  and  related  policies  on  growth  and  jobs  creation, 
fairness and cost-effectiveness are examples of elements that can be better considered at 
the EU level. 

The  LULUCF  Regulation  sets  a  framework  to  ensure  that  Member  States  take  the 
necessary  actions  related  to  land  use  and  forestry.  As  such,  it  depends  on  action  by 
Member States  (reflecting  the  externalities  related to land management)  and has  strong 
linkages with other policies, in particular agriculture, biodiversity and habitat protection, 
adaptation, and also energy policy due to the renewable energy aspects. There are many 

18 

 
 
 
 
 
reasons  for  regulating  the  LULUCF  sector  at  the  EU  level:  interdependencies  between 
the  different  policies  involved  and  their  cross-national  impact,  setting  emissions 
reduction  and  removal  targets  per  Member  State  as  well  as  setting  out  principles,  on 
which  basis  the  Member  States  will  report  on  their  achievements  and  measure  their 
progress  towards  reaching  their  individual  targets  and  targets  of  the  EU  as  a  whole,  as 
specified in the monitoring and reporting rules laid down in Regulation (EU) 2018/1999. 
Action  at  the  EU  level  is  therefore  indispensable  and  coordinated  EU  policies  have  a 
much  bigger  chance  of  leading  to  a  true  transformation  towards  a  climate  neutral 
economy  by  2050.  Coordinated  action  at  the  EU  level  furthermore  facilitates  the  full 
consideration  of  the  different  capabilities  to  act  among  Member  States.  The  EU  single 
market moreover acts as a strong driver for cost-efficient change. 

Finally,  EU-level  climate  policy  adds  significant  value  for  international  climate  action 
and  global  efforts  to  halt  biodiversity  loss.  Since  1992,  the  EU  has  worked  to  develop 
joint  solutions  and  drive  forward  a  global  agreement  to  fight  climate  change.  These 
efforts have helped to achieve the Paris Agreement in 2015. International climate policy 
and  climate  and  environmental  diplomacy  have  been  strengthened  as  a  result  of 
coordination of European climate policy at the EU level, both of which are crucial in a 
world in which the EU accounts for only around 10% of global GHG emissions.  

 4. OBJECTIVES: WHAT IS TO BE ACHIEVED? 

4.1. General objectives 

The European Green Deal is the crucial stepping stone towards making Europe a climate-
neutral continent (i.e. achieve net zero GHG emissions) by 2050. The Communication on 
stepping up Europe’s 2030 climate ambition41 frames the Commission proposals for the 
2030 Climate Target Plan.  

The  general  objective  of  this  initiative  is  to  make  the  LULUCF  Regulation  fit  for 
reaching  at  least  55%  net  greenhouse  gas  emission  reductions  by  2030  compared  to 
1990, in line with the 2030 Climate Target Plan, as a staging post to achieving climate 
neutrality by 2050. 

4.2.

Specific objectives 

4.2.1. A climate-neutral land sector by 2035  

The 2018  Commission Communication “A Clean Planet for  All”42 makes clear that  we 
need carbon removals to increase significantly if we are to achieve climate neutrality in 
2050.  Thus,  to  be  on  track  for  climate  neutrality  in  2050,  the  EU  needs  to  reverse  the 
recent  decline  in  land-based  removals  and  start  implementing  actions  to  increase 
removals already in this decade, in order to account for the long lead times of land-based 
climate mitigation.  

The views of stakeholders 

The  need  to  enhance  land-based  carbon  removals  was  well  recognized  by  stakeholders 
who  provided  feedback  to  the  Commission’s  Inception  Impact  Assessment  (see  Annex 
10.2.2). However, while respondents from the bio-based sector favour an approach that 

41 COM(2020)562 final, https://europa.eu/!uR93tq 
42 COM/2018/773 final, https://europa.eu/!VU93kN  

19 

 
 
 
 
 
                                                 
rewards  active  forest  management  and  views  Harvested  Wood  Products  (HWPs)  as  an 
important  type  of  removals,  environmental  NGOs  strongly  disagree  with  this  approach 
and would rather see a preservation of the existing carbon storage and removals. 

The modelling behind the Climate Target Plan shows that the at least -55% target would 
be  economically  feasible  even  if  the  LULUCF  sector  becomes  as  small  as  -225Mt  in 
2030  (which  is  the  minimum  level  of  removals  required  to  comply  with  the  current 
LULUCF Regulation, according to current LULUCF accounting rules). Nevertheless, the 
same  modelling43 also  shows  that  keeping  carbon  removals  at  today’s  level  (around  -
260Mt)  is  possible  with  no  additional  policies  by  Member  States,  and  that,  with 
additional action, an integrated land sector (LULUCF and Agriculture) “would have the 
potential to become rapidly climate-neutral by around 2035 in a cost-effective manner, 
and subsequently generate more removals than greenhouse gas emissions”44 (see Figure 
5). In a more detailed discussion about the actions needed to realise these projections, the 
Impact  Assessment  accompanying  the  Climate  Target  Plan  (in  its  section  9.2)  explains 
that the mitigation potential of non-CO2 agriculture emissions (currently covered by the 
Effort  Sharing  Regulation)  relies  on  actions  such  as:  anaerobic  digestion  with  biogas 
recovery,  livestock  breeding,  feed  additives,  nitrification  inhibitors,  more  efficient 
fertilizer  use,  as  well  as  changes  in  dietary  choices  and  alternative  protein  production 
from  aquaculture.  As  regards  the  LULUCF  sector,  the  Climate  Target  Plan  projections 
(see Figure 5 below) assume that the use of biomass for energy will remain stable until 
2030, while the mitigation potential in the short-term is based on limiting deforestation 
and  some  additional  soil  carbon  sequestration  and  sustainable  forest  management 
practices.  Another  highly  promising  action,  i.e.  protecting  organic  soils  from  intensive 
agricultural use, is not covered directly by the modelling in the Climate Target Plan, but 
another Commission study45 considers it as one of the most efficient solutions to reduce 
GHG emissions in agriculture.  

Thus,  the  first  specific  objective  of  this  initiative  is  to  achieve  a  climate-neutral  land 
sector by 2035. This objective breaks down in two parts: 

  An increase in LULUCF net removals, and 

  A decrease in agricultural emissions. 

Based  on  the  graph  in  Figure  5,  in  order  for  the  land  sector  to  be  on  track  for  climate 
neutrality  in  2035,  in  2030  net  removals  should  be  above  -300MtCO2eq 46 ,  while 
agricultural emissions should be around 360 MtCO2eq. The second part of this objective 
– the reduction of agricultural emissions – is also covered in the ESR impact assessment 
because agricultural emissions are currently within the scope of the ESR. 

43 For  more  information  on  the  assumptions  behind  these  modelling  projections,  see  the  Impact 
Assessment (SWD(2020) 176 final) accompanying the Communication Stepping up Europe’s 2030 climate 
ambition (section 6.10), and Annex 4 of this Impact Assessment. 
44 COM(2020)562 final, https://europa.eu/!uR93tq, p. 17 
45  “EcAMPA  3  –  Economic  assessment  of  GHG  mitigation  policy  options  for  EU  agriculture”, 
https://europa.eu/!uv84uR  
46 As Figure 5 indicates, LULUCF net removals should be between -295 Mt (solid LULUCF line) and -340 Mt 
(dotted  LULUCF+  line)  in  2030  in  order  for  the  sector  to  be  on  track  for  2035  land-based  climate 
neutrality. 

20 

 
 
                                                 
q
e
2
O
C
t
M

500
400
300
200
100
0
-100
-200
-300
-400
-500

2010

2005
Non-CO2 Agriculture

2015

2025

2020
LULUCF

2030
AFOLU

2035

2040
AFOLU+

2045

2050
LULUCF+

Figure  5  –  Projected  emissions  and  removals  from  the  Agriculture  and  LULUCF  sectors,  EU27.  Source:  Impact 
Assessment accompanying the Climate Target Plan. 

While the primary focus of the “Fit for 55” package is to achieve the 2030 climate target, 
in  the  case  of  the  land  sector  it  is  considered  important  to  signal  a  further,  mid-term 
target  for  2035.  First,  because  nature-based  actions  have  long  lead  times,  notably  for 
improved  land  use  management  practices,  the  development  of  large  scale  sustainable 
afforestation and the  restoration of habitats. A mid- to long-term policy orientation can 
thus avoid lock-in of measures that may be counterproductive in the long-term. Planning 
certainty  for  the  land  sector  appears  even  more  important  when  one  considers  that  this 
sector  is  projected  to  become  the  largest  one  in  the  EU  GHG  flux  profile  in  2050  (as 
fossil  emissions  become  significantly  reduced);  it  is  therefore  crucial  to  anchor  it  to  a 
trajectory  that  can  effectively  deliver  the  long-term  objective  of  EU-wide  climate-
neutrality in 2050. Last but not least, a 2035 policy horizon can provide for a clear long-
term direction for the future (2028-2035) Common Agricultural Policy. 

4.2.2. A fair, flexible and integrated climate policy framework for the land sector 

As the opportunities to increase carbon removals are unevenly distributed across Member 
States, and the multi-functionality of land creates synergies and trade-offs, the revision of 
the  LULUCF  Regulation  will  need  to  ensure  a  fair,  flexible,  and  integrated  policy 
framework.  

A fair policy framework should allocate any potential national target based on principles 
such as historical performance (e.g. past emissions) and capability (available land, cost-
effective mitigation potential). 

A  flexible  policy  framework  should  allow  Member  States  to  choose  which  mitigation 
actions  to  prioritise  across  the  economy,  and  to  have  access  to  inter-MS  trading 
mechanisms to ensure that action happens where it is the most cost-effective. 

Finally, an integrated policy framework should require Member States to reflect on the 
role of the LULUCF sector in their wider national climate strategy in a more integrated 
manner  than  what  emerged  from  the  NECP  exercise,  starting  from  the  obvious 
connections to mitigation strategies in the agricultural sector, but also taking into account 
synergies  with  other  land-related  objectives  (adaptation,  biodiversity,  sustainable  and 
circular bioeconomy). 

In  the  long  term  (i.e.  beyond  2030),  a  cost-efficient  policy  framework  to  implement 
climate  neutrality  for  the  land  sector  (and  further  on  net  carbon  removals,  to  achieve 
climate  neutrality  at  the  level  of  the  whole  economy)  will  be  a  market-based  carbon 
trading  system,  operating  at  the  level  of  the  land  or  removal  entity  manager. 

21 

 
 
 
 
 
 
Conceptually,  this  approach  will  be  analogous  to  the  way  in  which  the  ETS  requires 
compliance  at  the  level  of  the  industrial  entities.  Unlike  the  ETS,  however,  emissions 
allowances in a land-based carbon trading system should be progressively tied to removal 
certificates, to enforce  a transparent pathway towards climate neutrality. Such a system 
would ensure a level-playing field for the internal agricultural market.  

This  approach  will  require  a  robust  certification  system  and  a  widespread  capacity  of 
land managers to monitor their emissions and removals. Both these objectives are on the 
EU agenda for the years running up to 2030: a Carbon Removal Certification mechanism 
will be proposed by 2023 (as announced in the Circular Economy Action Plan), and by 
the end of 2021 a  Carbon Farming  Initiative (announced in the  Farm to Fork Strategy) 
will  promote  result-based  payments  for  land  managers.  Meanwhile,  the  CAP  will 
continue  to  support  the  uptake  of  sustainable  land  management  practices  and 
technologies and to enable access to advisory services and monitoring tools. Thus, while 
other  parallel  policy  initiatives  will  provide  incentives  for  land-based  mitigation  at  the 
level of individual land managers, the current revision of the LULUCF Regulation aims 
primarily  to  encourage  Member  States  to  design  more  ambitious  land  mitigation 
strategies.  Nevertheless,  by  modernising  the  governance  framework  and  upgrading  the 
monitoring  requirements,  this  revision  also  takes  the  first  steps  towards  a  more  cost-
efficient and integrated policy framework post-2030.   

Figure 6 shows the different elements of an integrated policy approach to the land sector, 
creating  both  an  overall  policy  framework  (addressed  to  Member  States)  and  direct 
incentives (addressed to land managers).  

Figure 6 – Policy approaches: overall policy framework (addressed to Member States) vs direct incentives (addressed 
to land managers). 

4.2.3. Simplification  

As  argued  above,  the  current  LULUCF  rules  are  often  complex  and  no  longer  needed 
given the new formulation of the -55% target; based on the lessons learnt, in particular 
with regard to the setting of the FRLs, a number of accounting concepts can be optimised 
and simplified. This can reduce implementation costs and improve the integration of the 
LULUCF sector in the overall national climate strategies. 

In  addition,  monitoring  and  reporting  systems  need  to  better  reflect  the  climate 
performance  of  the  sector.  Thanks  to  evolutions  in  land  monitoring  technologies,  there 
are  opportunities  to  map  land  use  changes  at  low  cost  and  in  a  timely  fashion  (e.g.  by 
using  approaches  based  on  remote  sensing,  including  from  satellites  such  as  the 

22 

 
 
 
 
Copernicus Sentinels and/or commercially available services); these maps will not only 
facilitate GHG reporting but also guide mitigation action to areas with highest potential 
for emission reductions, and more in general enable environmental action, biodiversity, 
nature protection and land planning.  

 5. WHAT ARE THE AVAILABLE POLICY OPTIONS? 

5.1. What is the baseline from which options are assessed? 

The baseline is the current LULUCF Regulation, which from 2021 integrates emissions 
and  removals  from  the  LULUCF  sector  into  the  EU  climate  policy  framework  for  the 
first  time;  the  Regulation  addresses  Member  States  and  puts  no  direct  requirements  on 
individual  land  managers.  Today  the  Regulation  establishes  rules  to  determine  which 
emissions and removals are taken into account towards the target (so-called ‘accounting’ 
rules),  in  the  same  spirit  as  international  conventions  established  under  the  Kyoto 
Protocol: 

  For  managed  cropland  /  grassland  /  wetland:  take  into  account  emissions  and 
removals in each compliance period47 minus the average emissions and removals 
in the base period 2005-200948. 

  For  afforested  or  deforested  land:  the  accounting  rule  takes  into  account  all 
emissions  and  removals  in  each  compliance  period49.  When  a  unit  of  land  is 
afforested,  it  remains  under  this  accounting  rule  for  20  years  before  being 
considered managed forest land; similarly, when a piece of land is deforested, it 
remains  under  this  accounting  rule  for  20  years  before  being  considered  as  the 
type of land use that it was converted to. 

  For  managed  forest  land  (which  also  includes  the  carbon  stored  in  harvested 
wood  products):  take  into  account  emissions  and  removals  in  each  compliance 
period minus the emissions and removals described by a benchmark (the ‘Forest 
Reference Level’)50.  

Box 2 – Definition and brief history of the Forest Reference Level (FRL) 

A reference level is a projection of future emissions and removals, against which the 
actual  emissions  and  removals  in  a  given  year  are  compared.  This  concept  was  first 
employed in the EU under the 2nd commitment period of the Kyoto Protocol; in that 
context,  the  projections  (called  Forest  Management  Reference  Level,  FMRL)  could 
include  policy  assumptions,  with  the  risk  of  inflating  the  real  impact  of  mitigation 
actions51.  Instead,  in  the  LULUCF  Regulation,  the  forest  reference  level  (FRL)  is 
exclusively based on the continuation of forest management practices and wood use as 
documented in a historical reference period (2000-2009), taking into account the age-
related  forest  dynamics  but  excluding  policy  assumptions.  As  a  result,  the  impact  of 

47 There are two compliance periods: from 2021 to 2025 and from 2026 to 2030. 
48 REGULATION (EU) 2018/841, Art. 7, https://europa.eu/!dD98cC 
49 REGULATION (EU) 2018/841, Art. 6, https://europa.eu/!dD98cC 
50  REGULATION  (EU)  2018/841,  Art.  8,  https://europa.eu/!dD98cC;  “Guidance  on  developing  and 
2018/841”, 
reporting 
https://europa.eu/!nx74BJ     
51 Grassi et al. (2018), “Science-based approach for credible accounting of mitigation in managed forests”, 
https://cbmjournal.biomedcentral.com/articles/10.1186/s13021-018-0096-2  

accordance  with 

Regulation 

Reference 

Forest 

Levels 

(EU) 

in 

23 

 
 
 
 
                                                 
any change in management or wood use will be reflected in the climate accounts, like 
in any other GHG sectors. The only difference with other sectors is the impact of forest 
age  dynamics:  for  instance,  where  forests  are  getting  older,  the  FRL  projection  will 
take  into  account  that  continuing  the  past  management  may  involve  increasing  total 
harvest.  The  rationale  of  this  approach  is  to  avoid  penalising  Member  States  for 
choices  taken  decades  or  centuries  ago  that  have  affected  the  age  structure  of  their 
forests. Beyond the impact of age-related dynamics on total harvest, any change in the 
forest management practices or in the ratio between energy and material use of wood 
relative to 2000-2009 will be fully reflected in the LULUCF accounts. 

The  FRLs  provide  a  more  realistic  counterfactual  than  the  FMRLs;  notably,  they 
project  a  level  of  removals  that  is  59  MtCO2eq  more  stringent  than  that  projected 
under the FMRLs. However, as discussed in Section 2.2.3, the technical complexity of 
the FRLs required a notable effort from the Member States and a long review process 
by the Commission and the LULUCF Expert Group. These efforts need to be weighed 
in when considering the benefits of the FRL approach for future policy development52. 

Taken  together,  these  rules  set  out  an  accounting  target,  i.e.  a  baseline  that  is  the 
minimum  compliance  level  for  the  LULUCF  sector.  This  level  is  expected  to  be 
around  -225 MtCO2eq  per  year  on  average,  at  EU27  level 53 , 54 ,  and  it  can  be 
considered as a ‘no-backsliding’ provision: it is designed to ensure that land management 
practices  do  not  become  worse  from  the  perspective  of  climate  change  mitigation. 
However,  this  level  is  far  from  being  aligned  with  the  trajectory  towards  a  climate-
neutral land sector in 2035, which would require removals above -300 MtCO2eq in 2030. 
It  is  also  well  below  the  removal  potential  estimated  by  the  Commission’s  policy 
scenario:  according  to  the  projections  in  this  scenario,  a  level  of  removals  of  -256 
MtCO2eq can be achieved at zero additional cost per ton of CO2 by 2030, implying that 
the  LULUCF  targets  in  the  baseline  could  be  increased  by  up  to  31  MtCO2eq  of 
removals in 2030 without entailing any additional cost. 

Figure 7 shows these estimated baseline targets, that is, the minimum levels of reported 
GHG removals (or, in some cases, emissions) for each Member State. For most Member 
States (17), these targets are lower than their recent (2016-2018) LULUCF performance: 
these  Member  States  could  still  be  meeting  the  target  even  if  they  produced  more 
LULUCF net emissions than currently, lose a large part of their current removals, or even 
go  from  delivering  net  removals  to  delivering  net  emissions.  Other  Member  States,  in 
particularly those that saw a sharp decrease in LULUCF removals in recent years due to 
the  impact  of  natural  disturbances  (e.g.  forest  fires,  pest  outbreaks,  droughts)  currently 
have a baseline  target that is much  more stringent than  what  their  LULUCF sector  has 
been able to deliver in recent years; this is because the FRL concept, which is the main 
driver of the target, is not meant to reflect recent natural disturbances. 

52 See  also  Korosuo  et  al.  (2020),  (https://europa.eu/!rq47KN)  and  Vizzarri  et  al.  (in  preparation)  for 
details of the FRLs and their assessment 
53 Throughout this impact assessment, the word baseline refers to the  current policy framework  (which 
would  imply  a  level  of  LULUCF  removals  equal  to  -225  MtCO2eq  in  2030);  this  is  distinct  from  the 
reference scenario (REF), which projects a “Business As Usual” scenario. See Annex 10.4 for more details. 
54 It is important to note that all numbers for baseline, targets, trajectories, and partly also the scenario 
modelling are linked to the 2020 GHG inventory submissions by Member States. Changes in subsequent 
GHG inventories, namely due to improved data and methods, will also require an update of the target. 
See Annex 10.4.2 for more detailed explanations.  

24 

 
 
 
                                                 
A similar comparison can be made between the targets in the baseline and the projected 
mitigation performance of the LULUCF sector in the policy scenario. Here, almost half 
(12) of the Member States have a target that is below their mitigation potential, including 
two cases where the target allows for the production of LULUCF net emissions while the 
policy scenario projects a potential to deliver net removals. 

The view of stakeholders 

A majority  (52%) of  the stakeholders that participated in the Open Public  Consultation 
on  the  LULUCF  Review  agreed  that  there  should  be  more  ambitious  LULUCF  targets 
than in the current baseline. 

Figure 7 – Targets in the baseline. Light blue areas in negative bars are LULUCF removals in excess of the target 
which  can  be  used  for  ESR  compliance.  In  Member  States  where  the  targets  corresponds  to  LULUCF  emissions 
(positive bars), the overall target is indicated by the dark blue border, and the light blue areas correspond to unused 
LULUCF emission “allowances” which can be used for ESR compliance. Unit of measure: MtCO2eq. 

Finally, Member States can create up to 262 MtCO2eq of LULUCF credits (i.e. removals 
in excess of the minimum compliance levels) over the 10-year period 2021-2030, i.e. an 
average  of  26.2  MtCO2eq  per  year;  these  can  be  used  to  help  achieve  ESR  national 
targets55 (so-called  ‘flexibility’).  For  each  Member  State,  the  availability  of  LULUCF 
credits  for  ESR  compliance  is  adapted  to  the  share  of  agricultural  emissions  in  ESR 
sectors.  This  is  done  to  recognise  that  Member  States  with  larger  emissions  from 
agriculture may find it more difficult to achieve their ESR targets, because the mitigation 
potential of agriculture is considered lower than in other sectors. The available quantities 
of  LULUCF  credits  are  shown  as  the  lighter  areas  in  Figure  7,  assuming  that  they  are 
equal to 1/10th of the overall flexibility amounts allocated to each Member State over the 
10-year  period.  Member  States  can  effectively  transfer  their  accumulated  LULUCF 
credits at the end of each compliance period to the ESR.  

55 REGULATION (EU) 2018/842, Article 7, https://europa.eu/!NU43BG 

25 

 
 
 
 
                                                 
As  presented  in  Section  2.1.2,  the  assessment  of  National  Energy  and  Climate  Plans 
(NECPs) shows that most Member States plan to ensure that their LULUCF performance 
is just good enough to meet their target, but very few of them give any indication of the 
extent  to  which  they  plan  to  generate  and  use  LULUCF  credits  for  ESR  compliance. 
Thus, while providing for  a  flexible  framework, the  current rules do not create enough 
incentives  for  additional  action  beyond  the  “no-debit”  targets.  Because  of  the  fact, 
mentioned above, that recent performance is already better than the accounting targets in 
many  Member  States,  up  to  84  MtCO2eq  of  LULUCF  credits  could  potentially  be 
generated  in  2030,  whereas  the  demand  for  such  credits  would  only  be  around  52 
MtCO2eq 56 .  These  estimates  indicate  that,  in  the  baseline,  the  potential  supply  of 
LULUCF  credits  is  likely  to  largely  outweigh  the  demand,  depressing  the  potential 
revenues from (and thus the incentives for) an overachievement of the target. 

5.2.

Description of the policy options 

In  line  with  the  specific  objectives  of  this  Impact  Assessment,  the  proposed  policy 
options will: increase the legislative incentives for climate mitigation in the land sector; 
distribute the efforts fairly across Member States; set more efficient incentives; simplify 
the administration and compliance; and create synergies with other policy instruments.   

Option 

Main elements 

Option 1 
Self-standing LULUCF 
target in 2030 

Option 1.1 
Changing the 
accounting rules for 
managed forest land 

Option 1.2 
Setting a single 
removal target 

Option 2 
Flexible LULUCF target in 2030 

Option 3 
Fully integrated agriculture and LULUCF 
targets in 2030 towards land-based climate 
neutrality in 2035 

  MS benchmarks for managed forest 

land: historic average instead of Forest 
Reference Level 

  No other changes of accounting rules 
 Intra-LULUCF flexibility, but no 
flexibility with Effort-Sharing 
Regulation (ESR) 

  A single removal target per MS (based 
on recent emissions and removals and 
area of managed land) instead of 
complex accounting rules 

 Intra-LULUCF flexibility, but no 

flexibility with ESR

  MS target based on recent emissions and 

removals  

  Broader flexibility with ESR 

  EU trajectory towards land-based 

climate neutrality in 2035 (based on 
recent emissions and removals and area 
of managed land) 

  Planning exercise for MS action 
  MS targets for integrated land-sector in 

2030 and 2035 

Table 1 – Overview of options, sub-options and their main elements. 

56 84  MtCO2eq  (respectively,  52  MtCO2eq)  is  the  sum  of  the  differences  between  removals  in  the  MIX 
projection  and  in  the  baseline  target  in  those  Member  States  where  this  difference  is  positive 
(respectively, negative). 

26 

 
 
 
 
                                                 
5.2.1. Option 1: Self-standing LULUCF target  

As  described  in  Section  5.1,  the  current  framework  uses  accounting  rules  to  define  a 
minimum climate performance for each land accounting category. This first option looks 
at  alternative  ways  to  design  national  LULUCF  targets,  either  by  simplifying  the 
accounting  benchmark  for  managed  forest  land  (Option  1.1)  or  by  setting  a  single 
removal  target  based  on  all  emissions  and  removals  reported  in  the  inventory  (Option 
1.2).  

Under  this  first  option,  it  is  assumed  that  no  flexibility  channel  exists  between  the 
LULUCF sector and the ESR sectors. The level of removals resulting from the amended 
accounting rules (Options 1.1) or a single target (Option 1.2) corresponds to the climate 
ambition  which  is  set  for  the  LULUCF  sector  on  its  own,  and  not  as  a  threshold  that 
defines the interaction between LULUCF and ESR sectors (as in the current Regulation). 
Although this feature was not part of  any of the options outlined in the  Climate Target 
Plan communication, it is included here to acknowledge the support for this approach by 
many stakeholders (see box below). Option 2 will address the flexibility dimension. 

The views of stakeholders 

A  separate  target  for  carbon  removals,  with  no  flexibility  with  other  sectors,  is  often 
indicated by some categories of stakeholders (in particular NGOs) as a choice that would 
ensure  the  environmental  integrity  of  the  framework.  This  was  confirmed  by  the 
responses to the Open Public Consultation, in which the policy option to strengthen the 
flexibility with the ESR received the strongest opposition in the open text response out of 
all  policy  options.  Many  stakeholders  wanted  to  fully  remove  any  flexibility  with  the 
ESR  and  have  a  separate  LULUCF  target.  The  most  often  named  reason  why 
stakeholders opposed the concept of ESR/LULUCF flexibility was that it would lead to 
inaction in the ESR sectors by enabling offsetting of emissions.  

Option 1.1: Changing the accounting rules for managed forest land  

This  option  proposes  to  change  the  accounting  rule  for  managed  forest  land57 (which 
includes  forest  land  which  remains  forest  land,  and  the  carbon  that  is  stored  in  wood 
products  which  are  harvested  from  this  type  of  land)  by  using  a  historical  benchmark 
instead  of  the  FRL  benchmark.  One  of  the  main  reasons  why  the  reference  level 
approach was retained from the Kyoto Protocol framework was that it recognises the link 
between the age structure of forests and their mitigation potential. Indeed, a large part of 
the mitigation potential of existing forests depends on their age structure, which in turn 
depends  on  land  management  decisions  made  a  long  time  ago;  the  point  of  the  FRL 
projection  is  to  cancel  out  the  effects  of  the  age  structure  to  avoid  creating  winners  or 
losers  based  on  the  legacy  of  past  management  decisions,  and  reflect  mitigation  action 
taken  during  the  compliance  period  (see  Box  2).  However,  as  argued  in  Section  2.2.3, 
this approach has been criticised for being too burdensome and open to interpretation.  

57 More options for changing the accounting rules (also for other land accounting categories) are possible, 
and some are presented in the note “Amend the LULUCF accounting rules to make the no-debit rule more 
stringent”,  prepared  by  external 
led  by  COWI 
consultants  under  a 
(https://data.europa.eu/doi/10.2834/201100).  Option  1.1  focuses  on  changing  the  accounting  rule  for 
managed forest land because this change entails the largest impact on the overall accounting target. 

contract 

support 

27 

 
 
 
 
                                                 
In order to simplify the accounting framework while also mitigating age structure effects, 
the reference period for the benchmark should be as close as possible to the compliance 
period.  Indeed,  the  closer  the  reference  period  is  to  the  compliance  period,  the  less 
important will be the effect of forest age structure.   

For  the  purposes  of  the  impact  assessment,  therefore,  the  calculations  are  carried  out 
based on the latest available reported data, here aligned with the start level in the current 
ESR implementation, i.e. 2016-201858. 13 years (from the middle of the reference period 
to  target  date  2030)  is  a  relatively  short  period  in  terms  of  forest  management,  which 
typically  covers  a  cycle  of  40  to  140  years  in  a  production  forest.  Possibilities  for 
management-driven changes to the age class structure would therefore be limited. 

The average reported emissions and removals from Managed Forest  Land in the period 
2016-2018  was  -351.0 MtCO2eq,  which  corresponds  to  34.8 MtCO2eq  of  additional 
removals  with  respect  to  the  Forest  Reference  Levels  (-316.2 MtCO2eq).  This 
simplification  of  accounting  rules,  therefore,  raises  the  ambition  of  the  LULUCF 
Regulation  from  the  current  -224.9 MtCO2eq  to  -259.7  MtCO2eq.  The  distribution  of 
this increase in the target across Member States is provided in Annex 10.5.  

Option 1.2: Setting a single removal target 

Another approach to step up the ambition of the LULUCF rules is to define directly the 
amount of net removals that must be delivered at the EU level in 2030. In other words, a 
LULUCF  target  is  set  as  the  amount  of  removals  reported  in  the  greenhouse  gas 
inventories,  instead  of  through  a  set  of  accounting  benchmarks.  As  argued  in  Section 
2.1.3,  the  accounting  approach  creates  complexity  and  hinders  the  integration  of  the 
LULUCF  sector  in  the  overall  policy  framework;  beside  its  simplification  benefits,  a 
single  removal  target  based  on  reported  values  is  also  coherent  with  the  2030  climate 
ambition  as  formulated  in  the  Climate  Target  Plan,  where  all  reported  LULUCF 
removals contribute to the -55% target. 

The design of this option requires two decisions: the overall target for net removals at the 
EU  level,  and  the  criterion  to  allocate  the  effort  among  Member  States.   In  this 
assessment,  based  on  the  emissions  and  removals  as  reported  in  the  GHG  inventory 
submission of 2020, the target is assumed to be -310 MtCO2eq  in 2030, in line with a 
trajectory towards a climate-neutral land sector in 2035 (the first specific objective, see 
Section 4.2.1). The proposed allocation across Member States is based on two elements: 

  Each Member State maintains its recent level of reported removals and emissions; 
in this assessment the average of the period 2016 to 2018 – the same start level as 
applied under the ESR59 – resulting in an EU starting level of 267.7 MtCO2eq.  

  The  remaining  gap 

in  2030  (e.g. 
42.3 MtCO2eq  of  removals  if  compared  to  the  average  of  2016  to  2018)  is 
allocated in proportion to the area of managed land in each Member State.  

the  EU-target  of  310 MtCO2eq 

to 

Annex 10.4.2 provides more details on how the targets are computed. 

58

 This  period  corresponds  to  the  starting  level  from  which  emission  reductions  apply  under  the  ESR 

(REGULATION (EU) 2018/842, Article 4(2), https://europa.eu/!NU43BG). 
59 See footnote 58 

28 

 
 
 
                                                 
5.2.2. Option 2: Flexible LULUCF target 

A flexibility mechanism from the LULUCF sector to ESR sectors can provide incentives 
to  enhance  LULUCF  removals  beyond  the  minimum  compliance  level.  Land-based 
mitigation  action  could  become  cheaper  or  easier  to  implement  than  foreseen  at  the 
moment of  deciding targets.  It  is therefore important that a  Member State  can consider 
land-based mitigation as an integrated part of its mitigation toolkit, and be incentivised to 
overachieve  its  LULUCF  target  if  this  appears  to  be  the  most  cost-effective  tool  at  its 
disposal.  

Under  the  current  rules,  access  to  the  flexibility  mechanism  reflects  a  ‘no-backsliding’ 
principle60: it requires that the mitigation performance of the LULUCF sector should not 
be worse than in a counterfactual where management practices had remained the same. 
However,  under  these  rules  the  level  of  LULUCF  removals  is  allowed  to  become  as 
small as -225MtCO2eq in 2030 – lower than the current performance of the sector.  

Option 2 therefore proposes a stricter interpretation of the ‘no-backsliding’ principle. It 
requires that the mitigation performance of the LULUCF sector should not be worse than 
its recent level: only if the performance is better than its recent level can a Member State 
generate  LULUCF  credits  for  compliance  with  its  ESR  target.  For  the  purposes  of  the 
impact assessment, this option calculates an EU target of -267.7 MtCO2eq, based on the 
average of the latest available data from 2016 to 2018. Like in Option 1.2, the target is 
set in terms of the overall amount of emissions and removals reported in the inventory, 
and  not  against  accounting  benchmarks.  The  result  of  this  target  allocation  for  each 
Member State is provided in Annex 10.5.  

Contrary  to  Option  1.2,  the  incentives  for  additional  action  beyond  the  recent  level  of 
mitigation  would  not  come  from  a  higher  LULUCF  target  but  from  the  demand  for 
LULUCF  credits  from  the  ESR.  To  increase  the  power  of  this  trading  incentive,  it  is 
proposed that the use of this trading flexibility should be broader: Member States should 
have  the  possibility  to  use  LULUCF  credits  not  just  for  compensating  their  own  ESR 
debits but also to sell them to other Member State for their ESR compliance. 

Obviously,  there  are  other  possibilities:  it  would  be  perfectly  possible  to  combine  the 
incentives  for  additional  action  that  this  impact  assessment  analyses  under  Option  1.2 
(e.g. a target of -310 MtCO2eq in 2030) with those arising from ESR-driven demand, as 
analysed  under  Option  2.  Such  possibilities  have  not  been  identified  in  this  Impact 
Assessment  as  separate  options  for  reasons  of  simplicity  of  the  analysis,  as  well  as 
because a choice of this kind would be highly dependent from choices made in respect of 
the future architecture of the ESR (as explained further in Section 7.3). 

5.2.3. Option 3: Fully integrated agriculture and LULUCF target  

In this option, emissions from agriculture are put together with LULUCF emissions and 
removals under a single “land sector” pillar.  

This option features three elements: (i) a planning process to ensure land-based climate 
neutrality in 2035; (ii) national binding targets for the land sector in 2030; (iii) national 
binding targets for the land sector in 2035.  

60

 This 

in 
http://unfccc.int/paris_agreement/items/9485.php 

enshrined 

principle 

is 

the 

Paris 

Agreement, 

Article 

4.3, 

29 

 
 
 
 
                                                 
Thus, this option differs from the other options in two ways. First, it has a wider sectoral 
scope, in order to better capture the interaction between livestock farming, fertiliser use 
and  land  management,  and  to  promote  an  integrated  policy  approach  to  land-based 
climate mitigation. Second, it extends beyond 2030, in order to directly address the first 
objective of this revision: by setting a trajectory towards a climate-neutral land sector by 
2035,  it  provides  planning  certainty  to  address  the  long  lead  times  of  land-based 
mitigation action.  

An integrated policy framework that explicitly aims at a climate-neutral land sector can 
also be seen as a prototype to develop the implementation of the climate-neutral EU-wide 
economy in 2050, an objective laid out in the 2018 Communication “A Clean Planet for 
All”61 and enshrined in the proposal for an EU Climate Law62. The land sector is a prime 
candidate to pilot this implementation approach, because it encompasses both emissions 
and removals (indispensable to achieve neutrality) and is projected to become the largest 
sector  in  the  EU  GHG  flux  profile  in  2050  (as  fossil  emissions  become  significantly 
reduced).  

  Planning process 

A  governance  system  is  set  up  to  ensure  that  Member  States  collectively  achieve  the 
2035  land  neutrality  objective,  based  on  a  planning  process  that  outlines  strategies  to 
decrease  agricultural  emissions  and  increase  land-based  net  removals  in  an  integrated 
manner, through existing policies (first and foremost, the Common Agricultural Policy) 
and  financial  incentives  for  the  reduction  of  agricultural  emissions  and  the  increase  of 
carbon removals.  

In this option, Member States submit national plans where they explain their contribution 
to  the  2035  objective.  The  plans  should  include  considerations  of  the  linkages  with 
adaptation,  biodiversity  and  bio-economy  goals,  in  order  to  address  all  synergies  and 
trade-offs  related  to  land planning  and land management.  They should  also explain the 
expected  role  of  different  sources  of  finance,  such  as  CAP  funds,  EU  regional  funds, 
other  national  funds,  State  Aid,  or  private  sources  (e.g.  creation  of  carbon  farming 
voluntary markets – see a description of carbon farming business models in Annex 10.7).  

The planning process should be integrated as a new element within the existing National 
Energy and Climate Plans (NECP) process. The Commission would review the plans and 
provide recommendations in case the progress would be insufficient towards the targets, 
which are defined below.  

 

2030 binding targets for the land sector 

Due to the different biophysical conditions across the Member States, it would neither be 
fair nor efficient to expect that each Member State reaches climate neutrality on its own 
in  2035.  In  some  Member  States  the  combined  land  sector  will  deliver  net  removals, 
while  in  others  it  may  still  create  net  emissions,  depending  on  the  combined  reduction 
potential of livestock, fertiliser, and land management activities. As explained in Annex 
10.4.2, this option proposes two formulas to compute each Member State’s contribution 
to  the  2035  neutrality  objective.  The  first  formula  distributes  the  contributions 
proportionally across Member States based on their recent emissions and removals. The 
second  formula  is  based  on  the  same  principles  as  the  fairness  distribution  key  of  the 
Effort Sharing Regulation, taking account of the differences in GDP per capita. The 2030 

61 COM/2018/773 final, https://europa.eu/!VU93kN 
62

 COM(2020)80 final amended by COM(2020)563 final, https://europa.eu/!GH37Bu  

30 

 
 
                                                 
targets are then found on the linear  trajectory  between the  2016-2018  reference  period 
and these 2035 contributions.  

It is important to note that Member States would not have separate targets for land-based 
removals  and  for  non-CO2  emission  reductions;  only  the  overall  balance,  or  the 
aggregate sum, of emissions and removals would count for the achievement of the 2030 
targets.  

 

2035 binding targets for the land sector 

Binding national targets for 2035 will be established after the completion of the planning 
process  outlined  above  and  be  based  on  a  dedicated  Impact  Assessment.  This  process 
will  take  place  following  the  review  task  set  for  the  Commission  in  the  current 
legislation, “no later than six months after each global stocktake” (art. 17 of the current 
LULUCF Regulation). This would place the discussion on the process and modalities for 
implementing  the  EU-wide  land-based  neutrality  objective  at  a  binding  Member  State 
level in late 2023 or 2024.  

The computation of these targets could include an adjustment of the trajectories defined 
for  the  determination  of  the  2030  targets;  in  particular,  the  starting  levels  could  be 
updated with data from newer inventories. In such a way, unforeseen circumstances such 
as new trends in forest removals or progress on agricultural land management under the 
CAP can be reflected in the 2035 targets. 

The 2035 targets could be complemented with EU-level measures. These could include: 
the  creation  of  an  emission  /  removal  trading  system  specific  to  the  land  sector;  the 
creation  of  a  fund  to  purchase  land-based  credits  certified  according  to  a  Carbon 
Removal  Certification  mechanism 63 ;  EU  targeted  measures  to  reduce  agricultural 
emissions.  If  appropriate,  these  EU  measures  will  be  based  on  a  dedicated  Impact 
Assessment that will take the most recent data and policy context into account. 

 6. WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? 

6.1.

Impact indicators 

The  assessment  and  comparison  of  the  various  options  is  based  on  the  following 
quantitative and qualitative indicators. 

6.1.1. Environmental impacts 

The most important impact of the revision will be an increase in LULUCF removals, to 
enhance  the  contribution  of  the  sector  to  the  more  ambitious  EU  2030  climate  target 
announced in the Climate Target Plan (-55%). This is linked to the first objective of this 
Impact  Assessment,  a  climate-neutral  land  sector  by  2035  (see  Section  4.2.1).  This 
impact  affects  Member  States  authorities,  who  will  need  to  design  ambitious  land 
policies to deliver these targets, and land managers (farmers, forest managers) who will 
be the actors on the ground; more in general, this impact affects all European and world 
citizens, as climate action is a public good that is cross-border in nature.  

This impact is assessed by comparing the EU removal target in 2030 to: 

63

 This mechanism was announced in the EU Circular Economy Action Plan (https://europa.eu/!Cp63VQ) 

and should be put in place in 2023 

31 

 
 
 
 
                                                 
 

 

the  trajectory  for  land-based  climate  neutrality  in  2035  (as  indicated  in  Section 
4.2.1,  LULUCF  removals  should  be  above  -300  MtCO2eq  in  2030  to  put  the 
sector on this trajectory); and  

the  mitigation  potential  of  the  LULUCF  sector  projected  by  the  Commission’s 
policy  scenario  (MIX),  according  to  which  keeping  carbon  removals  at  a  level 
around -256 MtCO2eq (slightly lower than today) is possible with no additional 
costs per ton of CO2eq. 64   

In the case of Option 3, where the target covers the entire land sector (i.e. not only the 
LULUCF but also the agricultural sector), the assessment will compare the target only to 
the projected mitigation performance of the land sector; alignment with the objective of a 
climate-neutral land sector is ensured by the way the targets are computed.  

All  proposed  targets  are  attainable  by  implementing  a  range  of  different  actions,  from 
peatland restoration to improved forest management, from afforestation to the promotion 
of long-lasting wood products (e.g. in construction).  

The views of stakeholders 

In  the  feedback  to  the  Inception  Impact  Assessment,  the  following  expected 
environmental impacts were mentioned most frequently in relation to a more ambitious 
LULUCF  Regulation:  increased  carbon  sequestration;  preservation  of  landscapes  and 
ecosystems,  including  water  systems  and  peatlands;  preservation  of  forests  as  carbon 
sinks  and  biodiverse  systems;  afforestation  and  reforestation  where  there  has  been 
intense  logging;  improved  soil  fertility  and  carbon  content;  reduction  of  emissions  and 
substitution of fossil-based materials.  

While  the  only  environmental  impacts  assessed  here  are  quantified  in  terms  of  GHG 
emissions  and  removals,  action  to  enhance  removals  is  highly  synergistic  with  nature-
based  solutions  and  sustainable  management  of  agricultural  and  forestry  resources;  a 
careful  selection  of  the  actions  needed  to  achieve  the  targets  will  lead  to  win-win 
outcomes  in  terms  of  other  environmental  objectives.  Annex  10.6  provides  many 
examples  of  win-win  solutions  for  mitigating  climate  change  while  at  the  same  time 
preserving  biodiversity,  landscapes  and  ecosystems  (see  also  Box  3  below),  improving 
land  adaptation  and  resilience  to  climate  change  impacts,  and  replacing  fossil-based 
materials to produce energy or other goods. For instance, a recent JRC report on the use 
of  woody  biomass  for  energy  production  in  the  EU65 finds  that  afforestation  on  former 
agricultural  land  with  mixed  species  plantations  or  with  naturally  regenerating  forests 
would be beneficial both for climate change mitigation and for biodiversity (see Figure 
19 in Annex 10.6.2). The optimal mix of actions for carbon removals is not determined 
only by the ambition of LULUCF targets, but rather corresponds to an integrated policy 
approach  that  enhances  these  synergies  and  balances  many  types  of  financial  and 
regulatory  incentives;  indeed,  in  many  cases,  there  are  considerable  synergies  between 
higher removal targets, adaptation strategies, the higher ambition in the EU Biodiversity 
strategy, enhanced sustainability requirement for EU biomass, and more sustainable food 
production.  The  EU  also  promotes  research  and  innovation  activities  in  this  area:  for 
instance,  Horizon  Europe  (Cluster  6)  will  allocate  at  least  €123  million  to  support  the 

64 For a comparison of the targets in all options with the projected potential by Member State, see Annex 
10.5. 
65  Camia  et  al. 
(https://europa.eu/!Bn46df) 

(2021),  “The  use  of  woody  biomass 

for  energy  production 

in  the  EU” 

32 

 
 
                                                 
contribution  of the  agriculture  and  forestry  sectors to the European  Green Deal.   Thus, 
the  revision  of  the  LULUCF  Regulation  is  only  one  element  in  a  set  of  EU  policy 
initiatives which, together, will encourage Member States to design national policies that 
harness these win-win solutions. See Annex 10.6 for more information on the articulation 
between the relevant EU policy initiatives on land-related topics. 

Box 3 – Links between higher removal targets, higher resilience and biodiversity 

Climate  change  and  biodiversity  loss  are  interdependent  and  mutually  reinforcing 
emergencies  and  closely  interconnected  threats,  and  therefore  they  need  to  be 
addressed  together:  climate  change  is  one  of  the  main  drivers  of  biodiversity  loss, 
while  biodiversity  loss  and  ecosystem  degradation  have  implications  for  climate 
change through feedbacks, and for the capacities and limits of nature-based adaptation 
and  mitigation  efforts.  Synergies  and  trade-offs  between  mitigation,  adaptation  and 
biodiversity have been the object of strong research efforts and raised policy interest to 
put forward nature-based solutions66, with a particular focus on land. Meeting higher 
carbon  removal  targets  and  higher  resilience  of  land  while  addressing  biodiversity 
challenges  will  require  strong  actions  to  change  land  management  practices,  in 
combination  with  adequate  spatial  planning,  including  the  expansion  of  protected 
areas,  the  restoration  of  degraded  areas  and  the  sustainable  management  of  land  and 
forests,  targeting  a  balance  between  CO2  removals  and  higher  carbon  stocks  in  all 
carbon pools. 

More information on this topic can be found in Annex 10.6.1. 

Other environmental impacts 

The modelling underpinning this Impact Assessment does not include impacts of higher 
net  removals  on  air  pollution  or  ecosystems  health.  However,  the  Impact  Assessment 
accompanying  the  Climate  Target  Plan  analysed  these  impacts  in  economy-wide 
scenarios that achieve the -55% reduction in net emissions in 2030. It found that, in those 
scenarios, air pollution would decrease by 60%, with positive impacts on human health 
(reduction in premature deaths and morbidity) and other positive economic implications 
(reduced air pollution control costs, reduced health damage). Achieving the -55% target 
would also reduce the areas of ecosystems subject to acidification (by 4.7 thousand km2) 
and to excess nitrogen deposition (by 8.7 thousand km2).67 

6.1.2. Distributional impacts 

The options include different proposals on how to define benchmarks and targets at the 
level of Member States; Annex 10.5 provides graphs and tables for an overview of these 
targets  across  Member  States.  The  fairness  of  the  target  distribution  is  assumed  to  be 

66 Nature-based solutions are defined as solutions that are inspired and supported by nature, which are  
cost-effective,  simultaneously  provide  environmental,  social  and  economic  benefits  and  help  build 
resilience. Such solutions bring more, and more diverse, nature and natural features and processes into 
cities, landscapes and seascapes, through locally adapted, resource-efficient and systemic interventions. 
Nature-based  solutions  must  therefore  benefit  biodiversity  and  support  the  delivery  of  a  range  of 
solutions: 
ecosystem 
https://europa.eu/!bu88Gq. 
in  nature”: 
https://europa.eu/!Jf47Gr.  

recent  policy  brief 

and  nature-based 

information  on 

For  more 

services. 

solution 

“The 

the 

the 

For 

EU 

is 

67 For more details,  see  section 6.3 of the Impact Assessment accompanying the Climate Target  Plan at 
https://europa.eu/!gC43Cr 

33 

 
 
 
                                                 
 
  
related  to  the  capacity  of  a  Member  State  to  deliver  mitigation  action  in  the  LULUCF 
sector.  Like  the  environmental  impacts,  also  this  impact  mainly  affects  Member  States 
who need to design policies to achieve the target; it is assumed that the distribution of the 
targets among Member States trickles down to the various groups of actors on the ground 
in a proportional manner.  

To assess this impact, the analysis will compare the target distribution to: 

  The recent mitigation performance of the LULUCF sector. This indicator looks at 
how  well  the  proposed  target  distribution  reflects  the  latest  LULUCF  inventory 
(average  2016-2018),  which  takes  into  account  the  recent  circumstances  of  the 
sector (e.g. impacts of natural disturbances, recent management practices). 

  The  2030  mitigation  potential:  this  indicator  reflects  the  alignment  of  the 
proposed  target  distribution  with  its  projected  capacity  to  deliver  land-based 
mitigation according to Commission’s policy scenario (MIX) (see  Annex 10.4.1 
for a more detailed description of this scenario). 

The comparison relies both on absolute differences to identify how many Member States 
receive a target that is more ambitious than their recent or projected performance, and on 
correlations  to  assess  the extent  to  which higher  targets are  assigned to  Member  States 
with the highest recent or projected performance (a high correlation coefficient indicates 
that the distributional allocation is very similar and can thus be considered fair). 

6.1.3. Economic impacts 

Economic impacts will affect both national policy-makers, who decide on how to use the 
flexibility  opportunities  provided  by  the  policy  framework,  and  actors  of  the  bio-
economy that deliver climate action on the ground.  

The views of stakeholders 

In  the  feedback  to  the  Inception  Impact  Assessment,  the  economic  impact  mentioned 
most frequently in relation to a more ambitious LULUCF Regulation was the growth of 
the  bio-based  sector  through  increased  use  of  HWPs  in  substitution  of  fossil-based 
materials.  The  expected  social  impacts  included:  the  creation  of  new  business 
opportunities, the promotion of territorial cohesion, and repopulation in rural areas.  

The analysis assesses: 

  The overall costs of achieving the targets are mainly associated with the actions put in 
place by the actors of the bio-economy, and in particular: forest management (change 
rotation  length,  thinning  and  harvest  intensity),  avoided  deforestation,  afforestation, 
and  fallowing  of  histosols.  These  cost  estimates  are  based  on  Marginal  Abatement 
Cost (MAC) curves from Commission’s modelling tools. MAC curves depend on the 
number  and  quantity  of  technologies  for  mitigation  action  and  the  opportunity  costs 
for those actions. The curves simulate emission reduction potentials at a given carbon 
price (equal to the marginal cost for the abatement of a ton of CO2eq) for a specific 
scenario  and  year.  Emission  reduction  potentials  are  non-linear  over  time;  for 
instance, the mitigation potential of afforestation after a modelling period of 10 years 
are small compared to the potentials after 30 or 50 years.  

The choice of the best pathway to achieve the national targets should depend not only 
on cost considerations, but also on the interconnected need to protect the biodiversity 

34 

 
 
 
and  promote  a  sustainable  bio-economy.  For  instance,  higher  removal  targets  could 
drive bioenergy subsidies towards more sustainable and biodiversity-friendly sources 
of  biomass  (in  synergy  with  the  sustainability  criteria  for  biomass  established  under 
the Recast Renewable Energy Directive, which are also being revised as part of the Fit 
for 55 package), and other bioeconomy sectors could receive a boost (for instance, the 
production  of  long-lasting  wood  products  for  furniture  or  construction  materials, 
which  would  be  accounted  as  temporary  carbon  removals).  Thus,  higher  LULUCF 
targets  could  promote  a  shift  of  the  bio-economy  sectors  towards  sustainable,  long-
lasting  and  circular  uses  of  natural  resources,  leading  to  jobs  and  growth  in  these 
sectors.  Annex  10.6.2  gives  more  information  on  these  links  while  Annex  10.4.1 
includes an explanation of how they are modelled in the Commission’s scenarios. 

  The expected revenues from land-based climate action.  

The views of stakeholders 

Stakeholders  who  replied  to  the  Open  Public  Consultation  on  the  Review  of  the 
LULUCF  Regulation  identified  the  following  financing  approaches  as  important  or 
very  important:  Subsidies  (e.g.  Common  Agricultural  Policy  or  national  policies) 
(72%);  a  dedicated  EU  or  national  fund  (61%);  revenues  from  selling  land-based 
carbon credits (49%). See Annex 10.2.3 for more details. 

Three  sources  of  revenues  can  be  identified:  public  subsidies,  private  markets,  and 
inter-Member State trade of LULUCF credits. 

In the agricultural sector (and, to some extent, in the forestry sector), the main source 
of public subsidies is the Common Agricultural Policy (CAP). With a budget of 344 
EUR  billion  in  the  2021-2027  period  (of  which  40%  earmarked  for  climate  action), 
the new CAP gives Member States a large flexibility to design their support schemes 
to achieve a set of 10 specific objectives, one of which is climate change mitigation 
and adaptation. Available instruments to compensate or reward climate action are: the 
design  of  basic  standards  (conditionality),  hectare-based  payments  for  practices  that 
contribute  to  climate  change  mitigation  or  adaptation  on  agricultural  land  (eco-
schemes), compensation for climate-friendly management practices or investments in 
rural  areas  (Rural  Development  measures).  Some  of  the  specific  drivers  behind  the 
decline in LULUCF removals, such as farmer’s lack of knowledge and low uptake of 
new  practices  and  technologies,  can  also  be  targeted  by  CAP  measures.  Another 
important  potential  source  of  public  support  is  the  budget  made  available  under  the 
“Next  Generation  EU”,  which  can  be  channelled  to  the  land  sector  through  the 
Recovery  and  Resilience  Plans,  submitted  by  Member  States  and  currently  being 
assessed and adopted. 

Private markets can reward climate action via, for instance, labelling schemes to target 
consumers willing to pay a higher price for climate-friendly products. In recent years, 
another  major  source  of  private  funding  has  emerged:  corporations,  but  also  private 
citizens,  buy  land-based  carbon  removals  in  voluntary  carbon  markets68 in  order  to 
compensate  for  their  (residual)  climate  footprint.  A  Carbon  Farming  Initiative, 
announced  by  the  Commission  in  the  Farm  to  Fork  Strategy,  will  promote  this  new 
business  model  for  rural  areas,  creating  new  income  and  jobs  for  rural  areas  (see 

68 The  Report  “2020  State  of  the  Voluntary  Carbon  Markets”  by  Ecosystem  Marketplace  finds  that 
corporate  carbon-neutral  pledges  fueled  a  record  transaction  volume  of  at  least  104  MtCO2e  in  2019, 
which is an increase of 6 percent over 2018.  

35 

 
 
                                                 
Annex 10.7 for an overview). To support carbon farming approaches, the Commission 
will propose in 2023 a regulatory framework on the certification of carbon removals.69 
As  mentioned  in  the  Circular  Economy  Action  Plan  and  in  the  EU  Adaptation 
Strategy,  carbon  removals  should  be  carried  out  in  full  respect  of  the  biodiversity 
objectives.  

Finally,  the  flexibility  mechanisms  within  LULUCF  as  well  as  with  the  ESR  allow 
Member  States  to  trade  LULUCF  credits  among  them,  which  can  create  additional 
revenues for governments who overachieve their LULUCF target. These mechanisms 
are designed to allow Member States to achieve their climate target in the most cost-
efficient way by focusing resources on the actions with lower abatement costs, and are 
essential  to  achieve  a  flexible  policy  framework  (Specific  Objective  #2,  Section 
4.2.2).  

Given that  the  LULUCF Regulation addresses primarily  Member  States,  this impact 
indicator will focus on the last type of revenues. Clearly, higher removal targets will 
affect  national  policies  which  will  in  turn  impact  individual  bio-economy  actors; 
however, when it comes to assessing the revenues resulting from different options on 
these  actors,  it  can  be  assumed  that  the  national  revenues  will  trickle  down 
proportionally  to  the  individual  level  through  the  available  types  of  public  support 
mentioned  above.  For  each  option,  this  indicator  will  assess  the  extent  to  which 
flexibility  mechanisms  are  likely  to  be  used,  based  on  the  expected  demand  and 
supply  for  these  credits;  these  are  estimated  by  looking  at  the  gap  between  the 
proposed national targets and the projected performance of the sector in each Member 
State, based on the Commission’s scenario modelling.  

Three  levels  of  flexibility  exist:  intra-LULUCF  flexibility  is  the  possibility  to  sell 
LULUCF removals in excess of the target to other Member States (Options 1 and 2); 
ESR-LULUCF flexibility is the possibility to use LULUCF removals in excess of the 
target to achieve ESR targets (Option 2); and full land flexibility is the possibility to 
achieve  the  land  targets  with  integrated  action  in  either  the  agricultural  or  the 
LULUCF sector (Option 3). 

6.1.4. Administrative impacts 

Administrative  impacts  are  understood  in  terms  of  regulatory  costs  that  affect  Member 
States  authorities  in  charge  of  the  implementation  of  LULUCF  and  other  land-related 
policies.  These  include  the  costs  of  implementing  the  policy,  the  costs  due  to  low 
integration with other policies, and the monitoring costs.  

 

Implementation  costs:  this  qualitative  indicator  assesses  the  extent  to  which  the 
implementation of the policy has been simplified (Specific Objective #3, Section 
4.2.3). At a minimum, this is related to abandoning the FRL concept compliance 
period (option 1.1). An additional layer of simplification is represented by those 
options that, besides moving away from the FRL concept, also move away from 
other  accounting  benchmarks  by  setting  a  single  target  based  on  reported 
emissions  and  removals  (options  1.2,  2,  and  3):  this  approach  decreases  the 
regulatory  costs 
the 
communication  about  the  policy  (this  last  impact  is  not  tangible  but  should 
nevertheless  be  mentioned,  because  the  complexity  of  the  LULUCF  accounting 

the  compliance  exercise  and  simplifies 

linked 

to 

69 To  identify  and  prioritise  the  research  and  innovation  needs  related  to  Carbon  Farming,  the  Horizon 
Europe  Work  Programme  for  2021-22  will  include  research  actions  to  improve  the  monitoring  and 
verification of land-based removals. 

36 

 
 
 
                                                 
rules has been likely to hinder full integration of this sector into climate policy-
making). 

  Synergies:  this  qualitative  indicator  is  linked  to  the  objective  of  an  integrated 
policy framework for the LULUCF sector (Specific Objective #2, Section 4.2.2). 
While Option 1 presents very little or no integration of the LULUCF sector in the 
overall  climate  policy  framework,  Option  2  presents  some  integration  via  the 
flexibility  between  the  LULUCF  Regulation  and  the  ESR;  Option  3  offers  the 
highest level of integration by setting a climate target that covers the land sector 
in  a  comprehensive  way.  A  comprehensive  target  for  the  land  sector  would 
provide  a  clear  climate  steer  to  the  Common  Agricultural  Policy  and  promote 
synergies  with  other  land-related  policies  (e.g.  climate  adaptation,  biodiversity). 
These  synergies  are  likely  to  result  in  more  effective  and  cost-efficient  policy 
design in the long term, as the policy approach is made ‘future-proof’ and in line 
with the projected contribution and needs of the land sector. 

  Monitoring  costs:  this  qualitative  indicator  is  linked  to  the  costs  of  improving 
national systems to monitor the climate performance of the LULUCF sector in a 
robust way. The current monitoring and reporting systems have improved during 
the  implementation of  the  LULUCF  Decision (2013-2020) but they  are still not 
granular enough to reflect climate action taken on the ground in an accurate way 
(see  Section  2.1.3).  In  particular,  enhancements  and  synergies  with  monitoring 
under  other  policy  areas  (biodiversity,  agricultural  policy)  should  be  leveraged. 
Thus,  for  all  the  options  to  be  implemented  effectively  (and  in  particular  those 
with targets based on reported emissions and removals, that is, option 1.2, 2 and 
3),  it  is  necessary  to  improve  these  systems  significantly  in  the  next  years; 
specific  requirements  are  discussed  in  Section  9.  While  these  requirements  will 
entail  some  costs70,  there  is  also  large  scope  for  cost-efficient  improvements  by 
drawing  on  existing  datasets  and  remote  sensing  technologies;  moreover,  better 
policy  monitoring  allows  to  better  target  areas  with  the  largest  mitigation 
potential,  thus  resulting  in  more  effective  and  cost-efficient  policy  making.  As 
these requirements are proposed as a horizontal element of the revision, and not 
as a specific feature of some selected options, these impacts can be considered to 
be the same across all options. 

 6.2.

Impacts of Option 1: Self-standing LULUCF target 

6.2.1. Option 1.1: Changing the accounting rules for managed forest land  

  Environmental impacts 

This option would require EU removals at the level of approximately -259.7 MtCO2eq. 
This level is just below the recent mitigation performance of the LULUCF sector and just 
above  the  projected  mitigation  potential  under  the  policy  scenario;  it  would  not  be 
enough to put the EU on track for a climate-neutral land sector. 

  Distributional impacts 

70

 In France for example, the cost of national soil carbon monitoring has recently been estimated to be 
between 2 and 6.5 million euros per year (Voltz et al., 2018). A coarse upscaling proportional to land area 
puts the figure at 15-55 million euros per year for the EU. For more details on this topic, see Note “Soil 
carbon”,  prepared  by  external 
led  by  COWI 
consultants  under  a 
(https://data.europa.eu/doi/10.2834/201100). 

contract 

support 

37 

 
 
 
                                                 
For  14  Member  States,  the  target  under  this  option  is  less  stringent  than  their  recent 
performance from 2016 to 2018. The same is true for 15 Member States with regard to 
their  potential  projected  by  the  policy  scenario.  For  the  remaining  Member  States,  the 
target is more ambitious but in most cases still very close to the Member State’s recent 
and projected performance (at zero marginal cost per tonne in the MIX projection). 

Overall, the targets under Option 1.1 correlate very well with the recent performance or 
with  the  projected  potential:  the  correlation  coefficient  is,  respectively, 𝑟 = 0.99 and 
𝑟 = 0.93. Targets based on a recent historic benchmark for managed forest land perform 
very well in terms of allocating more stringent targets to the Member States that show the 
best recent performance, largely overcome issues relating to age class structure of forests, 
and  offer  the  largest  projected  potential  to  deliver  climate  change  mitigation  in  the 
LULUCF sector. 

  Economic impacts 

The level of removals required under this option is very close to the level that the policy 
scenario assumes to be feasible at zero additional cost per tonne of CO2 (256 MtCO2eq). 
By  comparing  national  MIX  projections  (at  zero  additional  costs  per  ton  of  CO2)  with 
the national targets, it can be estimated that the annual supply and demand for LULUCF 
credits  in  2030  would  be  around  48  MtCO2eq  and  51  MtCO2eq,  respectively71.  Thus, 
there would be potential for trade between Member States but most Member States will 
likely  prefer  to  increase  own  mitigation  actions  instead  of  buying  from  other  Member 
States.  

Moreover, under this option there is no flexibility between the LULUCF sector and the 
ESR  sectors:  in  other  words,  there  is  no  possibility  to  use  over-performance  under 
LULUCF for ESR compliance and vice-versa. While such a separate removal target for 
the land sector can provide reassurances that the improvement in the performance in the 
LULUCF  sector  does not dilute the pressure to reduce emissions in other sectors72,  the 
absence of any flexibility between the LULUCF sector and the ESR also implies that no 
additional  incentives  exist  to  overachieve  the  target,  which  is  just  above  the  projected 
performance of the sector with no additional action. 

  Administrative impacts 

Implementation costs: Moving from the FRL accounting rule to a recent historic baseline 
provides two advantages: it  reduces  administrative burden,  and  it sets  a  more objective 
benchmark, less dependent on the choice of complex methodological approaches.  

The views of stakeholders 

This  option  was  discussed  extensively  in  November  2020  during  a  workshop  with 
national  experts,  many  of  which  were  members  of  the  LULUCF  Expert  Group  and 

71 48  MtCO2eq  (respectively,  51  MtCO2eq)  is  the  sum  of  the  differences  between  removals  in  the  MIX 
projection (at zero additional costs per ton of CO2) and the targets in  those Member States where this 
difference  is  positive  (respectively,  negative).  Under  the  current  LULUCF  regulation,  a  flexibility 
mechanism  exists  to  address  such  differences  in  credits  and  debits  between  Member  States.  Under 
certain  conditions,  Member  States  that  find  themselves  at  non-compliance  with  emissions  accounted 
against the FRL, are entitled to benefit from a certain amount of the surplus of the other Member States. 
This  flexibility  mechanism  can  only  enter  into  force  in  the  case,  inter  alia,  that  the  “no-debit”  rule  is 
fulfilled at EU level.  
72 Ref.  McLaren  et  al.,  “Beyond  “Net-Zero”:  A  Case  for  Separate  Targets  for  Emissions  Reduction  and 
Negative Emissions” (https://doi.org/10.3389/fclim.2019.00004).  

38 

 
 
                                                 
therefore had been personally involved in the FRL review process. The majority of these 
experts were of the view that the EU should not continue with the use of the FRL concept 
(a view also shared by a majority of the respondents to the Open Public Consultation on 
the LULUCF Review), and considered the FRL review process as too burdensome.  

Synergies:  The  absence  of  any  flexibility  between  the  LULUCF  sector  and  the 
agricultural  emissions  covered  by  the  ESR  may  hinder  a  strategic  policy  approach  to 
improve the mitigation performance of the land sector in an integrated manner. This may 
undermine synergies in policy planning which  may result in less cost-effective national 
climate policies across agriculture, forestry, and land use sectors in general. 

Monitoring costs: As for all options, the enhanced monitoring and reporting requirements 
described  in  Section  9  would  entail  some  costs,  but  these  costs  can  be  minimised  if 
existing  datasets  and  remote  sensing  technologies  are  exploited,  and  can  be  partly 
compensated  by  more  effective  policy  making  made  possible  by  better  monitoring 
systems. 

In conclusion, this sub-option presents some simplification benefits because it abandons 
the  FRL  concept,  but  the  lack  of  flexibility  and  of  integration  in  the  overall  climate 
framework  may  hinder  cost-effective  policy  design.  The  choice  of  a  recent  reference 
period for forests ensures a fair distribution of effort as it cancels out the impact of the 
forest age structure and recognises recent natural disturbances. It only implies a slightly 
more ambitious performance than in the Commission’s projections for 2030, which can 
be achieved at a very low cost, but does not offer incentives to exceed the target. 

Option 1.1 

Environmental 
impacts 

Distributional 
impacts 

Economic 
impacts 

Administrative 
impacts 

Main elements: 

  Benchmark 

managed forest 
land: historic 
average instead 
of FRL 

  No flexibility 
with ESR 

Target is approx. 
260 MtCO2eq.  

Not in line with 
trajectory 
towards land 
neutrality 
objective. 

The recent 
reference period 
for forests 
reflects the 
current forest age 
structure 
dynamics and 
recent natural 
disturbances. 

Low additional 
cost with respect 
to the baseline. 

Small potential 
for trade of 
LULUCF 
credits; no 
flexibility with 
ESR hinders 
overall cost-
efficiency.  

Simplification 
(no FRL) but 
still some 
complexity due 
to remaining 
accounting 
provisions 

No synergies / 
integration 
between the 
LULUCF and 
the Agriculture 
sector 

Assessment 

 

 

0 

 

Table 3 – Summary of main elements of Option 1.1, its impacts, and qualitative assessment ( Very positive;  
Positive;  Mildly positive; 0 No or negligible impact;  Negative) 

6.2.2. Option 1.2: Setting a single removal target 

  Environmental impacts 

This  option  proposes  an  EU  target  for  net  removals  of  -310  MtCO2eq  in  2030.  This 
level of removals is higher than the projections in the policy scenario  at zero additional 
cost per ton of CO2, but is consistent with putting the LULUCF sector on the trajectory 
of a climate-neutral land sector in 2035. 

39 

 
 
 
  Distributional impacts 

By construction, these targets imply an improvement over the recent performance for all 
Member States; collectively, Member States need to deliver 42.3 MtCO2eq more than in 
the recent period (2016-2018).  

It is noteworthy that the targets for 14 Member States are still below the policy scenario 
projections at a carbon price of 5 EUR/tCO2, while they would require additional effort 
for the remaining 13 Member States. 

Overall, the targets under Option 1.2 correlate very well with the current performance or 
with  the  projected  potential:  the  correlation  coefficient  is,  respectively 𝑟 = 0.999 and 
𝑟 = 0.97;  thus,  targets  based  on  a  recent  reference  period  and  on  the  area  of  managed 
land perform very well in terms of allocating more stringent targets to the Member States 
that  show  the  best  recent  performance  and  the  largest  projected  potential  to  deliver 
climate change mitigation in the LULUCF sector. This is because the choice of a recent 
reference  period  as  the  main  allocation  criterion  ensures,  like  in  Option  1.1,  that  the 
impact of the age structure of the forests (addressed in the current regulation through the 
FRL)  cancels  out,  and  the  impacts  of  recent  natural  disturbances  and  the  impacts  of 
recent changes in forest management are well reflected. 

 

 Economic impacts 

The level of removals required under this option is around 54 MtCO2eq higher than the 
level  that  the  policy  scenario  assumes  to  be  feasible  at  zero  additional  cost  per  ton  of 
CO2  (256  MtCO2eq).  Such  gap  can  be  filled  at  a  relatively  low  costs  per  ton  of  CO2 
(between 5 EUR/tCO2 and 10 EUR/tCO2), as explained in Annex 10.4.1. A carbon price 
of  5  EUR/tCO2  could  deliver  an  additional  58.3  MtCO2eq  for  an  incremental  cost  of 
EUR  291  Mio  per  year;  10  EUR/tCO2  could  deliver  another  10  MtCO2eq  for  an 
incremental cost of EUR 100 Mio. 

The  Common  Agricultural  Policy  offers  the  financial  support  to  finance  the  incurred 
costs for the additional  carbon removals. Alternatively, farmers and foresters could sell 
the  additional  carbon  removals  on  the  voluntary  carbon  market.  Assuming  that  carbon 
credits  would  trade  at  a  price  of  around  EUR  10,  farmers  and  foresters  could  expect 
additional revenues of up to roughly EUR 700 million for the additionally generated 68.3 
MtCO2eq.  Compared  to  annual  costs  of  EUR  391  Mio  per  year,  farmers  and  foresters 
could  expect  a  sufficient  gross  margin  to  cover  administrative  and  set-up  costs,  risks 
related to natural disturbances, and a return on the invested capital. See also Section 10.7 
for more explanations on the business model behind carbon farming.  

Finally, the 13 Member States with a target higher than the estimated level of removals 
in their policy scenario at a carbon price of 5 EUR/tCO2 may want to compensate their 
annual debits (in total 41 MtCO2eq) through buying LULUCF credits from the other 14 
Member  States  who  expect  to  have  total  annual  credits  of  45  MtCO2eq 73 .  These 
imbalances  can  create  important  trading  opportunities  within  the  LULUCF  sector. 
However,  another potential source  of demand  for  LULUCF credits, namely from those 

73 45  MtCO2eq  (respectively,  41MtCO2eq)  is  the  sum  of  the  differences  between  removals  in  the  MIX 
projection  at  5  EUR/tCO2  and  the  target  in  those  Member  States  where  this  difference  is  positive 
(respectively, negative). As explained in more detail in Annex 10.5, under the current LULUCF regulation, 
there exists a flexibility mechanism where Member States that find themselves with a debit will receive a 
certain  amount  of  credits  from  the  surplus  of  the  other  Member  States.  This  flexibility  mechanism  can 
enter into force in case that the “no-debit” rule is fulfilled at EU level. 

40 

 
 
                                                 
Member  States  who  may  not  achieve  their  ESR  target,  is  not  exploited  because  of  the 
absence of any flexibility between the LULUCF sector and the ESR (as in Option 1.1). 

  Administrative impacts: 

Implementation  costs:  A  single  target  which  is  based  on  the  emissions  and  removals 
reported  in  the  inventory  instead  of  being  based  on  a  set  of  accounting  benchmarks 
significantly simplifies planning, implementation, compliance, and communication about 
the policy. 

Synergies: See above (Option 1.1). 

Monitoring costs: See above (Option 1.1). 

In  conclusion, this option contributes  to simplification  and  increased climate ambition 
by setting a single removal target which is well above the level of removals required in 
the baseline and is aligned with the trajectory towards a climate-neutral land sector in 
2035. The higher ambition requires additional mitigation action in more than half of the 
Member  States,  but  this  can  be  achieved  at  a  relatively  low  cost.  Higher  targets  also 
boost  the  demand  for  LULUCF  credits  and  thus  the  incentives  to  overachieve  targets 
where  possible.  However,  this  option  performs  less  well  in  terms  of  flexibility  and 
synergies with other land-related policies. 

Option 1.2 

Environmental 
impacts 

Distributional 
impacts 

Economic 
impacts 

Administrative 
impacts 

Main elements: 

  Single removal 

target 

  No flexibility 
with ESR 

Target is -310 
MtCO2eq 
removals in 2030 

In line with land 
neutrality 
trajectory 

Target 
distribution 
reflects recent 
circumstances 
and future 
potential 

Additional action 
can be delivered 
at a relatively 
low cost 

Strong potential 
for trade of 
LULUCF credits 

High level of 
simplification 

No synergies / 
integration of the 
LULUCF and 
the Agriculture 
sector 

No flexibility 
with ESR 
hinders overall 
cost-efficiency  

Assessment 

 

 

 

 

Table 4 – Summary of main elements of Option 1.2, its impacts, and qualitative assessment ( Very positive;  
Positive;  Mildly positive; 0 No or negligible impact;  Negative) 

6.3.

Impacts of Option 2: Flexible LULUCF target 

  Environmental impacts 

The removal target is set at -268 MtCO2eq; however, the actual amount of removals that 
this  option  can  deliver  could  be  higher,  depending  on  the  level  of  ambition  set  for  the 
ESR. If ESR targets are ambitious enough to require the use of a significant amount of 
LULUCF  credits,  incentivising  Member  States  to  overachieve  their  LULUCF  targets, 
this  option  may  be  aligned  with  the  objective  of  a  climate-neutral  land  sector  in  2035. 
For  instance,  if  the  amount  of  LULUCF  credits  that  can  be  used  for  ESR  compliance 
remains on average 26 MtCO2 per year, like in the current ESR, and if the demand for 
these credits is large enough that they are all supplied, then the removals in 2030 could 
be up to -294 MtCO2eq, which is line with the trajectory towards a climate-neutral land 

41 

 
 
 
sector  in  2035.  In  addition,  the  possibility  to  sell  LULUCF  credits  to  other  Member 
States for their own ESR compliance broadens the pool of potential buyers of LULUCF 
credits,  which  can  provide  additional  incentives  to  overachieve  LULUCF  targets  (see 
‘Economic impacts’ for more details).  

  Distributional impacts 

Under this option, the targets are more ambitious than the 2030 policy scenario at zero 
additional costs per ton of CO2 for only 14 Member States74. 

Overall,  the  targets  under  Option  2  correlate  very  well  with  the  projected  potential  in 
2030 (𝑟 = 0.96)75. As under Option 1, targets based on a recent reference period perform 
well  in  terms  of  allocating  more  stringent  targets  to  the  Member  States  that  show  the 
largest potential to deliver climate change mitigation in the LULUCF sector in 2030. 

  Economic impacts 

The level of removals required under this option is around 12 MtCO2eq higher than the 
level  that  the  policy  scenario  assumes  to  be  feasible  at  zero  additional  cost  per  ton  of 
CO2 (-256 MtCO2eq). Such a small gap can be filled at a low cost per ton of CO2 (well 
below  5  EUR/tCO2),  as  explained  in  Annex  10.4.1.  As  explained  with  option  1.2,  the 
additional  costs  can  be  covered  by  financial  support  from  the  Common  Agricultural 
Policy or by revenues from selling carbon credits on voluntary carbon markets. 

When considering the possibility to trade LULUCF credits for LULUCF compliance, the 
14  Member  States  with  a  target  higher  than  the  estimated  level  of  removals  in  their 
policy  scenario  may  want  to  compensate  their  annual  debits  (in  total  45  MtCO2eq) 
through buying  LULUCF credits from the other  13 Member States who expect to have 
total  annual  credits  of  34  MtCO2eq  and  can  produce  even  more  removals  at  modest 
costs76. 

In  addition,  this  option  opens  the  possibility  to  trade  LULUCF  credits  for  ESR 
compliance.  According  to  the  rules  set  out  in  the  ESR,  each  Member  State  can  use  a 
maximum  amount  of  LULUCF  credits  generated  domestically  for  ESR  compliance. 
Whether this option makes it more difficult or easier to generate LULUCF credits for a 
Member  State’s  own  ESR  compliance  depends  on  whether  the  new  threshold  (i.e.  the 
new target) is more or less stringent than in the baseline (respectively, this is the case in 
17  and  10  Member  States).  However,  this  option  also  introduces  the  possibility  to  use 
LULUCF  credits  bought  from  another  Member  State  for  a  Member  State’s  ESR 
compliance.  Thus,  the  potential  buyers of  LULUCF credits  are not only those Member 
States  that  under-achieve  their  LULUCF  target,  but  also  those  that  under-achieve  their 
ESR target. While the ESR rules continue to impose a limit on the amount of LULUCF 

74

 By  construction,  there  is  no  difference  between  the  targets  in  Option  2  and  the  recent  mitigation 

performance. 
75

 By construction, there is perfect correlation  with the recent performance levels  –  same levels as the 

targets. 
76 34  MtCO2eq  (respectively,  45  MtCO2eq)  is  the  sum  of  the  differences  between  removals  in  the  MIX 
projection  at  zero  additional  costs  per  ton  of  CO2  and  the  target  in  those  Member  States  where  this 
difference  is  positive  (respectively,  negative).  As  explained  in  more  detail  in  Annex  10.5,  under  the 
current  LULUCF  regulation,  there  exists  a  flexibility  mechanism  where  Member  States  that  find 
themselves with a debit will receive a certain amount of credits from the surplus of the other Member 
States.  This  flexibility  mechanism  can  enter  into  force  in  case  that  the  “no-debit”  rule  is  fulfilled  at  EU 
level. 

42 

 
 
                                                 
credits that each Member State can use for its own ESR compliance77, there is no limit on 
the amount of LULUCF credits that a Member State can supply to other Member States 
for  their  own  ESR  compliance;  thus,  Member  States  with  the  most  cost-efficient 
mitigation  potential  are  encouraged  to  significantly  overachieve  their  LULUCF  target 
(even beyond the additional removals that they can use for their own ESR compliance) to 
meet the demand from this larger, EU-wide pool of potential buyers. 

  Administrative impacts  

Implementation  costs:  Given  that  national  targets  are  set  against  the  emissions  and 
removals reported in the inventories, and not against accounting benchmarks, the impacts 
of this option on this indicator are similar to those of Option 1.2. 

Synergies: The creation of a stronger EU-wide trade of LULUCF credits can promote a 
more  integrated  strategy  for  climate  mitigation  in  the  land  sector  (i.e.  agriculture  and 
LULUCF)  across  Member  States.  For  instance,  a  Member  State  with  a  combination  of 
high  GDP  (and  hence  a  high  ESR  target),  an  agricultural  sector  with  high  non-CO2 
emissions but low mitigation potential, and small potential to deliver LULUCF removals, 
can  purchase  LULUCF  credits  and  thereby  cover  the  costs  of  LULUCF  mitigation  in 
another Member State that has  a lower GDP (and hence a lower ESR target) and more 
land available for climate action. Thus, Member States have a stake in the effectiveness 
of  land  policies  put  in  place  in  other  Member  States;  this  can  foster  cross-border 
synergies and is aligned with a vision for a fully integrated and cost-efficient approach to 
climate mitigation in the land sector EU-wide. 

Monitoring costs: See above (Option 1.1). 

In  conclusion,  this  option  delivers  a  fair  and  flexible  policy  framework.  The  targets 
ensure “no-backsliding” with respect to the current LULUCF performance; while these 
targets would not be enough to achieve climate neutrality in the land sector in 2030, the 
broader  possibilities  for  EU-wide  trade  of  LULUCF  credits  for  ESR  compliance  could 
create the incentives to overachieve these targets. Like in Option 1.2, a single target set 
in reported terms delivers significant simplification. 

Option 2 

Environmental 
impacts 

Distributional 
impacts 

Economic 
impacts 

Administrative 
impacts 

77 These amounts are discussed in the Impact Assessment accompanying the proposal for a revision of the 
Effort Sharing Regulation. 

43 

 
 
                                                 
High correlation 
with projected 
LULUCF 
performance 
indicates a fair 
distribution of 
efforts 

High level of 
simplification 

Good synergies 
thanks to  
strengthened 
flexibility 
opportunities. 

Additional action 
can be delivered 
at a low cost. 

Broader trading 
opportunities 
with ESR 
promote a cost-
efficient 
allocation of 
mitigation action 
across borders. 

Main elements: 

  Flexibility with 

ESR 

  Broader 
trading 
possibilities 

  Single removal 
target equal to 
recent 
LULUCF 
performance  

Target is 268 
MtCO2eq 
removals. Strong 
demand for 
LULUCF credits 
(e.g. very high 
ESR targets) 
could create 
incentives to 
overachieve 
targets and put 
the sector on the 
trajectory for 
land-based 
neutrality in 
2035. 

Assessment 

() 

 

 

 

Table 5 – Summary of main elements of Option 2, its impacts, and qualitative assessment ( Very positive;  
Positive;  Mildly positive; 0 No or negligible impact;  Negative) 

6.4.

Impacts of Option 3: Fully integrated agriculture and LULUCF target 

  Environmental impacts 

This option proposes an EU target for the land sector of 40  MtCO2eq  in  2030,  which 
means that agricultural emissions should exceed land-based removals by no more than 40 
MtCO2eq.  This  is  more  ambitious  than  the  corresponding  projections  in  the  policy 
scenario  with  zero  additional  cost (120  MtCO2eq  in  2030),  and  is  by  construction 
consistent  with  a  trajectory  towards  land-based  climate  neutrality  in  2035,  when 
agricultural emissions shall not exceed land-based removals at EU level.  

The optimal  mix of mitigation action  for livestock and fertilizer use compared to land-
based  removals  will  depend  on  the  relative  costs  of  the  different  actions,  but  also  on 
policy  choices  in  line  with  Green  Deal  initiatives  (e.g.  Farm-to-Fork,  biodiversity, 
biomass  sustainability,  Methane  Strategy,  and  the  greening  of  the  CAP)  and  on 
developments on the demand side (e.g. meat consumption, alternative proteins). Indeed, 
even if many types of mitigation action in the LULUCF sector are possible at a relatively 
low cost and/or have large mitigation effects in the short term, more expensive LULUCF 
actions may carry more co-benefits for biodiversity and/or carry longer-term benefits for 
climate  mitigation  and  adaptation,  and  should  thus  be  prioritised.  Similarly,  even  if 
mitigation action in the agricultural sector is in general more expensive, the pressure to 
decrease  emissions  in  the  agricultural  sector  must  not  be  diluted  by  the  possibility  to 
compensate  these  emissions  with  cheaper  LULUCF  removals:  climate  action  in  the 
agricultural  sector  is  essential  for  the  many  co-benefits  that  it  can  provide,  such  as 
improving the sector’s resilience to the impacts of climate change, and reducing pollution 
and  threats  to  ecosystems.  Finally,  in  many  cases  the  same  type  of  climate  action  can 
deliver an improvement in terms of both agricultural emissions and LULUCF removals, 
and  such  synergies  should  be  addressed  in  an  integrated  manner:  for  instance,  the 
promotion  of  plant-based  diets  with  less  meat  can  both  reduce  agricultural  emissions 
from  the  livestock  sector78 and  free  up  land  that  can  deliver  carbon  sequestration  (e.g. 

78

 The  Commission’s  Communication 

final, 
https://europa.eu/!VU93kN)  has  presented  eight  scenarios  to  decarbonise  the  economy.  One  of  the 

“A  Clean  Planet 

(COM/2018/773 

for  All” 

44 

 
 
 
 
                                                 
 
biodiversity-friendly  afforestation),  besides  its  significant  benefits  for  the  health  of  EU 
citizens79 (see Annex 10.6.4 for more information on the mitigation potential of dietary 
change). 

Figure 8 illustrates the range of possible combinations between mitigation actions in the 
agricultural and LULUCF sectors. As the graph shows, the same mitigation outcome can 
be reached by doing more in agriculture and less in LULUCF, and vice versa. The orange 
dots  indicate  the  combinations  that  can  be  reached  at  a  low  range  of  economic  costs; 
however, as just argued, costs are only one of the considerations that should come into 
play in the choice of the optimal mitigation mix. 

Figure  8  –  Each  point  in  the  graph  corresponds  to  a  combination  of  additional  LULUCF  removals  (x-axis)  and 
additional emission reductions in Agriculture (y-axis) to achieve an EU climate neutral land sector in 2035. Points on 
the blue line correspond to combinations that deliver additional mitigation of 106 MtCO2eq; this level would bridge 
the gap that remains after the low-hanging fruits (the LULUCF and agricultural mitigation actions that are assumed 
at zero costs per ton of CO2eq) are carried out. The range shown in the graph goes from 47 MtCO2eq of LULUCF 
removals  and  a  reduction  of  59  MtCO2eq  in  agriculture  on  the  top-left  end  of  the  blue  line,  to  106  MtCO2eq  of 
LULUCF  removals  and  no  reduction  in  agriculture  on  the  bottom-right  end  of  the  blue  line.  Orange  dots  indicate 
economic cost-efficient options for combined LULUCF and Agriculture action. 

  Distributional impacts 

Under this option, all Member States need to improve the mitigation performance of their 
land  sector  compared  to  their  recent  performance  (2016-2018).  The  targets  are  more 
ambitious  than  the  2030  policy  projections  for  21  Member  States;  the  gap  that  these 
Member States have to fill is quite large (89 MtCO2eq) and concentrated (five Member 
States count for more than half of this gap).  

Overall, the targets under Option 3  correlate very  well with the current performance or 
with the projected potential for the land sector: the correlation coefficient is, respectively, 
𝑟 = 0.97  and  𝑟 = 0.94 .  Thus,  targets  under  this  option  perform  well  in  terms  of 

scenarios,  aiming  at  a  climate-neutral  EU  by  2050,  includes  climate-friendly  consumers’  choices.  The 
modelling exercise showed that even moderate changes in the consumption of food of animal origin in 
line with the World Health Organization (WHO) recommendations can significantly reduce emissions from 
agricultural production.  
79

 With  about  40%  of  cancers  preventable,  Europe’s  Beating  Cancer  Plan  (COM(2021)  44  final, 
https://europa.eu/!mg86Uu) promotes shifting to a more plant-based diet, with less red and processed 
meat and other foods linked to cancer risks and more fruit and vegetables. 

45 

 
 
 
                                                                                                                                                 
allocating  more  stringent  targets  to  the  Member  States  that  show  the  best  recent 
performance  and  the  largest  projected  potential  to  deliver  climate  change  mitigation  in 
the land sector. 

  Economic impacts 

Under  this  option,  Member  States  can  trade  land  credits  without  any  restrictions  and 
therefore optimise mitigation action across national borders. The full flexibility between 
the  agriculture  and  LULUCF  sector  is  a  specific  feature  of  this  option:  unlike  the 
flexibility mechanism in the baseline and under Option 2, there is no regulatory limit on 
the amount of LULUCF removals that can compensate for emissions in the agricultural 
sector,  and  vice  versa  (although,  as  just  argued,  such  constraints  are  imposed  by  other 
types of considerations). On the other hand, there is no flexibility between the land sector 
and the other sectors covered by the ESR. Thus, there is no risk that action in the land 
sector reduces the pressure to decarbonise other sectors that heavily rely on fossil fuels, 
such as transports or heating. 

As under the previous  options,  the  Common Agricultural Policy is available  to  support 
the costs for additional carbon removals as well as costs of reducing non-CO2 emissions. 
Farmers  and  foresters  can,  furthermore,  generate  additional  revenues  from  the  sale  of 
carbon credits on voluntary carbon markets, helping to cover the costs for removals and 
emissions reductions.    

  Administrative impacts 

Implementation costs: As in Option 1.2 and Option 2, a single target which is based on 
the emissions and removals reported in the inventory instead of being based on a set of 
accounting  benchmarks  simplifies  planning, 
implementation,  compliance,  and 
communication  about  the  policy.  The  regulatory  burden  corresponding  to  the  planning 
exercise is minimised by linking the submission to the NECP cycle and by building on 
the analysis done in the context of CAP Strategic Planning.  

To  minimise  implementation  costs,  the  planning  process  can  be  linked  to  the  planning 
cycle of National Energy and Climate Plans (for which the next draft update is due by 30 
June  2023).  A  dedicated  section  could  be  added  with  a  specific  template  aimed  at 
gathering  information  on  the  achievement  of  the  collective  target,  in  a  similar  way  to 
current requirements to describe the contribution to the EU targets for renewable energy 
and energy efficiency. Moreover, the planning process can build on the discussions that 
are already taking place  at the national level in the context of the CAP Strategic Plans: 
Member States will not start from scratch in their analysis, because important inputs such 
as the climate-related SWOT analysis and identification of needs will have already been 
carried out for the establishment of those plans; this analysis will nonetheless have to be 
updated  given  the  larger  scope  of  the  exercise  (with  a  larger  role  for  non-agricultural 
land) and the specific 2035 objective of land-based climate neutrality. 

The  planning  process  can  also  improve  transparency  about  the  long-term  planning 
direction  of  land-related  policies,  which  is  good  for  stakeholder  involvement  and 
investments. 

Synergies: By integrating all climate action in the agriculture and LULUCF sector under 
the  same  piece  of  legislation,  this  option  presents  very  high  potential  for  policy 
synergies,  which  are  likely  to  result  in  more  effective  and  cost-efficient  policy  design. 
The  full  flexibility  between  the  two  sectors  promotes  a  synergistic  approach  that  takes 
into account the linkages between land use, livestock activities, fertiliser use, and forest 
management. The better alignment with the scope of actions that can be supported under 

46 

 
 
the Common Agricultural Policy can result in more effective use of the CAP budget for 
climate action. The 2035 policy horizon provides for a clear policy direction in the long-
term, including for the future (2028-2035) Common Agricultural Policy.  

Monitoring costs: See above (Option 1.1). 

In  conclusion, this option contributes  to simplification  and  increased climate ambition 
by  setting  a  single  target  for  the  land  sector  which  is  fully  aligned  with  the  trajectory 
towards  a  climate-neutral  land  sector  in  2035.  This  option  establishes  binding  2030 
targets according to the current performance of the land sector and the area of managed 
land in each Member State, which correlates well with the capacity to deliver mitigation. 
It also performs very well in terms of flexibility and synergies, as it creates an integrated 
framework for climate action in the land sector. 

Option 3 

Environmental 
impacts 

Distributional 
impacts 

Economic 
impacts 

Administrative 
impacts 

High correlation 
with current and 
projected land 
mitigation 
performance 
indicates a fair 
distribution of 
efforts 

Main elements: 

  Binding targets 
for the land 
sector 
(agriculture + 
LULUCF) 

  Planning 
exercise 
towards land-
based climate 
neutrality in 
2035 

Target is 40 
MtCO2eq net 
emissions for the 
land sector in 
2030, which is 
fully in line with 
the trajectory 
towards land-
based climate 
neutrality in 
2035 

The overall cost 
depends on the 
balance between 
mitigation action 
in the agriculture 
vs LULUCF 

High level of 
simplification  

Planning 
exercise in 
synergy with 
NECP cycle 

Full flexibility 
between 
agriculture and 
LULUCF 
promotes cost-
efficiency 

Full integration 
of LULUCF and 
Agriculture, 
alignment with 
CAP, long-term 
policy direction 

Assessment 

 

 

 

 

Table 6 – Summary of main elements of Option 3, its impacts, and qualitative assessment ( Very positive;  
Positive;  Mildly positive; 0 No or negligible impact;  Negative) 

6.5.

Summary of impacts 

The following table summarizes the impacts for the three policy options: 

Environmental 
impacts 

Distributional 
impacts 

Economic 
impacts 

Administrative 
impacts 

Option 1.1 

 

Option 1.2 

 

Option 2 

() 

Option 3 

 

 

 

 

 

0 

 

 

 

 

 

 

 

Table 7 – Summary of the qualitative assessment of the impacts of the different options ( Very positive;  
Positive;  Mildly positive; 0 No or negligible impact;  Negative) 

The following box summarises the costs and benefits of the different options and who 
will be affected by them: 

47 

 
 
 
 
 
Box 4 – Summary of costs and benefits of the different options 

The  modelling  results  show  that  mitigation  action  must  happen  on  all  types  of  land  – 
action  on  forest  land  or  agriculture  land  alone  is  not  enough  to  achieve  the  more 
ambitious  targets.  Therefore,  all  actors  of  the  bioeconomy  (farmers,  forest  managers, 
producers of bioenergy or long-lasting wood products) have a role to play. However, the 
modelling results also show that the costs of the needed mitigation action are relatively 
low. In particular, the carbon price of the additional action that is needed to achieve the 
targets in the different options are: 

  Option 1.1: The level of removals required under this option (-260 MtCO2eq) is 
very  close  to  the  level  that  the  policy  scenario  assumes  to  be  feasible  at  zero 
additional cost per ton of CO2. 

  Option  1.2:  the  target  (-310 MtCO2eq)  could  be  achieved  at  a  carbon  price 
between 5 EUR/tCO2 and 10 EUR/tCO2, or an estimated total cost between EUR 
291 Mio and EUR 391 Mio per year. 

  Option 2: the minimum target (-267.7 MtCO2eq) could be achieved at a very low 
cost per ton of CO2 (well below 5 EUR/tCO2). However, this option incentivizes 
the  generation  of  LULUCF  credits  above  the  target  via  strengthened  flexibility 
with  the  ESR:  effectively,  the  amount  of  removals  (and  associated  costs)  is 
expected to be higher than the minimum target and similar to Option 1.2.  

  Option  3:  the  carbon  price  range  for  cost-efficient  mitigation  actions  is  16-23 
EUR/tCO2eq  for  LULUCF  and  1-41  EUR/tCO2  for  Agriculture  (depending  on 
the  relative  contribution  from  each  sector  to  the  overall  target).  The  total 
estimated cost in 2035 in the combined land sector ranges between EUR 531 Mio 
and EUR 605 Mio. 

To put these numbers in perspective, the ETS carbon price is currently around EUR 50 
per  ton  of  CO2,  and  the  budget  earmarked  for  climate  in  the  Common  Agricultural 
Policy for the 2021-2027 period is EUR 138 billion (40% of the total EUR 344 billion). 

In  terms  of  benefits,  given  that  the  LULUCF  Regulation  addresses  primarily  Member 
States,  the  corresponding  impact  indicator  in  this  impact  assessment  focuses  on  the 
revenues  from  inter-Member  State  trade  of  LULUCF  credits.  However,  clearly,  higher 
removal  targets  will  affect  national  policies  which  will  in  turn  impact  both  public  and 
private markets for climate mitigation in agriculture. The Commission is working on the 
concept  of  carbon  farming  to  promote  carbon  sequestration  as  a  new  green  business 
model that can create a new source of income for land managers. A higher ambition for 
the  LULUCF sector is  expected to  drive carbon  farming approaches in  the near future, 
but  a  precise  quantification  of  the  economic  benefits  for  individual  land  managers  was 
not possible in the context of this report.80 

In  terms  of  administrative  savings,  the  simplification  of  the  target  and  compliance 
framework  places  more  emphasis  upon  the  use  of  already  reported  datasets  in  the 
existing greenhouse  gas  inventory  covered  by the Governance Regulation (2018/1999). 
The  main  administrative  costs  of  this  reporting  are  therefore  marginally  reduced,  since 
the  provision  of  information  by  Member  State  administrations  for  compliance  of 
accounting  is  simplified.  For  example,  an  estimated  shared  cost  between  Commission 
and Member States of EUR 4.5 Mio could be saved by changing the accounting rule for 
Managed  Forest  Land  from  the  Reference  Level  approach  to  a  net-net  accounting. 
Potential  savings  also  lie  in  the  use  of  EU  standardised  datasets  (such  as  taken  from 

80 See the economic assessment of option 1.2 for an estimation of the potential maximum revenues for 
carbon removals.   

48 

 
 
                                                 
related  policy  areas  like  the  CAP  and  Restoration  planning  and  monitoring),  the 
incorporation of data from EU programmes such the EU Soil Observatory and LUCAS 
soil  survey  data,  the  EEA’s  Forest  Information  System  for  Europe,  the  provision 
Copernicus  services  –  provided  free  to  Member  States  –  and  the  harmonisation  of 
modelling  tools  between  Member  States.  The  development  of  these  has  already  been 
encouraged  for  some  years  through  LIFE—funded  projects  and  technical  assistance  by 
the Commission to Member States. 

 7. HOW DO THE OPTIONS COMPARE? 

The views of stakeholders 

A  qualitative  analysis  of  the  feedback  provided  to  the  Inception  Impact  Assessment 
indicates that stakeholders in general agreed on the need to increase the ambition of the 
LULUCF regulation in line with the new climate targets (57% of the 69 respondents who 
commented  on  this);  all  of  those  disagreeing  (19%)  expressed  a  concern  that  a 
strengthened  regulation  would  lead  to  further  obligations  on  the  part  of  the  bio-based 
sector.  Of  the  56  respondents  providing  feedback  on  the  option  to  strengthen  the 
flexibility  between  the  LULUCF  Regulation  and  the  Effort  Sharing  Regulation,  a 
majority  (65%,  mainly  environmental  NGOs  and  respondents  from  the  bio-based 
industry), disagreed with increasing this flexibility, due to a concern that this could lead 
to a decrease in the ambition to reduce emissions in other sectors. Finally, 53 respondents 
provided feedback on the option to combine the agriculture and LULUCF sectors into a 
single  climate  policy  pillar  with  a  separate  target;  43%  of  them  disagreed  with  this 
option,  expressing  concerns  such  as  an  expectation  for  the  forestry  sector  to  offset 
emissions from the agricultural sector or to reduce wood harvest rates.  

Respondents  to  the  Open  Public  Consultation  had  a  preference  for  more  ambitious 
removal  targets  for  the  LULUCF  sector,  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  35%  of  the  respondents,  mostly  the  private  sector.  A 
strengthening of  flexibility  with  the ESR was the most preferred  option among 20%  of 
respondents, mostly public authorities. For more information on stakeholders’ view, see 
Annex 10.2. 

7.1.

Effectiveness 

Effectiveness is the extent to which options are fit to achieve the general objective set out 
in  Section  4  (-55%  of  net  emissions  in  the  EU  economy  by  2030),  which  is  mainly 
connected to Specific Objective #1 (A climate-neutral land sector by 2035). 

  Specific objective #1: A climate-neutral land sector by 2035 

The two options  with  a target that  is  fully  aligned with a climate-neutral  land  sector in 
2035 are Option 1.2 and Option 3. The single LULUCF target in Option 1.2, set at -310 
MtCO2eq of removals in 2030, would put the LULUCF sector on the trajectory needed 
to  compensate  for  all  remaining  agricultural  emissions  in  2035.  This  option  does  not 
address  directly  agricultural  emissions:  in  case  this  option  is  retained,  the  parallel 
contribution from the agricultural sector would need to be ensured by higher ESR targets. 
Option  3  fully  covers  the  LULUCF  and  the  agricultural  sector  under  the  same  policy 
target, which is by construction aligned with the objective: it promotes a fully integrated 

49 

 
 
 
 
 
policy  approach  to  achieve  land-based  climate  neutrality  in  2035,  and  is  therefore  the 
more indicated option to achieve this objective. 

Option  2  could  potentially  deliver  enough  removals  to  put  the  LULUCF  sector  on  the 
desired trajectory, but this depends on the incentives to overachieve the targets in order 
to generate LULUCF credits. The option features two elements that can consolidate the 
demand  for  LULUCF  credits  and  thereby  increase  these  incentives:  it  sets  higher 
LULUCF  targets  than  in  the  baseline,  and  it  allows  the  use  of  LULUCF  credits 
purchased  from  another  Member  State  for  ESR  compliance.  A  third  and  fundamental 
incentive  to  overachieve  the  target  is  the  need  for  LULUCF  credits  in  view  of  ESR 
compliance; therefore, the more ambitious the ESR targets are, the more this option is fit 
for this objective. 

Option  1.1  increases  the  ambition  of  the  target  with  respect  to  the  baseline  but  not 
enough to be aligned with the first specific objective; the absence of any flexibility with 
the ESR makes it unlikely that Member States would overachieve this target. 

7.2.

Efficiency 

Efficiency is the extent to which options can achieve the main objective of the initiative 
in  a  cost-effective  way,  that  is,  by  minimising  economic  and  regulatory  costs,  and  by 
enhancing  synergies.  Thus,  efficiency directly relates to Specific  Objectives  #2 (A fair, 
flexible  and  integrated  climate  policy  framework  for  the  land  sector)  and  #3 
(Simplification). 

  Specific  objective  #2:  A  fair,  flexible  and  integrated  climate  policy 

framework for the land sector 

Fairness 

Fairness  is  intended  to  measure  the  extent  to  which  higher  targets  are  allocated  to 
Member States with the largest potential to deliver climate change mitigation, which is 
necessary to achieve the targets in a cost-effective way. 

All  options  have  a  similar  performance  when  it  comes  to  providing  a  fair  policy 
framework. As they all select a more recent reference period for target setting, the target 
distribution is always well correlated to the recent mitigation performance of the sector, 
which  indicates  a  fair  recognition  of  recent  circumstances  in  the  forest  sector  (natural 
disturbances,  changes  in  management  practices).  The  correlation  with  the  projected 
potential of the LULUCF sector is also very high and comparable across all options. 

Flexibility 

As  mitigation  costs  differ  widely  across  Member  States,  cost  efficiency  can  be  be 
increased  through  a  flexible  framework  such  that  Member  States  who  have  the  land 
available to implement mitigation action can seek a compensation of the costs by selling 
the  resulting  removals  to  other  Member  States  with  lower  mitigation  potential.  A 
mechanism to trade LULUCF credits across Member States and across sectors is a way 
to ensure this.  

In  this  respect,  Option  1  only  allows  for  intra-LULUCF  flexibility  and  therefore  only 
slightly  contributes  to  this  objective;  under  this  option,  Option  1.2  is  better  fit  than 
Option  1.1  to  create  a  flexible  framework  for  LULUCF  action,  because  its  higher 
ambition  is  more  likely  to  result  in  active  trade  of  LULUCF  credits  among  Member 
States (albeit at low prices) and in a cost-effective allocation of LULUCF action. Option 
2 introduces trading opportunities between the LULUCF and ESR sectors, including the 
possibility  of  using  LULUCF  credits  bought  from  another  Member  State  for  ESR 
compliance; this may create a significant demand for LULUCF credits (depending on the 
ambition of the  ESR targets),  and can  therefore  encourage  additional action where  it is 

50 

 
 
 
most  cost-efficient  to  do  so.  So  does  Option  3,  which  features  full  flexibility  between 
agriculture and  LULUCF, and thus expands even further the opportunities to trade  any 
overachievement of the national targets for land-based mitigation; under this option there 
is  no  flexibility  between  the  land  sector  and  the  other  sectors,  which  can  provide 
reassurances about the decarbonisation of the fossil-fuel based economy. 

Integration 

An integrated policy approach to climate mitigation in the land sector is relevant to the 
efficiency  criterion,  because  it  can  promote  synergies  between  different  and  connected 
mitigation actions and provide a clear direction for cost-efficient policy making (e.g. in 
the context of CAP planning). 

In  Option  1,  there  is  no  integration  of  the  LULUCF  sector  in  the  overall  policy 
framework, and therefore this option does not perform well in terms of better integrating 
LULUCF into the wider climate policy framework. Option 2 adds some incentives to a 
more  integrated  policy  approach  to  the  land  sector,  through  the  flexibility  between  the 
LULUCF  Regulation  and  the  ESR;  however,  this  integration  is  only  partial,  given  that 
Member  States  can  use  this  flexibility  to  compensate  for  excess  ESR  emissions  from 
either  agriculture  or  other  sectors,  and  it  does  not  by  itself  drive  a  holistic  strategy  for 
land-based  mitigation.  Option  3  clearly  addresses  this  objective  by  setting  out  a 
trajectory  to  climate  neutrality  in  2035  and  asking  Member  States  to  submit  integrated 
plans for climate change mitigation in the land sector. There are strong synergies with the 
CAP  and  other  land-related  policies  with  a  view  to  develop  a  truly  integrated  policy 
approach to the land sector. 

  Specific objective #3: Simplification 

The simplification objective relates to efficiency, as it aims to minimise regulatory costs.  

Option  1.1  performs  moderately  well  against  this  objective  because  it  replaces  the 
complex  FRL  benchmark  with  a  more  straightforward  benchmark  based  on  the  recent 
mitigation  performance  of  the  forest  sector;  however,  it  carries  on  an  accounting 
framework  whereby  targets  are  based  on  many  different  benchmarks,  which  can  create 
implementation costs and undermine the understanding of the contribution of the sector 
to the overall climate ambition. Options  1.2  and  2 set a single target for the  LULUCF 
sectors  based  on  the  emissions  and  removals  that  are  reported  in  the  inventories:  this 
choice corresponds to a great degree of simplification, treats the LULUCF sector like any 
other sector, and is consistent with the way that the 2030 -55% target is formulated (the 
net emission target fully incorporates all emissions and removals in the LULUCF sector, 
without  a  need  for  any  accounting  benchmark).  Option  3  goes  a  step  further  and 
integrates  all  agricultural  and  LULUCF  emissions  and  removals,  abandoning  the 
artificial separation between the LULUCF and agriculture sectors in EU climate policies.   

7.3.

Coherence 

All options  aim  at increasing carbon  removals from the  LULUCF sector, and therefore 
encourage  Member  States  to  put  in  place  national  policies  that  are  likely  to  have  co-
benefits  for  climate  change  adaptation,  biodiversity  and  sustainability  of  biomass.  As 
such,  all  options  are  coherent  with  the  EU  adaptation,  biodiversity  and  bio-economy 
policies  (for  more  details,  see  Annex  10.6).  Furthermore,  the  new  business  models 
around carbon removals – be it through CAP payments or carbon markets – are expected 
to contribute to the development of a  circular and sustainable bio-economy (see  Annex 
10.7). 

In the context of the EU climate mitigation policies, the LULUCF sector has particularly 
strong  links  with  the  Effort  Sharing  Regulation,  because  the  latter  currently  covers 
agricultural  emissions  (among  others).  The  review  of  the  ESR  envisages  three  options: 

51 

 
 
 
the  first  option  is  to  maintain  the  current  sectoral  scope  of  the  Regulation  (agriculture, 
waste, transport, buildings, F-gases) and increase current targets; the second is to reduce 
its  scope  (transport  and  buildings  are  only  covered  by  the  ETS)  and  either  increase  or 
keep current targets; and the third is to phase out the ESR. The coherence of each of the 
LULUCF  options  with  the  ESR  therefore  depends  on  the  piece  of  legislation  which 
would eventually cover agricultural emissions: 

 

 

If the ESR is phased out (third option in the ESR review), then the most coherent 
option would be Option  3, whereby agricultural emissions would be covered by 
extending the scope of the LULUCF Regulation. 

If  instead  the  ESR  continues  to  cover  agricultural  emissions  (first  and  second 
options  in  the  ESR  revision),  then  the  2030  binding  targets  for  the  land  sector 
proposed  under  Option  3  would  not  be  coherent  with  the  overall  policy 
framework. Therefore, the most coherent option would be to select the targets on 
a range between Option 1.2 and Option 2. In particular: 

 o If  ESR  targets  are  significantly  raised  compared  to  the  current  targets, 
there  would  be  strong  demand  for  LULUCF  credits;  this  would  ensure 
that  relatively  less  ambitious  LULUCF  targets  combined  with  the 
possibility  to  use  LULUCF  credits  for  ESR  compliance  would  put  the 
LULUCF sector on the trajectory towards land climate neutrality in 2035, 
while  ensuring  a  flexible  policy  framework.  Therefore, Option  2  would 
be the most coherent option.  

 o If  ESR  targets  are  kept  at  their  current  levels,  then  it  is  unlikely  that 
incentives  for  higher  LULUCF  removals  would  come  from  the  need  to 
generate LULUCF credits for ESR compliance. In this case, the ambitious 
LULUCF  targets  proposed  in  Option  1.2  would  be  the  most  coherent 
option.  

Table  8  provides  a  summary  overview  of  how  the  four  options  perform  against  the 
effectiveness, efficiency and coherence criteria. 

Option 1.1 

Option 1.2 

Option 2 

Option 3 

Effectiveness 

1 / 3 

3 / 3 

2 / 3 

3 / 3 

Objective 1: 

A climate-neutral land 
sector by 2035 

 

 

() 

 

Efficiency 

2 / 6 

3 / 6 

4 / 6 

6 / 6 

Objective 2: 

A fair, flexible and 
integrated climate 
policy framework 

Objective 3: 

Simplification 

 

 

 

 

 

 

 

 

52 

 
 
 
Coherence with 
options in ESR 
Impact Assessment 

ESR Opt 1.2 
or 2.2, ESR 
targets kept at 
current level 

ESR Opt 1.1 
or 2.1, ESR 
targets 
increased 

ESR  
Option 3 

Table 8 – Comparison of options based on their Effectiveness, Efficiency and Coherence ( Very positive;  
Positive;  Mildly positive; 0 No or negligible impact;  Negative)  

 8.

PREFERRED OPTION 

When proposing its updated 2030 greenhouse gas emissions reduction target of at least 
55%81,  the  European  Commission  also  described  the  actions  across  all  sectors  of  the 
economy  that  would  complement  national  efforts  to  achieve  the  increased  ambition.  A 
number of impact assessments have been prepared to support the envisaged revisions of 
key legislative instruments.  

Against  this  background,  this  impact  assessment  has  analysed  the  various  options 
through  which  a  revision  of  the  LULUCF  Regulation  could  effectively  and  efficiently 
contribute  to  the  delivery  of  the  updated  target  as  part  of  a  wider  “Fit  for  55”  policy 
package. 

8.1. Methodological approach 

Drawing  conclusions  about  preferred  options  from  this  analysis  requires  tackling  two 
methodological issues.  

First,  as  often  the  case  in  impact  assessment  analysis,  ranking  options  may  not  be 
straightforward as it may not be possible to compare options through a single metric and 
no option may clearly dominate the others across relevant criteria. Ranking then requires 
an  implicit  weighting  of  the  different  criteria  that  can  only  be  justifiably  established  at 
the political level. In such cases, an impact assessment should wean out as many inferior 
options  as  possible  while  transparently  provide  the  information  required  for  political 
decision- making.  

Secondly,  the  “Fit  for  55”  package  involves  a  high  number  of  interlinked  initiatives 
underpinned  by  individual  impact  assessments.  Therefore,  there  is  a  need  to  ensure 
coherence between the preferred options of various impact assessments.  

8.2.

Policy interactions 

Given  the  complex  interdependence  across  policy  tools  and  the  interplay  with  the 
methodological issue outlines above, no simultaneous determination of a preferred policy 
package is thus possible. A sequential approach was therefore necessary.  

First,  the  common  economic  assessment 82 , 83  underpinning  the  “Communication  on 
Stepping  up  Europe’s  2030  climate  ambition”  looked  at  the  feasibility  of  achieving  a 
higher climate target and provided insights into the efforts that individual sectors would 
have to make. It could not, however, discuss precise sectoral ambitions or detailed policy 
tools. Rather, it looked at a range of possible pathways/scenarios to explore the delivery 

81 Communication on Stepping up Europe’s 2030 climate ambition - Com(2020)562 
82  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020SC0176 

83  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020SC0331 

53 

 
 
 
 
 
                                                 
 
 
of the increased climate ambition. It noted particular benefits in deploying a broad mix of 
policy  instruments,  including  strengthened  carbon  pricing,  increased  regulatory  policy 
ambition and the identification of the investments to step up the climate ambition. 

An update of the pathway/scenario focusing on a combination of extended use of carbon 
pricing  and  medium  intensification  of  regulatory  measures  in  the  economy,  while  also 
reflecting  the  COVID-19  pandemic  and  the  National  Energy  and  Climate  Plans, 
confirmed these findings.  

Taking  this  pathway  and  the  Communication  on  Stepping  up  Europe’s  2030  climate 
ambition  as  central  reference,  individual  impact  assessments  for  all  “Fit  for  55” 
initiatives were then developed with a view to provide the required evidence base for the 
final step of detailing an effective, efficient and coherent “Fit for 55” package. 

At the aggregate level, these impact assessments provide considerable reassurances about 
the policy indications adopted by the Commission in the Communication on Stepping up 
Europe’s  2030  climate  ambition.  This  concerns  notably  a  stronger  and  more 
comprehensive role of carbon pricing, energy efficiency and renewable energy policies, 
the land sector, and the instruments supporting sustainable mobility and transport. These 
would be complemented by a carbon border adjustment mechanism and phasing out free 
allowances.  This  would  allow  to  continue  to  address  the  risk  of  carbon  leakage  in  an 
efficient manner.  It would also preserve the full scope of the Effort Sharing Regulation 
for achieving the increased climate target. 

Various elements of the analyses also suggest that parts of the revenues of a strengthened 
and extended ETS should be used to counter any undesirable distributional impacts such 
a package would entail (between and within Member States). While the best way to do 
this  is  still  to  be  determined,  this  would  seem  a  superior  alternative  to  foregoing  the 
relevant  measures  altogether  or  simply  disregarding  the  uneven  nature  of  their 
distributional impacts. Under both these alternatives, the eventual success of any package 
proposed would be at risk.  

8.3.

Preferred policy option 

Preliminarily  assuming  this  fact  and  the  analysis  above  as  the  framework  for  the 
aggregate “Fit for 55” package, the specific analysis carried out in this impact assessment 
comes  to  the  main  following  conclusions  and  would  suggest  as  the  preferred  policy 
option for the revision of the LULUCF Regulation a package consisting of the following 
elements: 

1.  Set simplified and more ambitious national LULUCF targets for Member States 
in 2030 in order to achieve net LULUCF removals above -300 MtCO2eq in 2030 
and to put the LULUCF sector on the right trajectory to achieve the objective of 
land-based  climate  neutrality  in  2035.  This  can  be  done  via  a  single  removal 
target  (Option 1.2), via increased incentives to create  LULUCF  credits for  ESR 
compliance (Option 2), or by taking elements of both options (i.e. more ambitious 
targets combined with flexibility with ESR). Which of these is the most effective 
choice for the design of the LULUCF targets will depend on the ambition of the 
ESR targets.   

2.  Set a new obligation for Member States to submit integrated mitigation plans for 
the land sector (Option 3), in order to promote a more integrated policy approach 
to the land sector.  

54 

 
 
 
3.  Set an EU-wide climate neutrality target for the land sector in 2035; based on the 
integrated mitigation plans, propose at a later stage binding national land targets 
for 2035 and, if needed, other EU-wide measures (Option 3).  

8.4.

Coherence with other elements of the package 

If  the  ESR  targets  are  significantly  increased  for  2030,  the  expected  large  demand  for 
LULUCF credits from the ESR could guarantee that LULUCF targets equal to the recent 
mitigation  performance  in  combination  with  wider  flexibility  opportunities  (Option  2) 
will be effective  to put the  LULUCF sector  on a trajectory  compatible with land-based 
climate neutrality in 2035. On the other hand, if the ESR targets are not increased by the 
necessary  magnitude,  it  will  be  more  effective  to  set  more  ambitious  LULUCF  targets 
without  enhanced  flexibility  with  the  ESR  (Option  1.2),  because  it  is  expected  that 
Member States would have less need for and hence make less use of this flexibility. 

Setting  nationally  binding  targets  for  the  land  sector  in  2030  (Option  3)  would  not  be 
coherent with an aggregate “Fit for 55” package in which, for the sake of the stability of 
the  regulatory  framework,  the  Effort  Sharing  Regulation  continues  to  cover  agriculture 
emissions; these targets are therefore discarded. Nevertheless, the parallel contribution of 
the  agricultural  sector  to  the  trajectory  towards  land-based  climate  neutrality  in  2035 
would  be  ensured  by  the  increased  ambition  of  the  ESR  targets,  as  well  as  by  the  new 
planning  process  for  the  land  sector  (second  element  of  the  package)  and  the  EU-wide 
climate neutrality target for the land sector in 2035 (third element of the package). 

Increasing planning certainty beyond 2030 is important to incentivise the timely uptake 
of  actions  in  the  LULUCF  sector  which  often  deliver  mitigation  outcomes  only  after 
several  years,  such  as  afforestation.  A  2035  objective  for  land-based  climate  neutrality 
will  also  strengthen  Member  States’  incentives  under  the  ESR  to  take  more  mitigation 
actions  in  the  agricultural  sector  (non-CO2  emissions  from  livestock  and  use  of 
fertilizers). As the implementing measures for the 2035 objective of climate neutrality for 
the  land  sector  (e.g.  binding  Member  State  targets  or  other  regulatory  measures  at  EU 
level) will only be set at a later stage (such as after the next cycle of NECPs in 2024), this 
staged  approach  leaves  enough  flexibility  to  define  the  interaction  with  the  other  post-
2030 climate policy instruments.  

Generally,  more  ambitious  mitigation  targets  under  LULUCF  can  bring  co-benefits  for 
other land-related policy objectives, such as biodiversity and climate change adaptation, 
and are coherent and  mutually  reinforcing with the  parallel  targeted revision of  the EU 
sustainability and GHG saving criteria for biomass for energy use under the Renewable 
Energy Directive (see Annex 10.6). 

8.5.

REFIT (simplification and improve efficiency)  

Compared  to  the  current  Regulation,  the  abovementioned  preferred  policy  option  is 
expected to significantly simplify the legal framework. In particular, moving away from 
a  no  debit  commitment  based  on  a  complex  set  of  accounting  rules  for  different  land 
categories to a single removal target for all land categories taken together should simplify 
compliance.  In  addition,  widening  the  use  of  the  flexibility  opportunities  between  the 
LULUCF  Regulation  and  the  ESR,  as  proposed  under  Option  2,  can  enhance  a  cost-
efficient achievement of the national targets by Member States. 

The provision to start a planning process for enhanced mitigation in a single land sector 
bringing  together  agriculture  and  other  land-use  under  the  LULUCF  Regulation,  as 
proposed  under  the  preferred  option,  may  add  some  administrative  costs  for  national 

55 

 
 
 
 
authorities. However, these costs can be minimised by integrating this planning exercise 
into the already existing governance framework for National Energy and Climate Plans.  

The  proposed  improvement  to  the  monitoring  and  reporting  systems  is  not  expected  to 
significantly  increase  administrative  costs  for  national  authorities  as  it  would  rely  on 
using existing datasets and remote sensing technologies. 

 9. HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

9.1. Operational objective of the monitoring 

The  objective  is  to  assess  the  annual  progress  towards  –  and  compliance  with  –  the 
LULUCF 2030 target assigned to each Member State. Coherence with other EU policies 
that  also  rely  on  land  monitoring  –  such  as  the  CAP,  biodiversity,  and  the  Renewable 
Energy  Directive  –  is  also  of  strong  significance,  providing  moreover  important 
administrative and cost synergies.  

As explained  in Section 2.1.3, under  the Kyoto  Protocol (2013-2020),  requirements for 
monitoring  were  technologically  rather  weak  and  met  only  the  relatively  low  standard 
required  for  all  UNFCCC  parties84.  Even  though  the  regulatory  framework  under  the 
current LULUCF regulation will improve this, new policy synergies and new tools have 
become  operational  that  enhance  the  opportunities  for  improved  monitoring,  at  very 
limited cost. For example, Copernicus sensors and services are today operational, which 
at the time of the previous proposal (2016) were still emerging.   

The  definition  of  individual  Member  State  targets  for  the  LULUCF  sector  with 
compliance based upon reported GHG inventories (as proposed in Options 1.2, 2 and 3), 
places  a  higher  emphasis  on  the  accuracy,  completeness  and  reliability  of  the  reported 
estimates  of  emissions  and  removals.  Upgrading  the  monitoring  approach  in  the 
Regulation, thereby introducing a level playing field for all Member States with respect 
to  using  comparable  and  standardized  approaches,  in  line  with  available  tools  and 
technologies, is therefore of major importance and will ensure adoption of best practices 
for monitoring.  

The views of stakeholders 

For  a  majority  (66%)  of  the  stakeholders  who  participated  in  the  Open  Public 
Consultation on the Review of the LULUCF Regulation, an improved EU framework for 
monitoring, reporting and verifying LULUCF emissions and removals is an important or 
very  important  policy  approach  to  promote  climate  change  mitigation  in  land-related 
sector  (this  was  the  most  selected  policy  approach  among  many;  see  Annex  10.2.3  for 
more details). 

9.2. Monitoring data and technology 

Removal and emission estimates, reported at national level, are aggregates of individual 
actions that take place over land units  (usually called “activity data”) which are assessed 
according  to  their  management  and  use  (so-called  “emission  factors”)  (see  Annex  10.8 
for more details). The individual geographically explicit estimates for each land unit are 

84 for  example,  according  to  a  JRC  analysis  (2021),  even  today  most  Member  States  use  default  IPCC 
reporting assumptions of “no stock change” to report carbon emissions or removals in agricultural soils. 

56 

 
 
 
 
                                                 
then  statistically  aggregated  and  included  in  national  greenhouse  gas  inventories,  to 
provide  the  core  monitoring  indicators,  namely  reported  estimates  at  national  level  per 
land use and land use change category. 

Activity  data  shows  the  area  of  land  use  and  change  between  uses,  within  a  Member 
State,  year-to-year.  The  accuracy  of  this  information  depends  on  the  quality  of  the 
geographical  data  collected.  Improvements  in  accuracy  in  these  estimates  are  therefore 
obtained  by  first  improving  the  quality  and  disaggregation  of  the  activity  data  –  for 
example,  the  knowledge  of  where  arable  fields  have  been  ploughed,  what  soils  they 
cover and what crop is grown on them. Activity data can be directly measured through a 
variety of information systems, already available at national level for policies such as the 
CAP, biodiversity monitoring, forest fire monitoring. 

The  second  step  to  improvement  is  through  the  use  of  more  realistic  emission  factors, 
such  as  those  determined  by  the  Member  State  or  region  concerned  through  direct 
measurement  on  experimental  sites.  The  estimates  of  emissions/removals  within  each 
land  category  relies  on  the  accurate  application  of  emission  factors  to  each  of  these 
activity  data  land  units.  The  upgrading  of  these  estimates  relies  on  the  application  of 
correct emission factors (broadly described as Tiers by the IPCC). 

Improvements to both the activity data collection and the emission factors applied in the 
EU  have  been  fostered  through  the  trials  associated  with  the  LULUCF  Decision85,  and 
the  preparation  of  the  implementation  of  the  LULUCF  Regulation.  The  LULUCF 
Decision  529/2013  already  familiarised  Member  States  with  the  need  to  develop  data 
collection and provision of emission and removal estimates for cropland and grassland86. 
The  LULUCF  regulation  built  on  this  step-wise  process  by  including  agricultural  land 
cover  in  its  mandatory  framework,  and  by  also  requiring  that  the  collection  of  activity 
data should be “geographically explicit”, in particular for land use change. This implies 
that  Member  States  are  required  to  establish  operational  monitoring  systems  with  a 
resolution capable of detecting and tracking accurate changes in land use as small as the 
minimum area defined for forest in the Member State87.    

While the past years have seen tests and improvements achieved by Member States88, the 
upgrading of the target to a reporting-based compliance framework could benefit directly 
from  technology  and  tools  applied  already  in  other  EU  policy  areas.  Common 
Agricultural  Policy  data,  based  since  2005  upon  the  regulatory  requirement  to  apply 
geographic information systems for data management, clearly provides a strong synergy 
with objectives of climate action. The high degree of monitoring and auditing of farmers’ 
claims, motivated  by the high financial level of the policy  transactions, also provides a 
very strong base quality for the data collected. Substantial and well-proven systems are 
already in place and are systematically improved. Alignment with this operational system 
largely  removes  the  risk  of  uncertainty  with  respect  to  the  activity  data  collected.  A 
majority of Member States have already started exploring the combined use of these data 
for the purpose of climate activity  data reporting, although some time is still needed to 
achieve the necessary reporting upscaling. 

A further monitoring enhancement with respect to land of high carbon stock would also 
deliver  strong  climate  and  biodiversity  synergies.  Close  monitoring  (and  appropriate 

85 Decision No 529/2013/EU, https://europa.eu/!fT34JH   
86 Accounting for cropland and grassland management activities is not obliged by the Kyoto Protocol and 
is therefore not covered in GHG accounting by three-quarters of the Member States. 
87 This minimum area is laid out in Reg (EU) 2018/841 Annex II, and varies between 1ha and 0.05ha. 
88 EU Climate Action Progress report, Nov 2020, https://europa.eu/!By94Yn  

57 

 
 
                                                 
management action) would deliver better permanence of these stocks – which if released 
would have strong detrimental effects on the GHG emissions in a Member State. High 
carbon  stocks  also  typically  correlate  with  areas  of  high  natural  value,  such  as 
biodiversity reserves, old-growth forests and wetlands.   

It is also apparent that remote sensing data – in combination with the rich data source of 
traditional national forest inventories – helps address monitoring accuracy and timeliness 
issues.  The  Commission  has  reported 89  on  recommendations  to  better  leverage  the 
potential  of  earth  observation  tools  for  forests,  by  integrating  the  traditional  national 
forest inventory approaches to create mutually beneficial synergies. The report notes that 
remote sensing is a powerful tool able to plug information gaps, because of its synoptic 
view and the possibility to monitor large areas. In Europe, the report concludes that the 
Copernicus  programme  provides  already  many  of  the  necessary  tools  to  produce  the 
required  information  on  forest  disturbances  such  as  fires,  or  to  help  assess  and  address 
vulnerability  to  climate  change  and  assist  with  adaptation  strategy  development90,  with 
many  more  tailored  products  to  emerge.  The  programme  services  cover  all  Member 
States, including the Outermost Regions of France, Portugal and Spain, future coverage 
of these regions will of course remain very pertinent. 

Such tools are moreover already used for land monitoring applications in different parts 
of  the  world  by  agriculture  and  forest  services  such  as  Brazil,  Canada  and  the  US  to 
deliver  operational  applications,  especially  in  the  fields  of  agricultural  production,  fire 
monitoring  and  deforestation.  A  majority  (56%)  of  the  respondents  to  the  Open  Public 
Consultation on the LULUCF Review supported the use of high resolution and wall-to-
wall  satellite  imagery,  which  was  the  most  frequently  selected  approach  to  reinforce 
LULUCF monitoring, reporting and verification systems. 

9.3.

Use of monitoring results 

Results of the monitoring will be used to evaluate the accuracy of the EU land emissions 
and removals reporting, and thus determine if action is on track to meet policy objectives 
in each Member State. The exercise would be made on a yearly basis and provide global 
assurance  of  the  progress  towards  meeting  the  EU’s  target  transparently  –  a  key 
consideration with respect to the international nature of the commitment. A trial already 
this  year  (2021)  will  help  further  improve  and  develop  procedures  by  the  European 
Environment Agency, in line with other GHG emission sectors. However, the continuous 
improvement of the monitoring will be dependent on tools and resources made available 
for  the  specific  needs  identified  in  accordance  with  the  target  option  selected  and 
proposed, with a view to also reducing administrative burden in Member States. 

Annex  10.8  provides  an  overview  of  the  available  data  and  technologies  that  could  be 
used to upgrade the quality of the monitoring but also to benefit from economies of scale 
and scope by using the latest available digital technologies. 

89

 European 

Commission, 
https://op.europa.eu/s/oKot  
90 Forzieri  et  al.  Emergent  vulnerability  to  climate-driven  disturbances  in  European  forests,  Nature 
Communications 2021 (in print). 10.1038/s41467-021-21399-7  

2020,  Monitoring 

Sensing, 

through 

Remote 

Forests 

of 

58 

 
 
 
 
                                                 
 10. ANNEXES 

10.1. Procedural information 

10.1.1. Lead DG, Decide Planning / CWP reference 

The  Directorate-General  (DG)  for  Climate  Action  was  leading  the  preparation  of  this 
initiative  and  the  work  on  the  Impact  Assessment  in  the  European  Commission.  The 
planning entry was approved in Decide Planning under the reference PLAN/2020/8682.91 
It is included in the 2021 Commission Work Programme “A Union of vitality in a world 
of fragility” (COM(2020) 690 final),  under the policy objective “Fit for 55 Package”.92 

10.1.2. Organisation and timing 

  The planned adoption date (Q2 2021) was included in the Commission Work 

Programme adopted on 19 October 2020. 

  The Inception Impact Assessment was open for feedback between 29 October 

2020 and 26 November 2020 

  The Open Public Consultation was online between 13 November 2020 and 05 

February 2021 

  An inter-service steering group (ISG), was established for preparing the climate-
related “Fit for 55 Package” initiatives. Its members were: SG, LS, AGRI, 
BUDG, COMM, COMP, CNECT, DEVCO, DGT, DIGIT, EAC, ECFIN, ECHO, 
EMPL, ENER, ENV, ESTAT, FISMA, FPI, GROW, HOME, HR, IAS, JRC, 
JUST, MARE, MOVE, NEAR, OLAF, REGIO, RTD, SANTE, TAXUD, 
TRADE.  

  The ISG met three times in the period from September until adoption in July 

2021. 

10.1.3. Consultation of the RSB 

A draft Impact Assessment was submitted to the Regulatory Scrutiny Board on 10 March 
2021. Following the meeting on 14 April 2021, the Board issued a positive opinion with 
reservations on 19 April 2021. The recommended improvements suggested by the Board 
were addressed as follows: 

(1) The  report  should  strengthen  the  explanation  of  the  preferred  option.  It  should 
explain  why  the  seemingly  optimal  option  is  not  the  preferred  one  given  the 
arguments  in  the  report  in  favour  of  better  integrating  LULUCF  into the  wider 
policy  framework.  The  report  should  explain  how  the  preferred  option  will 
address this issue.  

Section  8  has  been  redrafted  to  stress  that  the  preferred  option  is  a  package  of  several 
elements. One of these elements is the binding targets for 2030: these targets only cover 
the  LULUCF  sector,  and  not  the  integrated  land  sector,  for  the  sake  of  regulatory 
stability. Nevertheless, other elements are taken from Option 3 and aim to better integrate 
the LULUCF sector into the wider policy framework. 

91 Internal reference: https://europa.eu/!hknMk6 
92 https://ec.europa.eu/info/sites/info/files/2021_commission_work_programme_en.pdf  

59 

 
 
 
 
 
 
 
                                                 
(2) The report should better justify why an EU-wide climate neutrality target for the 
land  sector  in  2035  needs  to  be  set  at  this  point  in  time,  in  addition  to  binding 
national LULUCF targets for 2030. The report should clarify the evidence on the 
basis of which the 2035 target has been defined, and the reason for its inclusion 
in  the  preferred  option,  including  its  value  added  and  likely  impacts.  It  should 
analyse the coherence of the 2035 target with the other initiatives of the ‘Fit for 
55’  package,  whose  analysis  ends  in  2030.  It  should  clarify  to  what  extent  the 
introduction  of  the  2035  target  predetermines  changes  in  the  other  initiatives 
after 2030. The report should clarify how a binding EU target would evolve after 
2035 to ensure sufficient ambition in the land sectors.  

The  arguments  supporting  the  introduction  of  an  EU-wide  target  for  the  land  sector  in 
2035 have been  clarified  in  section 4.2.1, where  this objective  is presented for the first 
time. The coherence  of  this  target  with other initiatives of  the “fit  for 55” package  has 
been addressed in section 8.4. 

(3) The  report  should  better  reflect  this  two-pronged  approach  (2030  vs.  2035 
targets) in the intervention logic, i.e. in the problem definition, objectives, impact 
analysis and comparison of options.  

This  distinction  and  the  arguments  behind  this  approach  have  been  clarified  in  the 
description of the first problem (section 2.1.1), of the first objective (4.2.1) and of Option 
3 (5.2.3). 

(4) The  report  should  be  more  explicit  when  analysing  the  distributional  and 
economic  impacts.  It  should  include  an  analysis  of  how  economic  actors  in  the 
LULUCF sector will be affected. Stakeholder views should be more prominently 
included in the analysis, with an explanation on where they converge or diverge 
on  the  options  considered.  As  far  as  possible,  the  report  should  quantify  the 
administrative impacts.  

The  description  of  impacts  has  been  improved  and  a  box  summarizing  the  economic 
impacts  of  each  option  has  been  added  to  section  6.5.  Stakeholder  views  have  been 
highlighted throughout the report in dedicated boxes titled “The views of stakeholders”. 

(5) The methodological section (in the annex),  including methods,  key assumptions, 
and baseline, should  be  harmonised as much as  possible across  all ‘Fit for  55’ 
initiatives.  Key  methodological  elements  and  assumptions  should  be  included 
concisely in the main report under the baseline section and the introduction to the 
options.  The  report  should  refer  explicitly  to  uncertainties  linked  to  the 
modelling. Where relevant, the methodological presentation should be adapted to 
this specific initiative.  

All modelling tools are presented in section 10.4 of this report. Four main models were 
used  in  the  LULUCF  Impact  Assessment:  GLOBIOM,  G4M,  CAPRI  and  GAINS. 
GLOBIOM  and  G4M  are  unique  to  the  LULUCF  sector  and  require  a  more  thorough 
presentation;  for  CAPRI  and  GAINS  this  Impact  Assessment  only  introduces  elements 
that are specific and relevant to the LULUCF sector and limited to the modelled policies. 
GLOBIOM  and  G4M  were  used  for  LULUCF  scenario  development;  all  models  were 
used for modelling  emission reductions or enhanced removals with marginal abatement 
cost  curves  (see  Annex  10.4  of  this  report).  All  methodological  analysis,  namely  the 
analysis of policy measures, is specific to the LULUCF sector and is therefore presented 
in detail in Annex 10.4. A box commenting specifically on the uncertainty levels related 
to LULUCF estimates has been added to section 10.4.2. 

60 

 
 
Annex 3 should be reinforced to better explain the costs (including administrative costs), 
benefits and the impacts on different economic actors 

A summary of costs of all options has been added in section 6.5, and annex 3 has been 
reinforced. 

10.1.4. Evidence, sources and quality 

  The quantitative assessment of the economic, social and environmental impacts is 
based on integrated economic land use modelling by IIASA with GLOBIOM and 
G4M. The policy scenario takes into account likely biomass demands from other 
sectors  and  follows  assumptions  of  the  1.5TECH  scenario  of  the  EU  long-term 
strategy.  This  scenario  projects  that  the  net  LULUCF  sink  by  2030  will  be  at 
similar  levels  as  in  the  period  2016-2018.  The  impact  of  specific  measures  for 
emission reduction or enhanced removals was modelled with marginal abatement 
cost curves. This analysis demonstrated that significant increases in the land sink 
can be achieved at relatively low costs (5-10 EUR/tonne of CO2). It also showed 
cost-efficient  emission  reductions  require  action  on  all  land  uses,  such  as 
improved forest management, afforestation, avoided deforestation for forest lands 
and  set  aside  of  land  use  on  organic  soils  and  improved  cropland  management 
strategies on agricultural land. 

  Specific  Contract  N°  340201/2020/832904/ETU/CLIMA.C.3  “Reviewing  the 
contribution of the Land Use, Land Use Change and Forestry sector to the Green 
Deal”.  Under  this  contract,  a  consortium  made  up  of  COWI  A/S,  Technopolis, 
Exergia  and  individual  experts  carried  out  three  tasks:  (1)  conceptual  work  on 
problems,  objectives  and  options  for  the  revision  of  the  LULUCF  Regulation 
(output: 7 research notes and an executive summary); (2) stakeholder consultation 
(output:  four  workshops,  analysis  of  the  feedback  to  the  Inception  Impact 
Assessment, analysis of the replies to the Open Public Consultation); (3) analysis 
of “LULUCF action” reports submitted by Member States under art. 10 of the LU 

  LUCF Decision (529/2013) (output: a short report).93 

93 COWI,  Technopolis  Group,  Exergia,  Silvestrum  (2021):  Reviewing  the  Contribution  of  the  Land  Use, 
Land-use change and Forestry Sector to the Green Deal; European Commission, Luxembourg: Publications 
Office of the European Union (https://data.europa.eu/doi/10.2834/201100).  

61 

 
 
 
 
 
                                                 
 
10.2. Stakeholder consultation 

10.2.1. Introduction 

The Commission carried out consultation activities on the plan to increase the EU 2030 
Greenhouse Gas (GHG) emissions reduction target. This plan includes the review of the 
LULUCF  regulation.  The  review  of  the  LULUCF  Regulation  started  with  an  Inception 
Impact Assessment (IIA) and was followed by an Open Public Consultation (OPC). The 
IIA  was conducted from the 29th of  October  2020 to  the 26th  of November 2020. The 
OPC was conducted through an online survey between the 13th of November 2020 and 
the 5th of February 2021. A workshop with stakeholders was also conducted. A summary 
of this feedback is provided in the next sections. 

10.2.2. Feedback to the Inception Impact Assessment 

The Inception Impact Assessment was published for feedback between 29 October 2020 
and  26  November  2020,  and  received  a  total  of  93  responses,  mainly  from  the  private 
sector (39%), including the Harvested Wood Products (HWPs) value chain and biofuels, 
the agricultural sector and the energy sector. A majority of respondents (87%) explicitly 
supported the need to amend the LULUCF regulation to align with the higher climate 
target set in the European Green Deal, and a large share of them (55%) agreed with the 
objective  of  enhancing  land-based  sinks.  However,  while  respondents  from  the  bio-
based  sector  favour  an  approach  that  rewards  active  forest  management  and  views 
Harvested  Wood  Products  (HWPs)  as  part  of  the  sink,  environmental  NGOs  strongly 
disagree  with  this  approach  and  would  rather  see  a  preservation  of  the  existing  land 
carbon sink. 

69 respondents provided feedback on the option to strengthen the LULUCF regulation in 
line  with  the  new  climate  targets  (Option  1).  Of  these,  57%  agreed  to  increase  its 
ambition;  all  of  those  disagreeing  (19%)  expressed  a  concern  that  a  strengthened 
regulation would lead to further obligations on the part of the bio-based sector. 

56 respondents provided feedback on the option to strengthen the flexibility between the 
LULUCF Regulation and the Effort Sharing Regulation (Option 2). A majority of those 
respondents  (65%), made  up mainly of environmental NGOs and  respondents from the 
bio-based  industry,  disagreed  with  increasing  this  flexibility,  due  to  a  concern  that  this 
could lead to a decrease in the ambition to reduce emissions in other sectors. 

53 responses provided feedback on the option to combine the agriculture and LULUCF 
sectors into a single climate policy pillar with a separate target (Option 3). 43% of these 
respondents  disagreed  with  this  option,  expressing  concerns  such  as  an  expectation  for 
the  forestry  sector  to  offset  emissions  from  the  agricultural  sector  or  to  reduce  wood 
harvest rates.  

Respondents  also  expressed  their  views  on  the  expected  impacts  of  a  revision  of  the 
LULUCF regulation. The economic impact mentioned most frequently was the growth of 
the  bio-based  sector  through  increased  use  of  HWPs  in  substitution  of  fossil-based 
materials. The likely social impacts include: the creation of new business opportunities, 
the  promotion  of  territorial  cohesion,  and  repopulation  in  rural  areas.  The  following 
expected  environmental  impacts  were  mentioned  most  frequently:  increased  carbon 
sequestration;  preservation  of  landscapes  and  ecosystems,  including  water  systems  and 
peatlands;  preservation  of  forests  as  carbon  sinks  and  biodiverse  systems;  afforestation 
and reforestation where there has been intense logging; improved soil fertility and carbon 
content; reduction of emissions and substitution of fossil-based materials.  

62 

 
 
 
 
 
10.2.3. Feedback to the Open Public Consultation 

  Overview of respondents 

The OPC on the review of the EU rules on LULUCF received a total of 235 replies from 
different stakeholders/user groups. Private sector organisations had a combined share of 
the  responses  of  28%.  This  includes  business  associations  with  a  total  of  18%  (43 
responses)  and  companies/business  organisations  with  a  total  share  of  10%  (24 
responses)  of  all  submitted  responses.  26%  (60  responses)  of  all  responses  came  from 
EU-Citizens. 17% of respondents represent a non-governmental organisation (NGO) (41 
responses)  and  12%  came  from  academia  (29  responses).  There  are  also  a  number  of 
responses  from  public  authorities  (8%  /18  responses),  trade  unions  (2%  /4  responses), 
environmental organisations (1% / 3 responses), and a non-EU citizen (1 response). 5% 
(12 responses) were from a stakeholder group which was not predefined.  

  Methodology for data processing 

As questions in the online survey were optional, the percentages presented below refer to 
the total respondents that answered the concerned question.  

Some questions allowed respondents to ‘rate’ options (from -2 to +2 / not important at all 
to  very  important).  This  synopsis  report  provides  percentage  figures  for  options  which 
were rated by a majority as important or very important. These are indicative of the most 
relevant  positions.  If  there  were  less  than  three  options  selected  by  at  least  50%  of 
stakeholders the percentages for the three overall highest rated options are presented.  

Finally, respondents often selected ‘Other’ options and provided open text answers. The 
overview of these answers can be found in a more detailed report94.  

Questionnaire 

The  questionnaire  was  composed  of  four  sections.  The  first  collected  feedback  on  the 
mitigation  and  business  potential  of  the  land  sector  and  the  bioeconomy  to  the  overall 
climate ambition for 2030. The second addressed the overall policy approach for revising 
the  LULUCF  Regulation  in  view  of  the  increased  2030  climate  ambition.  The  third 
collected  feedback  on  more  ambitious  rules  and  targets  for  the  LULUCF  sector.  The 
fourth focussed on the links between land use and agriculture. 

  Part  I:  Mobilising  the  mitigation  and  business  potential  of  the  land  sector 

and the bioeconomy 

Stakeholders  were  asked  for  the  most  important  drivers  behind  the  decline  of  the 
land-based net carbon sink. The three most important drivers behind the decline were 
listed by stakeholders as:  

1.  Conversion of carbon-rich land (deforestation, draining of wetland or peatland), 
land take and soil sealing (expansion of built-up and artificial areas (63%/127);  

2.  Unsustainable  land  management  practices  impacting  carbon  stocks  and  sinks 

(58%/120);  

3.  Natural disturbances (weather events,  fires, pest  outbreaks…) that are caused or 

accelerated by climate change (56% / 117).  

94 COWI,  Technopolis  Group,  Exergia,  Silvestrum  (2021):  Reviewing  the  Contribution  of  the  Land  Use, 
Land-use change and Forestry Sector to the Green Deal; European Commission, Luxembourg: Publications 
Office of the European Union (https://data.europa.eu/doi/10.2834/201100).  

63 

 
 
 
                                                 
 
The majority of stakeholders believed that an important EU policy approach to promote 
climate  change  mitigation  in  land-related  sectors  was  to  create  an  improved  EU 
framework on monitoring, reporting and verifying emissions and removals (MRV) 
(66%/137). Many also found it important that the EU sets national targets which Member 
States  (MS)  can  achieve  in  different  ways  (e.g.,  Common  Agricultural  Policy,  national 
forest  policies,  other  national  policies)  (59%/121),  the  use  of  EU  taxes  or  subsidies 
(56%/107)  and  having  EU  policies  to  promote  more  sustainable  and  healthier  diets 
(54%/101).  

The next question asked about the best policy approach to harness the substitution effect 
and carbon storage potential of long-lasting wood products and bio-based and renewable 
materials. More than half of respondents selected support for research and innovation 
into more sustainable production of woody biomass and more sustainable use of wood-
based  materials,  products  and  by-products  (72%/153),  and  training  (e.g.,  for  land 
managers, engineers, architects) and awareness raising (58%/122). Other effective policy 
options to incentivise use of wood products are a carbon farming approach (according 
to 46% of respondents) or tax incentives (45%). 

Stakeholders  were  also  asked  in  which  areas  the  EU  should  focus  efforts  to  enhance 
carbon sinks and protect carbon stocks. The most selected answers were:  

1.  Afforestation, reforestation and forest restoration (77%/162 respondents); 

2.  Protection and restoration of wetland and peatland ecosystems (69%/131);  

3.  Soil carbon increase in agricultural land (69%/124);  

4.  Carbon storage in long-lasting wood-based materials and products (66%/131);  

5.  Agro-ecology and agro-forestry, as well as grassland management (55%/96). 

A  majority  of  stakeholders  believed  that  important  approaches  to  finance  more 
ambitious  climate  action  in  land-related  sectors  were  subsidies  (e.g.,  Common 
Agricultural  Policy  or  national  policies)  (72%/136)  or  a  dedicated  EU  or  national  fund 
(61%/111).  Using  revenues  from  selling  land-based  carbon  credits  was  the  third  most 
frequently selected option (49%/89). 

  Part II: Overall policy approach 

Stakeholders  were  asked  on  their  preferred  policy  approach  to  revise  the  LULUCF 
Regulation in view of the increased 2030 climate ambition. The most frequently selected 
options were: 

1.  Strengthening the current LULUCF Regulation and increase its ambition (Option 

1) was selected by 45% of respondents (95).  

This  was  the  most  frequently  selected  policy  option  among  Academic/research 
institutions, Environmental organisations, EU citizens, and NGOs. This policy option 
was also the second most frequently selected option for the private sector and shares 
the second most frequent selection with Policy Option 3 for Public authorities.  

2.  Combining  the  emissions  from  agriculture  and  LULUCF  sectors  into  a  single 
climate  policy  pillar  with  a  separate  target  (Option  3)  was  selected  by  35%  of 
respondents (75).  

This was the most frequently selected option by the private sector. It was the second 
most  frequently  selected  option  by  Academic/research  institutions,  EU  citizens, 
NGOs, Others, and Public authorities. 

64 

 
 
3.  Strengthening the flexibility with  the Effort  Sharing Regulation  (Option  2) was 

selected by 20% of respondents (42).  

This was the most frequently selected option by Public authorities, the Other group, 
as  well  as  for  the  small  sample  of  trade  unions  in  which  all  policy  options  were 
selected  once.  It  was  the  least  frequently  selected  option  for  Academic/research 
institutions,  the  Private  sector,  Environmental  organisations,  EU  citizens,  Non-EU 
citizens, and NGOs. 

  Part III: Setting more ambitious rules for the Land Use, Land Use Change 

and Forestry sector 

A  majority  (52%)  of  stakeholders  agreed  that  there  should  be  more  stringent  targets 
than  the  current  “no-debit”  rule  for  the  LULUCF  sector  (mostly,  Academic/research 
institutions,  Environmental  organisations,  EU  citizens,  and  NGOs),  whereas  23%  of 
them opposed more stringent targets and would like to continue with the current no-debit 
rule. 25% would prefer a totally different option.  

Should there be more stringent targets for the LULUCF sector? 

100%

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Yes, there should 
be more stringent 
targets than the 
current “no-debit” 
rule 

No, continue with
the current no-
debit rule

Other...

Figure 9 – Stakeholders’s replies to the question “Should there be more stringent targets for the LULUCF sector?”, 
by type of stakeholder. 

Many  stakeholders  indicated  that  national  targets  for  the  LULUCF  sector  should  be 
based  on  the  Member  State’s  potential  to  increase  the  net  sink  in  a  cost-efficient  way 
(28%/55) or a percentage increase compared to the Member State’s net sink in a baseline 
that is specific to each land use category (22% / 43 respondents). This was followed by a 
criterion based on the Member State’s share of agricultural land, forest land and wetland 
(13% / 25 respondents). A third of respondents (30% / 60) selected the option “Other”. 

A majority of stakeholders agreed that the EU should discontinue the Forest Reference 
Level (FRL) concept and instead use as a benchmark based on the historic performance 
of forests (14%/25, plus a large share of the 28%/50 respondents who selected Other and 
gave more details) or look at all removals in existing forests, without comparing them to 
any baseline (22%/39). For other stakeholders, the EU should continue with the current 
FRL  approach  (16%/28)  or  harmonise  the  FRL  methodology  across  Member  States 
(21%/37).  

65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q9. In the current LULUCF Regulation, emissions and removals from existing forests are compared to a Forest Reference 
Level. The concept of reference levels was chosen to ensure a smooth transition from a similar concept under the Kyoto 
Protocol. Should t 

30%

25%

20%

15%

10%

5%

0%

28% 

Other… 

22% 

21% 

16% 

14% 

No, take into account the 
entire net sink in existing 
forests, without comparing it 
to any baseline (“gross-net” 
accounting) 

Yes, continue to use Forest
Reference Levels, but
harmonise the methodology
to establish them across
Member States

Yes, continue to compare the
net sink from existing forests
to a Forest Reference Level
which is based on the
continuation of past
management practices

No, compare the net sink in 
existing forests to a historic 
baseline (“net-net” 
accounting); such a baseline 
corresponds to a larger sink 
than the Forest Reference 
Level. 

% of respondents to Q9 selected this answer (n=179)

Figure 10 – Stakeholders replies to the question “Should the EU continue with the Forest Reference Level concept” 

On  reinforcing  the  LULUCF  monitoring,  reporting  and  verification  (MRV)  systems,  a 
majority of respondents (56%/113) supports the use of high resolution and wall-to-wall 
satellite  imagery  to  identify  where  land  use  change  happens.  Many  also  selected  the 
options  to  reinforce  biodiversity,  ecosystem  and  adaptation  considerations  into  the 
reporting requirements  (45%/91  respondents),  and to  use more precise emission factors 
or emission modelling (34%/68 respondents). 

  Part IV: Links between land use and agriculture 

Stakeholders were asked how EU climate policy for agriculture and land use should 
be designed. About a third of respondents (33%/61 respondents) believe the EU should 
create  a  new  policy  strand  which  covers  agricultural  non-CO2  emissions  and  land  use 
emissions  together.  Another  third  of  respondents  (35%/66)  selected  options  which 
continue with including agricultural non-CO2 emissions under the ESR. A large number 
of the 59 stakeholders who selected ‘Other’ and provided additional comments disagreed 
with any additional flexibility between the LULUCF sector and other sectors, saying they 
do  not  want  offsetting  of  emissions  from  other  sectors  using  the  LULUCF  sector;  a 
disagreement with the creation of a land pillar was mentioned explicitly by 13 of these 
respondents. 

66 

 
 
 
How should the architecture of EU climate policy be designed when it comes to agriculture and land use? 

33% 

32% 

15% 

12% 

9% 

35%

30%

25%

20%

15%

10%

5%

0%

Create a new policy strand,
which covers agricultural non-
CO2 and land use emissions
together.

Other… 

% of respondents to Q11 selected this answer (n=186)

Continue to include agricultural
non-CO2 emissions under the
Effort Sharing Regulation;
continue to allow for the use of
LULUCF credits in the Effort
Sharing Regulation up to the
current limit.

Continue to include agricultural
non-CO2 emissions under the
Effort Sharing Regulation;
increase the possibility to use
LULUCF credits in the Effort
Sharing Regulation, independent
of a change to Effort Sharing
Regulation target levels.

Continue to include non-CO2
agricultural emissions under the
Effort Sharing Regulation;
increase the possibility to use
LULUCF credits in the Effort
Sharing Regulation, but only in
case Effort Sharing Regulation
targets are increased.

Figure 11 – Stakeholders replies to the question “How should the architecture of EU climate policy be designed when 
it comes to agriculture and land use?”  

If  such  a  single  policy  strand  was  created,  34%  of  respondents  would  be  in  favour  of 
legally binding national targets and 28% opted for an EU-wide target to which Member 
States should be required to pledge their contributions. Only 17% disagreed with having 
a specific target for a potential combined sector. 

If such targets were established, more than a third of respondents (34%/60) believe that 
they should be based on the Member State’s potential to achieve climate neutrality in the 
EU  land  sector  in  a  cost-efficient  way.  The  second  most  popular  criterion  (of  the  ones 
outlined in the OPC) was the Member State’s share of agricultural land, forest land and 
wetland (17 %/29 respondents). This was followed by a percentage increase compared to 
the  MS’  past  emissions  and  removals  from  the  land  sector  (15%/26  respondents).  22% 
(39) respondents selected the option “other” and provided a different view or agreed with 
one the options outlined but added comments.  

10.2.4. Feedback from expert workshop on reporting and accounting rules 

The  workshop  “LULUCF  Reporting  and  Accounting  approaches”  was  held  on  18th 
November  2020;  participation  was  limited  to  70  experts  from  different  stakeholders 
groups (national authorities, research and academia, NGOs, business associations). Many 
of the participants were members of the LULUCF Expert Group and therefore had been 
personally involved in the FRL review process. The workshop aimed to gather insights 
from  experts  on  how  to  strengthen  greenhouse  gas  reporting  and  how  to  adjust 
accounting methodologies to ensure that the LULUCF sector can effectively, efficiently 
and reliably deliver to the new target setting. The workshop was structured around three 
main  discussions:  the  first  one  challenged  some  of  the  basic  ideas  on  LULUCF 
accounting and the changes that can be made; the second focused on LULUCF reporting 
needs,  completeness  and  accuracy  as  well  as  on  wall-to-wall  data  as  a  cost-beneficial 
means for land monitoring; the third focused on policy options.  

Participants broadly agreed that future work should focus on more ambitious  LULUCF 
targets  with  significantly  reduced  accounting  complexity.  The  majority  of  participants 
were  of  the  view  that,  in  case  there  would  be  national  targets  for  the  LULUCF  sector, 
these should be proportional to the Member State’s potential to increase the net sink in a 
cost-efficient way. Most of them stated that the EU should not continue with the use of 
the  Forest  Reference  Level  (FRL)  concept.  The  FRL  review  process  was  in  fact 
considered  as  not  stringent  and  too  burdensome.  As  regards  LULUCF  reporting 
67 

 
 
 
 
 
improvements,  activity  data  availability  was  identified  as  the  most  pressing  need.  In 
addition,  remote  sensing  data  and  products,  and  statistical  and  geostatistical  modelling 
were identified as potential ways to improve and verify the accuracy and uncertainty of 
LULUCF  estimates.  All  emissions  and  removals  should  be  reported.  Wall-to-
wall/seamless  geospatial  data  should  play  an  important  role  in  LULUCF  reporting  by 
2030, while ensuring time series consistency with historic data. 

68 

 
 
 
 
10.3. Who is affected and how 

10.3.1. Practical implications of the initiative 

The  current  legislative  framework  addresses  Member  States  and  thus  mainly  affects 
authorities  in  the  public  administration  sector.  This  situation  would  predominantly 
remain  in  the  preferred  option.  Potentially  affected  public  institutions  include 
agricultural, climate, energy and environmental authorities, agencies dealing with zoning 
and territorial planning, statistical offices, as well as universities and research institutes.  

Under the preferred option, the practical implications for these institutions involve:  

1.  a simplification of the current LULUCF implementation through the elimination 
of  most  of  the  current  accounting  layer,  and  the  deployment  of  targets  and 
compliance  based  upon  reported  aggregate  values  in  the  greenhouse  gas 
inventory;  

2.  a  higher  potential  for  cost-efficiency  through  increased  trading  options  at  the 
level of Member States (if the target in the preferred option is based on the design 
of Option 2, which includes flexibility from the LULUCF sector to the ESR); 
3.  a requirement to further improve monitoring and reporting systems, in particular 
by further strengthening the use of geographic information systems (GIS), and by 
enhancing  synergies  with  datasets  that  underpin  agricultural  and  environmental 
policies;  

4.  an  increased  focus  on  integrating  land-related  policies  for  climate  change 

mitigation, adaptation, biodiversity, agriculture policy, and bio-economy,  

5.  enhanced  planning  specific  to  the  land  sector,  to  ensure  better  protection  of 
existing  carbon  stocks  and  the  enhancement  in  the  medium  term  of  carbon 
removals. 

This initiative will not affect the bioeconomy actors in a direct way: in particular, it will 
not establish any direct reporting requirements at the level of the individual actors, and 
therefore  there  will  be  no  associated  direct  compliance  costs.  However,  the  higher 
national  targets  will  drive  national  mitigation  policies  in  the  agriculture,  land  use  and 
forestry sector,  and these national policies will in turn affect actors of the bioeconomy, 
both in the primary sectors (e.g. farmers, forest owners, land managers in general) and in 
the relevant value chains (e.g. food processors, bioenergy producers); indirect effects can 
also reach final consumers through prices and more sustainable products. The direct costs 
for  the  actors  of  the  bioeconomy  will  therefore  stem  from  the  cost  of  implementing 
action on the ground; according to Commission’s modelling, these costs are found to be 
relatively low. The  net economic impact on these actors will  very  much depend on  the 
type  of  incentives  established  in  national  policies.  For  instance,  the  costs  incurred  or 
income  foregone  due  to  changes  in  land  management  practices  to  enhance  carbon 
removals  can  be  covered  by  CAP  support.  Member  States  can  also  facilitate  access  to 
voluntary  carbon  markets  or  other  funds,  which  would  help  these  actors  benefit  from 
additional income stemming from climate action. 

10.3.2. Summary of costs and benefits 

I. Overview of Benefits (total for all provisions) – Preferred Option 
Amount 

Comments 

Description 

Reduced GHG emissions, 
increased removals 

High: additional removals 
around -75 MtCO2eq in 2030  

Co-benefits for climate 
change adaptation, 

Direct benefits 

69 

 
 
 
 
 
Medium, unquantifiable 

Medium/High 
(avoided cost of establishing 
new FRLs estimated around 
EUR 4.5 Mio)  

biodiversity, bio-economy 

Reduced costs of achieving 
the targets (cost-efficiency) 
through better geographic 
spread of LULUCF action 
(where it is nearer optimal 
cost/benefit) 

Reduced administrative 
burden due to simplification 
of compliance rules 

Medium/High, unquantifiable  Improved re-use and 

Increased trading of carbon 
removals at MS-level (only 
if target is designed 
according to Option 2) 

Reduced regulatory costs 

Reduced monitoring costs 
through re-use of EU 
programmes (e.g. 
Copernicus) and other policy 
data sources  

Policy synergies 

High, unquantifiable 

Indirect benefits 

Potential for new business 
models 

Medium/High, unquantifiable  The more ambitious targets 

synergies with other policy 
datasets will enhance 
monitoring, and provide a 
better platform for decision 
making and selection of 
actions  

The planning exercise for the 
land sector will result in 
policy synergies thanks to a 
more integrated approach. 

can be implemented by 
Member States through 
incentive payments to farmers 
and foresters or through 
fostering private carbon 
markets (see Annex 10.7 on 
carbon farming). 

The simplified target system 
and improved monitoring 
would lead to better 
incentives for action in the 
sector. 

Facilitating EU GHG 
inventory robustness 

High, unquantifiable 

Table 9 – Overview of Benefits 

II. Overview of costs – Preferred option 

Citizens/Consumers  

Businesses 

Administrations 

One-off  Recurrent  One-off  Recurrent  One-off  Recurrent 

n/a 

n/a 

n/a 

Costs of action 
on the ground 

Direct 
costs 

n/a 

n/a 

Low 
(approx. 
EUR 2,2 
billion 
over the 
ten-year 
period) 

70 

 
 
 
 
Indirect 
costs 

n/a 

Low, 
unquantifi
able 

n/a 

n/a 

n/a 

n/a 

Simplified 
targets   

Improved use 
of GIS and 
related policy 
data   

Integrating 
land-related 
policies 

Enhanced 
planning 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Table 10 – Overview of costs 

n/a 

n/a 

n/a 

n/a 

Low 

Reduced 
(by EUR 
4.5 Mio) 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

n/a 

Medium  Reduced 

Low 

Low 

Neutral 

n/a 

Medium  Reduced 

n/a 

n/a 

n/a 

Low 

Neutral 

Low 

Low 

n/a 

n/a 

71 

 
 
 
 
10.4. Analytical methods 

10.4.1. Overview of the modelling framework applied in this impact assessment 

Four  main  models  were  used  in  the  LULUCF  Impact  Assessment:  GLOBIOM,  G4M, 
CAPRI  and  GAINS95.  GLOBIOM  and  G4M  are  unique  to  the  LULUCF  sector  and 
require  a  more  thorough  presentation;  for  CAPRI  and  GAINS  this  Impact  Assessment 
only introduces elements that are specific and relevant to the LULUCF sector and limited 
to  the  modelled  policies.  GLOBIOM  and  G4M  were  used  for  LULUCF  scenario 
development;  all  models  were  used  for  modelling  emission  reductions  or  enhanced 
removals with marginal abatement cost curves. All methodological analysis, namely the 
analysis of policy measures, is specific to the LULUCF sector and is therefore presented 
in detail in this section. 

Model description for the LULUCF sector used in this impact assessment 

The  land-use  simulation  model  GLOBIOM  and  the  forest  sector  model  G4M  are 
commonly  applied  in  an  iterative  manner  for  the  estimation  of  LULUCF  emission 
pathways  for  each  EU  Member  State.  GLOBIOM  and  G4M  models  cover  together  all 
UNFCCC  land  use  categories  of  relevance  for  CO2  emissions,  only  wetlands  and 
settlements  are  added  exogenously  based  on  the  2020  GHG  inventory.  Also,  non-CO2 
emissions from LULUCF are added by an offset-calibration procedure. G4M covers the 
forestry sector and delivers emissions from biomass, dead organic matter and soil from 
afforestation and deforestation activities and biomass emissions from forest management. 
GLOBIOM provides emissions from cropland and grassland management. 

GLOBIOM 96  is  a  global,  recursive  dynamic,  bottom-up,  partial  equilibrium  model 
integrating  the  agricultural  and  forestry  sectors.  The  model  computes  a  market 
equilibrium for agricultural and forest products by allocating land use among production 
activities  to  maximize  the  sum  of  producer  and  consumer  surplus,  subject  to  resource, 
technological,  demand  and  policy  constraints.  The  supply  side  of  the  model  is  built-up 
from  the  bottom  (spatially  explicit  land  cover,  land  use,  management  systems 
information)  to  the  top  (regional  markets).  For  the  EU  (except  Croatia,  Cyprus,  and 
Malta)  the  basis  are  spatial  units  of  1x1  km  pixels,  which  are  re-aggregated  to  the 
NUTS2  level.  Demand  and  international  trade  occur  at  regional  level  (58  regions), 
covering  all  27  EU  Member  States  and  31  regions  in  the  rest  of  the  world.  Besides 
primary products for the different sectors, several processing activities for final and by-
products are covered by the models. 

The  level  of  production  in  each  area  is  determined  by  the  agricultural  or  forestry 
productivity in that area (dependent on land suitability and farm management), by market 
prices  (reflecting  the  level  of  demand),  and  by  the  conditions  and  cost  associated  to 
conversion  of  the  land,  to  expansion  of  the  production  and,  when  relevant,  to 
international  market  access.  Trade  flows  are  balanced  between  different  specific 
geographical regions based on cost competitiveness. This allows tracing of bilateral trade 
flows between individual regions. 

G4M97 estimates  the  impact  of  forestry  activities  (afforestation,  deforestation,  residue 
harvest  and forest management) on biomass  and other  carbon pools.  By  comparing the 

95 GAINS is a key model for the ESR Impact Assessment and therefore will not be described in detail here, 
see also https://iiasa.ac.at/GAINS  
96 See also https://iiasa.github.io/GLOBIOM/.  
97 See also: www.iiasa.ac.at/G4M 

72 

 
 
 
 
                                                 
net  present  value  of  managed  forest  (difference  of  wood  price  and  harvesting  costs, 
income from storing carbon in forests) with potential income from alternative land use on 
the  same  place,  a  decision  on  afforestation  or  deforestation  is  made.  The  model 
incorporates  empirical  forest  growth  functions  for  major  tree  species  groups.  G4M  is 
spatially explicit and runs on a 0.5° x 0.5° resolution. Since the model neither represents 
forest  markets  nor  other  economic  sectors,  it  relies  on  information  from  other  sources 
(i.e.  GLOBIOM  or  other  databases)  for  wood  prices,  land  rents,  urban  sprawl  etc. 
Similarly,  information  about  natural  disturbances  comes  as  input  to  the  model.  As 
outputs,  G4M  produces  estimates  of  forest  area  change,  carbon  sequestration  and 
emissions in forests, impacts of carbon incentives (e.g. avoided deforestation) and supply 
of biomass for bio-energy and timber. 

The  Common  Agricultural  Policy  Regional  Impact  Analysis  (CAPRI) 98  modelling 
system  is  a  global,  economic,  comparative-static,  partial  equilibrium  model  for  the 
agricultural  sector.  The  core  of  CAPRI  is  based  on  the  linkage  of  highly  detailed  and 
disaggregated models of EU regional agricultural supply and a global market model for 
agricultural  commodities.  The  regional  supply  models  simulate  the  profit  maximizing 
behavior  of  representative  farms  for  all  EU  regions  under  constraints  related  to  land 
availability, nutrient balances for cropping and animal activities, and policy restrictions. 
The supply module consists of about 280 independent optimization models representing 
regional agricultural production activities (28 crop and 13 animal activities) at NUTS 2 
level within the EU. Producer prices are exogenous to the supply module and provided 
by  the  market  module.  The  global  market  module  consists  of  a  spatial,  global  multi-
commodity  model  for  about  60  primary  and  processed  agricultural  products,  covering 
about  80  countries  in  40  trading  blocks.  International  trade  covers  bilateral  trade  flows 
and price transmission between agricultural commodity markets. 

The  regional  CAPRI  supply  models  capture  links  between  agricultural  production 
activities  in  detail.  Based  on  the  inputs  and  outputs  of  these  activities,  EU  agricultural 
nitrous  oxide  and  methane  emissions  are  calculated  following  mostly  the  2006  IPCC 
guidelines, tier 2 approach. CAPRI also includes a carbon cycle model for EU agriculture 
to  account  for  CO2  emissions  and  removals  linked  to  EU  agricultural  production  and 
effects related to the continued use of land and land use change. Moreover, the CAPRI 
model covers a set of specific technological (i.e., technical and management-based) GHG 
mitigation  options  for  EU  farmers  in  the  livestock  and  crop  sectors.  Implementation 
costs,  cost  savings,  and  mitigation  potential  of  these  options  are  mainly  based  on  data 
from the GAINS database and information collected within the AnimalChange project. A 
detailed description of each mitigation option and the underlying assumptions is provided 
in Pérez Domínguez et al. (2016, 2020).99,100 

Scenarios used in the impact assessment 

Scenarios  model  the  likely  development  under  current  land  use  policies  or  make 
assumptions  about  future  policies.  This  concept  is  different  from  the  baseline,  which 

98 See also: www.capri-model.org 
99 Pérez  Domínguez  et  al.  (2016):  An  economic  assessment  of  GHG  mitigation  policy  options  for  EU 
agriculture (EcAMPA 2). JRC Science for Policy Report, European Commission, Luxembourg: Publications 
Office of the European Union. doi:10.2791/843461 
100 Pérez  Domínguez  et  al.  (2020):  Economic  assessment  of  GHG  mitigation  policy  options  for  EU 
agriculture: A closer look at mitigation options and regional mitigation costs (EcAMPA 3). JRC Science for 
Policy  Report,  European  Commission,  Luxembourg:  Publications  Office  of  the  European  Union. 
doi:10.2760/4668 

73 

 
 
                                                 
applies to the current policy framework (the LULUCF Regulation) and is based on data 
from the 2020 GHG inventory. 

In  the  Reference  scenario  (hereafter,  REF)  the  LULUCF  development  is  following  a 
business-as-usual development, taking into account foreseeable actions, e.g. harvest and 
reforestation when forest reach the end of their rotation length. In exceptional cases the 
REF scenario also takes into account major disturbances of the LULUCF sink. 

The  REF  scenario  is  based  on  most  recent  datasets  and  model  projections  available101. 
While input data are mainly based on FAOSTAT and FAO-FRA data, important scenario 
drivers  for  the  projections  of  the  LULUCF  emissions/removals  are  PRIMES  bioenergy 
demand projections (biofuels and solid biomass use) – which are fully integrated with the 
other  parts  of  the  Fit  for  55  proposal  –  and  the  GEM-E3  macro-economic  projections 
(population  and  GDP  growth)  taken  up  by  GLOBIOM.  The  afforestation  and 
deforestation  rates  in  G4M  have  been  calibrated  to  the  data  based  on  the  2020  GHG 
inventory. 

The  LULUCF  Policy  scenario  (hereafter,  MIX)  considers  changes  in  the  biomass 
demand  from  the  energy  sector,  which  is  the  main  difference  to  the  REF  scenario. 
Biomass  demand  assumptions  generally  follow  the  1.5TECH  scenario  of  the  EU  long-
term strategy102,103. A higher demand for biomass results in different land-use change and 
emission trajectories, including an increased production of lignocellulosic crops or higher 
wood removals from the forest. 

Modelling  emission  reductions  or  enhanced  removals  with  marginal  abatement  cost 
curves 

In GLOBIOM, the following technical options have been considered explicitly when 
estimating the cost curves for agricultural land:  

  Alternative tillage and residue management systems (conventional, reduced, and 
minimum tillage, dynamic representation) with different impacts on soil carbon 
  Change in crop rotations (NUTS2-specific based on EUROSTAT crop shares and 

agronomic constraints) 

  Set-aside (incorporated in crop rotations, calibrated to historic EUROSTAT data) 
  Reallocation of production to more productive areas and areas with higher 

potential for carbon sequestration 

  Protection of areas with high carbon stocks in biomass and soil (except forests). 

For  the  European  agricultural  sector,  GLOBIOM  relies  on  input  datasets  from  the 
biophysical process-based crop growth model EPIC. Crop rotations and different tillage 
systems  have  been  incorporated  for  Europe.  Crop  rotations  have  been  derived  for  each 
NUTS2 region from crop shares calculated from EUROSTAT regional statistics on crop 
areas  taking  into  account  data  on  relative  NUTS2  crop  shares,  assumptions  about  crop 
planting  decisions  and  other  agronomic  constraints  such  as  frequency  limits  for  self-
intolerant  crops  (e.g.  sugar  beet)  or  intolerant  pairs  of  crops  (e.g.  sugar  beet  and 
rapeseed). The derived  crop rotations represent  the current  crop mix. They include  e.g. 
set-aside, other green fodder on arable land and different legumes (based on shares from 
EUROSTAT  data).  In  addition,  perennial  crops  such  as  switch  grass,  miscanthus  and 

101 EU Reference Scenario 2020 publication 
102 COM(2018) 773 final: A Clean Planet for all - A European strategic long-term vision for a prosperous, 
modern, competitive and climate neutral economy. 
103 In-Depth Analysis in Support of the Commission Communication COM(2018) 773. 

74 

 
 
                                                 
short rotation tree plantations are represented which usually tend to sequester carbon in 
the soil due to high biomass growth and litter inputs. 

Dynamic sequestration/emission  rates over time are explicitly taken into account  in  the 
modelling framework switching from conventional to no-tillage systems. switching from 
conventional to no-tillage systems. 

The following mitigation options have been explicitly considered in G4M: 

-  Reduction of deforestation area 
- 
Increase of afforestation area 
-  Change of rotation length of existing managed forests in different locations 
-  Change of the ratio of thinning versus final felling 
-  Change of harvest intensity (amount of biomass extracted in thinning and final 

felling activity) 

-  Change of harvest locations.  

These  activities  are  not  adopted  independently  since  the  model  manages  forest  land 
dynamically  and  activities  affect  each  other.  The  model  is  calculating  the  economic 
optimal  combination  of  measures  and  the  introduction  of  a  carbon  price  gives  an 
additional value to the forest through the carbon stored and accumulated in it which tends 
to decrease deforestation and increase afforestation. However, this may not happen at the 
same  intensity  because  less  deforestation  increases  land  scarcity  and  might  therefore 
decrease afforestation. The existing forest under  a carbon price is managed with longer 
rotations  and  expanding  harvest  to  less  productive  forest.  Where  possible,  the  model 
increases the area of forests used for wood production, meaning a relatively larger area is 
managed relatively less intensively which affects the carbon balance. Forest management 
activities can also have a feedback on emissions from deforestation because they might 
increase  or  decrease  the  average  biomass  in  forests  being  deforested  and  influence 
biomass accumulation in  newly planted  forests,  depending on whether  these forests  are 
used for production or not. 

Market  feedbacks  and  effects  of  these  mitigation  options  in  the  forestry  sector,  e.g. 
prolonging  rotation,  are  explicitly  accounted  for  as  the  production  of  wood  to  satisfy 
wood  demand  has  higher  priority  than  the  carbon  accumulation.  In  fact,  much  of  the 
mitigation  effects  are  achieved  by  structural  and  geographic  relocation  of  harvesting 
schedules to increase sequestration while at the same time satisfy market demands. 

CAPRI modelled the mitigation potential and related costs of fallowing of histosols (i.e., 
ceasing agricultural production on organic soils). This management option focuses on the 
restoration of organic soils and, hence, prevents peatlands from releasing large quantities 
of  carbon  into  the  atmosphere.  Organic  soils  need  to  be  drained  to  be  used  for  crop 
production, and this drainage leads to aeration and subsequent decomposition of the peat, 
which  results  in  a  substantial  release  of  CO2  and  N2O  emissions.  In  CAPRI,  the 
mitigation  option  of  fallowing  histosols  is  considered  by  setting  aside  a  certain 
proportion  of  the  agricultural  area  (arable  and  grassland)  in  each  MS.  The  adoption  of 
this mitigation option is constrained by the shares of cultivated organic soils. The direct 
costs  of  this  measure  considered  at  present  are  the  opportunity  cost  of  land  use  (i.e. 
foregone income). Other direct costs (e.g. rewetting) and indirect costs (e.g. transaction 
costs linked to regional land regulation) faced by the farmers are not considered. 

GAINS has been used to model non-CO2 emission reductions in the agriculture sector. 
The  following  mitigation  options  have  been  considered  in  GAINS  (they  will  not  be 
further described in this Impact Assessment): 

75 

 
 
-  Ban on burning agriculture waste (CH4) 
-  Breeding through selection: enhance productivity, fertility and longevity to 

minimize kg CH4/kg milk (CH4) 

Intermittent aeration and alternative hybrids (CH4) 
Intermittent aeration, alternative hybrids and sulphate amendments (CH4) 

-  Farm-scale anaerobic digestion with biogas recovery (CH4) 
-  Feed additives and/or changed feed management practices (CH4) 
- 
- 
-  Abandoning agricultural use of org soils (N2O) 
-  Nitrification inhibitors (N2O) 
-  Precision farming(N2O) 
-  Variable rate technology (N2O) 

Mitigation measures include technological and opportunity costs104: 

  GLOBIOM  and  G4M  explicitly  take  into  account  land  competition  and  the 
mutual  interaction  between  mitigation  measures.  All  measures  focus  on  CO2 
mitigation options. 

  CAPRI  estimates  the  CO2  mitigation  potentials  from  organic  soils 105 .  The 
specific  mitigation  action  “fallowing  of  histosols”  is  an  addition  to  LULUCF 
mitigation measures modelled under GLOBIOM and G4M. 

  GAINS  models  the  mitigation  of  agricultural  non-CO2  emissions  (CH4  and 
N2O).  All  N2O  and  most  CH4  mitigation  measures  introduce  technologies  and 
are  not  related  to  land  management  practices  as  modelled  from  LULUCF  with 
GLOBIOM, G4M and CAPRI. 

Mitigation costs, here in Mio EUR are estimated by the formulas 

𝐶𝑜𝑠𝑡𝑀𝐶 = 𝑀𝐶 ∗ 𝑀𝑖𝑡𝑖𝑔𝑎𝑡𝑖𝑜𝑛𝑀𝐶 

𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 = ∑

𝑀𝐶=0

𝐶𝑜𝑠𝑡𝑀𝐶

Where: 

  𝑀𝐶 is the marginal cost in EUR per tonne CO2 
  𝑀𝑖𝑡𝑖𝑔𝑎𝑡𝑖𝑜𝑛 is the additional mitigation for marginal cost 𝑀𝐶 in t CO2eq 
  𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 is the sum of incremental costs, 𝐶𝑜𝑠𝑡𝑀𝐶in EUR per year 

Mitigation and costs for additional action in 2030 for LULUCF 

The MIX scenario projects an EU  LULUCF sink of 256 MtCO2eq in 2030 (see Figure 
12)106 without  an  application  of  a  carbon  price  on  the  LULUCF  sector.  The  scenario 
reproduces the historic LULUCF sink development (2000-2015) and projects a relatively 
stable  sink  for  the  years  2020-2035.  The  forest  sink  is  projected  to  be  relatively  stable 
between  2020  and  2030  but  declines  towards  2035.  This  decrease  is  compensated  by 
significant  emission  reductions  in  Cropland,  namely  due  to  planting  of  lignocellulosic 
energy crops.  

104  Technological  costs  describe  all  investments  for  installation  and  operation  of  a  certain  land 
management  practice  or  technology.  Opportunity  costs  include  all  estimates  against  the  current  land 
management as counterfactual, namely the foregone income. 
105 GAINS models the N2O emission reductions by measure “Abandoning agricultural use of organic soils”. 
106 For coherence with demands by other policy pillars this section of the impact assessment uses the MIX 
scenario. For the period relevant the difference to the LULUCF total in the REF scenario is very small. 

76 

 
 
 
 
                                                 
Figure 12 –  EU LULUCF MIX scenario modelled in GLOBIOM and G4M for all UNFCCC Land use categories. 

Based on this  scenario,  Figure 13 shows marginal abatement costs  curves  (MACC) for 
the  main  land  uses  in  LULUCF  for  2030 107 .  According  to  this  modelling,  the  EU 
LULUCF  sink  of  -310  MtCO2eq,  as  proposed  in  Option  1.2,  could  be  achieved  at  a 
carbon price between 5 EUR/tCO2 and 10 EUR/tCO2108.  A carbon price of 5 EUR/tCO2 
could  deliver  an  additional  58.3  MtCO2eq  for  a  cost  of  EUR  291  Mio  per  year;  10 
EUR/tCO2 could deliver another 10 MtCO2eq for an incremental cost of EUR 100 Mio.  

Figure  13  –  Marginal  abatement  costs  curve  for  the  MIX  scenario  in  2030  for  actions  modelled  in  GLOBIOM  and 
G4M  for  main  LULUCF  land  use  categories  and  CAPRI  for  organic  soils  on  agricultural  land.  Mitigations  were 
estimated for carbon prices [y-axis] shown in dots. LULUCF is the aggregate of Forest land, and Agricultural Land. 
Forest land is the aggregate of mitigation by Afforestation, Deforestation, and Forest Management which correspond 
to “land converted to forest land”, “forest land converted to other land uses”, and “forest land remaining forest land” 
on  mineral  soils,  respectively.  Agricultural  land  is  the  aggregate  of  mitigation  from  Cropland  and  Grassland  on 
mineral  soils  and  organic  soils  under  cropland  and  grassland  combined.  Mitigation  measures  by  carbon  prices  on 
other LULUCF categories (Wetlands, Settlement, Other land, Harvested Wood Products) were not explicitly modelled. 

107 GLOBIOM G4M and CAPRI used marginal costs in intervals of 5, 10, 15, 20, 30, 40, 50, 70, 100 and 150 
EUR/tCO2. 
108 The carbon price of 10 EUR/tCO2 also considers the generation of LULUCF credits for possible use in 
the ESR, as discussed in the ESR Impact Assessment. 

77 

 
 
 
 
                                                 
Mitigation  on  forest  land  and  agricultural  land109 show  similar  potentials  for  measures 
included in the  modelled  carbon  price scenarios,  and none can  reach the target of  -310 
MtCO2eq  at  low  costs  alone.  This  underlines  the  importance  of  mitigation  action  and 
their  significant  potential  on  all  major  land  uses.  The  model  setup  is  a  conservative 
estimate and focusses on simpler and cheaper mitigation measures, because not all land 
uses  and  mitigation  actions  were  explicitly  modelled.  Also,  possibly  significant 
abatements by increasing Harvested Wood Products or by rewetting forest organic soils 
were not included in this modelling.  

Measures on Forest Management, such as change of rotation length, thinning and harvest 
intensity,  have  the  highest  mitigation  impact  for  Forest  Land;  yet,  maximum  potentials 
around  30  MtCO2eq  are  reached  with  carbon  prices  as  low  as  10  EUR/tCO2.  This  is 
mainly because the carbon price only needs to compensate for the opportunity costs, e.g. 
foregone income due to a longer rotation length110. Avoided deforestation holds notable 
potentials for moderate carbon prices (10 Mt CO2eq for 15 to 20 EUR/tCO2) but reaches 
saturation at 20MtCO2eq due to no further loss of forest at 40 EUR/tCO2.  

Afforestation  shows  a  steady  increase  in  the  mitigation  potential  with  higher  carbon 
prices. A time span of only 10 years is too short for noting significant effects of fostered 
afforestation  on  the  carbon  sink;  the  impact  becomes  significantly  more  notable  in 
subsequent decades111. Investment costs for afforestation are also significantly higher and 
include  opportunity  costs  and  technological  costs.  Often  there  are  incentive  schemes, 
including  under  the  CAP,  which  could  prevent  farmers  from  converting  marginal  land 
into forests because they fear losing premiums under the first pillar. Converting land into 
Forests is also a permanent land management decision with particularly high initial costs 
which only pay off for future generations. Technological costs for afforestation related to 
instalment  (soil  preparation,  seedlings)  and  maintenance  for  at  least  20  years  (soil 
cleaning,  pre-commercial  thinning)  have  been  based  on  existing  studies 112 , 113 ,114 and 
scaled  to  today’s  expenses.  Depending  on  Member  State’s  specific  costs  and  specific 
instalments and  maintenance needs, e.g., one or  two soil cleanings  and pre-commercial 
thinnings, total costs per hectare for at least the first 20 years of operation range between 

109 Agricultural  land  is  the  aggregate  of  measures  for  Cropland  and  Grassland  on  mineral  soils  and 
fallowing of organic soils in cropland and grassland combined.  
110 An  additional  reason  is  that  Forest  Management  zero  additional  cost  is  based  on  the  2000-2010 
average  wood  production  map  (Verkerk  et  al.  2015)  without  further  optimization.  At  5  EUR/tCO2  the 
carbon  sink  in  forest  biomass  is  optimized  for  this  carbon  price.  A  further  increase  of  carbon  price  has 
limited  effect  on  mitigation  because  the  model  seeks  to  satisfy  wood  demand  and  hence  increased 
carbon  prices  are  in  competition  with  local  wood  prices.  Overall,  the  possibility  of  harvesting 
approximately the same amount of wood and at the same time increasing the carbon sink in the forest 
biomass is limited. Verkerk PJ, Levers C, Kuemmerle T, Lindner M, Valbuena R, Verburg PH, Zudin S (2015) 
Mapping wood production in European forests. Forest Ecology and Management 357: 228-238. 
111 Following  IPCC  2006  Guidelines,  Afforestation,  that  is  “Land  converted  to  Forest  Land”  under  the 
UNFCCC,  remains  in  this  land  transition  category  until  an  equilibrium  of  soil  carbon  stocks  has  been 
reached.  By  default,  this  period  is  20  years.  Thereafter,  carbon  sequestration  (and  losses)  are  reported 
under  “Forest  Land  remaining  Forest  Land”.  This  modelling  framework  applies  the  same  methodology 
and therefore presents the mitigation by Afforestation under Forest Management for areas 20 years after 
Afforestation.  
112 Di  Fulvio,  F.,  Forsell,  N.,  Lindroos,  O.,  Korosuo,  A.,  Gusti,  M.  (2016)  Spatially  explicit  assessment  of 
roundwood  and  logging  residues  availability  and  costs  for  the  EU28,  Scandinavian  Journal  of  Forest 
Research, 31 (7), pp. 691-707. 
113

 https://bur.regione.emilia-romagna.it/bur/area-bollettini/bollettini-in-lavorazione/n-100-del-05-05-

2015-parte-seconda.2015-05-04.8251650544/aggiornamento-elenco-prezzi-degli-interventi-di-
forestazione/allegato-c  
114

 https://www.skogforsk.se/kunskap/kunskapsbanken/2014/Skogsbrukets-kostnader-och-intakter-

20131/  

78 

 
 
                                                 
EUR  1,177  and  EUR  3,285  115.  This  is  still  lower  than  average  payments  of  4,000 
EUR/ha under the CAP116.  

Fallowing  of  histosols,  currently  used  for  agriculture  or  as  grasslands,  holds  the  same 
mitigation  potential  as  measures  for  improved  Forest  Management.  Very  high 
mitigations at low carbon prices (e.g. 23 MtCO2eq for 5 EUR/tCO2) soon reach a limit 
of  35  MtCO2eq  because  all  land  has  been  set  aside.  Fallowing  histosols  is  intended  as 
permanent non-use of economic land, as the intention is to maintain accumulated carbon 
stocks  in  this  land  and  each  economic  use  has  the  loss  of  part  of  this  carbon  as  a 
consequence. This impact assessment limits the mitigation measure to  fallowing, hence 
only the compensation for foregone income (opportunity costs). In reality, fallowing of 
histosols  should  be  accompanied  by  renaturation  and  rewetting  of  the  land  to  stop 
mineralization  of  the  organic  matter117.  The  area  affected  by  fallowing  of  histosols  is 
very small: emission reporting for grassland and cropland in the EU118 notes less than 1.5 
Mio  ha  of  Cropland  and  less  than  3  Mio  ha  of  Grassland  on  organic  soils  which 
corresponds  to  1.18%  and  3.33%  of  the  respective  total  land  use  category  area.  The 
current annual  emissions  from these areas  are reported  with 30 MtCO2eq for Cropland 
and  41  MtCO2eq  for  Grassland.  Therefore  fallowing  histosols  is  a  powerful  mitigation 
strategy that only affects a very small part of agricultural land and holds further potential 
of emission reductions with additional technologies such as renaturation and rewetting.  

In comparison, other measures on agricultural land have a comparatively low impact on 
climate  mitigation.  Yet,  improvements  on  cropland  management  e.g.,  change  in  tillage 
systems, crop rotations and reallocations show a steadily increasing mitigation potential 
with higher carbon prices and could therefore gain relative importance in future decades 
when other mitigation measures reach saturation levels. 

Mitigation and costs in 2035 for an integrated Agriculture and LULUCF target 

Figure 14 shows the mitigation by carbon price for 2035. LULUCF mitigation categories 
show similar patterns as for 2030 with the exception of afforestation; the additional five 
years  result  in  notably  higher  mitigation  for  high  carbon  prices.  The  agriculture  sector 
(which is additionally presented in Figure 14) shows a non-CO2 mitigation potential of 
nearly  20 MtCO2eq  at  no  economic  cost  by  introducing  animal  breeding  and  a  ban  on 
burning  agricultural  waste.  Feed  additives  for  dairy  cows  may  reduce  emissions  by 
7 MtCO2eq  for  a  carbon  price  between  20  and  40  EUR/tCO2.  Nitrification  inhibitors 
show  a  significant  effect  for  carbon  prices  above  50  EUR/tCO2.  The  total  emission 
reduction for a carbon price of 150 EUR/tCO2 is 60 MtCO2eq. The combined mitigation 
on agricultural land and agriculture non-CO2 holds a significantly higher potential than 
the forest sector. 

115 The  actual  cost  might  be  substantially  different  considering  site  circumstances  (soil  quality,  water 
potential,  access  and  terrain)  and  the  selected  species.  Calculations  assumed  no  costs  for  natural 
disturbances. The literature reports cases of costs above 10,000 EUR/ha. 
116 SWD(2019) 389 final. Evaluation of the Regulation (EU) No 1305/2013 of the European Parliament and 
of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund 
for  Rural  Development  (EAFRD)  and  repealing  Council  Regulation  (EC)  No  1698/2005  concerning  the 
forestry  measures  under  Rural  Development.  P11,  Table  3:  planned  Afforestation  under  M8.1:  Area 
afforested: 569,234ha, public expenditure: EUR 2,263 Mio. 
117 Rewetting could result in additional carbon sequestration, yet at substantially higher carbon prices. 
118 EU GHGI inventory 2020: Table 4.B (Cropland) and Table 4.C (Grassland) for areas with organic soils.  

79 

 
 
                                                 
Figure  14  –  Marginal  abatement  costs  curve  for  the  MIX  scenario  in  2035  for  actions  modelled  in  GLOBIOM  and 
G4M for main LULUCF land use categories, CAPRI for organic soils on agricultural land and GAINS for mitigation 
of CH4 and N2O in the agriculture sector. For LULUCF, mitigations were estimated for carbon prices [y-axis] shown 
in dots. LULUCF is the aggregate of Forest land, and Agricultural Land. Forest land is the aggregate of mitigation by 
Afforestation,  Deforestation,  and  Forest  Management  which  correspond  to  “land  converted  to  forest  land”,  “forest 
land  converted  to  other  land  uses”,  and  “forest  land  remaining  forest  land”  on  mineral  soils,  respectively. 
Agricultural  land  is  the  aggregate  of  mitigation  from  Cropland  and  Grassland  on  mineral  soils  and  organic  soils 
under  cropland  and  grassland  combined.  Mitigation  measures  by  carbon  prices  on  other  LULUCF  categories 
(Wetlands, Settlement, Other land, HWP) were not explicitly modelled. For agriculture non-CO2 marginal mitigations 
were extracted at steps of 1 EUR/tCO2 for all technologies listed in the method description. 

Option  3  of  the  Impact  Assessment  seeks  to  achieve  a  climate  neutral  land  sector 
(agriculture  non-CO2  and  LULUCF  sectors  combined)  by  2035.  To  that  end,  the  MIX 
policy  scenario  at  zero  additional  cost  predicts  a  mitigation  gap  of  106  MtCO2eq  in 
2035. Figure  15  shows the range of carbon price and  total  costs needed to  achieve EU 
land neutrality. The EU may achieve this goal on any point on this curve that combines 
the marginal abatement cost curves for LULUCF and agriculture non-CO2. As action in 
the  agriculture  non-CO2  sector  can  only  mitigate  60  Mt  of  non-CO2  for  an  assumed 
maximum  carbon  price  of  150  EUR/tCO2,  a  minimum  set  of  actions  in  the  LULUCF 
sector  is  required  for  a  carbon  price  of  at  least  4  EUR/tCO2 119.  Carbon  prices  for 
economic  cost-efficient  solutions  (in  orange)  range  from  16  to  23  EUR/tCO2  for 
LULUCF that correspond to 41 to 1 EUR/tCO2 for emission reductions in the agriculture 
non-CO2  sector.  The total costs in 2035 in  both  sectors  combined  range  between  EUR 
531 Mio and EUR 605 Mio. Given the generally higher mitigation potential of action in 
the  LULUCF  sector,  total  costs  in  LULUCF  will  exceed  investments  in  non-CO2 
emission reductions in  agriculture. However, the  overall  mitigation action and  costs on 
agricultural land (Grassland Cropland in LULUCF, including fallowing of histosoils) and 
the agriculture non-CO2 sector combined will exceed actions in the forest sector. 

119 For this analysis carbon prices for LULUCF were interpolated to intervals of 1 EUR/tCO2. 

80 

 
 
 
                                                 
Figure 15 – Carbon price (left) and Total cost (right) ranges for the LULUCF and Agriculture sector to achieve land 
neutrality by 2035. Orange shows economic cost-efficient solutions. 

10.4.2. Approach to compute the targets 

Table  11    gives  an  overview  of  LULUCF  targets  under  the  baseline  and  the  various 
options: 

Option  Baseline 
Scope  LULUCF 

Option 1.1  Option 1.2  Option 2 
LULUCF 
LULUCF 
LULUCF 

Targets 

MtCO2eq  -224.9 

-259.7 

-310 

-267.7 

Table 11 – Overview of LULUCF targets in the various options for 2030. 

Option 3 
Agriculture 
+ LULUCF 
+39.9 

All benchmarks and targets calculated and set out in this impact assessment, partly also 
the scenarios modelling, are linked to the emission and removals as reported in the 2020 
GHG inventory by Member States and submitted to the UNFCCC.  

Box 5 – Uncertainty in LULUCF estimates 

The LULUCF sector estimates in the EU GHG inventory have an uncertainty of 22.4% 
for  the  level  and  15.0%  for  the  trend 120.  Level  uncertainty  estimates  for  all  other 
sectors but fuel combustion are at a similar level or even higher (e.g. Agriculture non-
CO2:  45.1%).  Uncertainty  estimates  for  the  trend  are  lower  for  all  other  sectors  but 
Waste  (19.1%).  There  are  no  specific  uncertainty  estimates  for  model  runs  in  this 
impact  assessment.  However,  scientific  studies  analysed  the  model  sensitivity  for 
scenario modelling121 and marginal abatement cost curve (MACC) analysis122. 

120 EU National Inventory report for 2020. Table 1.15, page 53.  
121 Böttcher, H. Verkerk, P.J., Gusti, M., Havlik, P., Grassi, G. (2012), Projection of the future EU forest CO2 
sink  as  affected  by  recent  bioenergy  policies  using  two  advanced  forest  management  models.  GCB 
Bioenergy, 4, p. 773–783. 

81 

 
 
 
 
 
 
 
                                                 
Figure 16  –  Total  LULUCF  emissions and  removals  from annual  GHG  inventory  submissions  2008 to  2020  for  the 
EU-27.  Left:  Total  LULUCF  greenhouse  gas  profile  from  all  inventories  from  1990  to  the  respective  last  reporting 
year (inventory year – 2). Right: Total LULUCF emissions and removals from all GHG inventories for reporting year 
2006 (last common reporting year) and the last reporting year or each GHG inventory submission. 

In  the  first  years  of  GHG  reporting  (GHG  inventory  submissions  of  2008-2011), 
LULUCF  totals  changed  a lot from one GHG inventory submission to the next, with a 
significant  jump  in  the  2012  GHG  inventory  submission  (Figure  16).  Since  2014,  the 
GHG  inventory  submissions  are  relatively  stable  at  EU  level123.  Usually,  a  new  GHG 
inventory  submission  shifts  the  level  of  the  entire  time  series  due  to  improvements  in 
data  and  methodologies,  e.g.,  reflecting  new  carbon  pools  or  a  change  in  emission 
factors,  but  rarely  changes  only  specific  years.  The  changes  in  emission  level  between 
GHG  inventory  submissions  may  be  more  significant  in  relative  terms  at  the  level  of 
individual  Member  States.  To  ensure  the  same  level  of  ambition  at  the  point  of 
compliance,  it  is  important  to  update  targets  with  the  GHG  inventory  used  for 
compliance  against  the initial calculations set out with the 2020  GHG  inventory in  this 
impact assessment.  

The benchmarks and targets for each Member State are calculated as follows: 

  Baseline 

The  estimate  of  -224.9  MtCO2eq  represents  the  no  debit  benchmark,  or  baseline,  by 
applying the accounting  framework of the  current  LULUCF Regulation to the reported 
emissions  and  removals  in  the  GHG  inventory  submission  of  2020.  This  estimate  can 
therefore be quantitatively compared to other benchmarks or targets as proposed in this 
Impact  Assessment.  Despite  some  caveats,  this  approach  for  estimating  the  baseline  is 
the best-possible solution while also taking into account envisioned changes in the scope. 

The baseline of each Member State is calculated from the average reported emissions and 
removals of greenhouse gases (CO2, CH4 and N2O) of the period 2005-2009 using the 
following equation: 

𝐵𝐿 = 𝐿𝑈𝐿𝑈𝐶𝐹 − 𝑀𝐹𝐿 − 𝐴𝐹𝐿 − 𝐷𝐹𝐿 + 𝐹𝑅𝐿 

122 Gusti, M., Forsell, N., Havlik, P., Khabarov, N., Kraxner, F., Obersteiner, M. (2019), The sensitivity of the 
costs of reducing emissions from deforestation and degradation (REDD) to future socioeconomic drivers 
and its implications for mitigation policy design. Mitig Adapt Strateg Glob Change, 24, p. 1123 1141. 
123 The  GHG  inventory  submission  of  2014  corresponds  with  the  last  year  of  reporting  under  the  first 
commitment period of the Kyoto Protocol. 

82 

 
 
 
 
 
 
 
 
                                                                                                                                                 
where124: 

  BL: the baseline for 2030 
  LULUCF from “Total LULUCF” for emissions and removals in Table 4 
  MFL: Managed Forest Land, which consists of:  

o  “Forest  Land  remaining  Forest  Land”  for  net  carbon  stock  changes  in 
Table 4.A, direct N2O emissions from N inputs to managed soils in Table 
4(I), direct N2O emissions from N mineralization/immobilization in Table 
4(III) and greenhouse gas emissions from biomass burning in Table 4(V) 

o  “Harvested wood products” for net change of CO2 in Table 4.Gs1 
o  “Total  Forest  Land”  for  emissions  and  removals  from  drainage  and 
rewetting  and  other  management  of  organic  and  mineral  soils  in  Table 
4(II)125 

  AFL: Afforested Land from “Land converted to Forest Land” for net carbon stock 
changes  in Table 4.A, direct  N2O  emissions from  N  inputs to managed  soils in 
Table 4(I), direct N2O emissions from N mineralization/immobilization in Table 
4(III) and greenhouse gas emissions from biomass burning in Table 4(V) 

  DFL: Deforested, Land which consists of126: 

o  “Forest land converted to Cropland” for net carbon stock changes in Table 
4.B  and  direct  N2O  emissions  from  N  mineralization/immobilization  in 
Table 4(III) 

o  “Forest  land  converted  to  Grassland”  for  net  carbon  stock  changes  in 
N 

emissions 

Table 
mineralization/immobilization in Table 4(III) 

direct 

N2O 

from 

and 

4.C 

o  “Forest  land  converted  to  Settlements”  for  net  carbon  stock  changes  in 
N 

emissions 

Table 
mineralization/immobilization in Table 4(III) 

direct 

N2O 

from 

and 

4.E 

o  “Forest  land  converted  to  Other  Land”  for  net  carbon  stock  changes  in 

Table 4.F 

  FRL:  Forest  Reference  Level  as  laid  down  in  the  Commission  Delegated 

Regulation (EU) 2021/268.127,128 

The  current  reporting  to  the  UNFCCC  does  not  provide  a  sufficient  disaggregation  for 
estimating all carbon stock changes and GHG emissions and removals in an additive way 
as  required  in  Art  2  of  the  current  LULUCF  Regulation.  Applying  a  “backward 
calculation” or subtraction approach,  as shown  in  the equation above, ensures  covering 

124 Table notations for the descriptors refer to specific LULUCF tables in the GHG inventory submitted to 
the UNFCCC. 
125 In the context of laying down Forest Reference Levels it was recommended to include emissions from 
drainage and rewetting into the FRL (LULUCF Expert Group, slide 10). As Table 4(II) does not provide a 
disaggregation between remaining and converted forest land uses, it was deemed appropriate to assume 
that all emissions correspond to “Forest Land remaining Forest Land”. 
126 The  land  category  conversion  “Forest  land  converted  to Wetland”  is  currently  only  reported  by  very 
few Member States and was therefore not included in the baseline calculation. Including this conversion 
from the currently reported estimates has an impact of 2.5Mt yr-1. 
127  Commission  Delegated  Regulation  (EU)  2021/268  of  28  October  2020  amending  Annex  IV  to 
Regulation (EU) 2018/841 of the European Parliament and of the Council as regards the forest reference 
levels to be applied by the Member States for the period 2021-2025.  
128 Forest Reference Levels are based on the continuation of sustainable forest management practices as 
documented  in  the  period  from  20002-2009  (Art  8  of  the  LULUCF  Regulation).  Accounting  of  managed 
cropland, managed grassland and managed wetland, which are not subtracted from the LULUCF total in 
the baseline equation, result from the base period 2005-2009 (Art 7 of the LULUCF Regulation). 

83 

 
 
                                                 
all reported emissions and removals. At the same time it extends the scope of the current 
LULUCF Regulation to all emissions and removals as reported in the LULUCF sector129.  

The calculation makes three assumptions: 

  Global  Warming  Potentials:  All  calculations  use  Global  Warming  Potentials  of 
AR5, only the FRLs are based on AR4130. FRLs are not disaggregated by gases, 
hence  the  impact  cannot  be  directly  quantified,  yet  it  is  safe  to  assume  a 
negligible impact131.  

  Age dynamics: The calculation assumes the FRLs laid down for the period 2021-
2025  to  be  the  same  in  the  period  2026-2030.  Forest  Reference  Levels  for  the 
period  2026-2030  will  be  proposed  by  June  2023,  hence  a  quantitative  estimate 
cannot  be  made  at  this  moment.  However,  the  only  variable  compared  to  the 
existing FRLs are the age-class dynamics that evolved by 5 years. Therefore it is 
reasonable to assume no significant differences compared to the FRLs laid down 
today. 

  Background level for natural disturbances: This baseline cannot take into account 
possible  exclusions  of  emission  due  to  applying  the  provision  for  natural 
disturbances, except for those Member States that included a preliminary estimate 
in  the  FRL.  This  parameter  cannot  be  inferred  indirectly,  and  there  are  not  yet 
experiences with the provision’s application. Therefore, it is impossible to predict 
both, the occurrence of natural disturbances and the application of the provision.  

  Option 1.1 

The average reported emissions and removals from Managed Forest  Land in the period 
2016-2018  was  -351.0 MtCO2eq,  which  corresponds  to  34.8 MtCO2eq  of  additional 
removals  with  respect  to  the  Forest  Reference  Levels  (-316.2 MtCO2eq).  This 
simplification  of  accounting  rules,  therefore,  raises  the  ambition  of  the  LULUCF 
Regulation from the current -224.9 MtCO2eq to -259.7 MtCO2eq. 

  Option 1.2 

The allocation criterion is a mix between  
:

1.

  A Member State’s recent LULUCF emissions and removals (the average between 
the  current  mitigation 
2016-2018): 
performance  of  the  LULUCF  sector  in  each  Member  State,  which  include  the 
recent impacts of natural disturbances; 

target  reflects 

this  ensures 

that 

the 

2.

  The area of managed land: this criterion reflects the capacity of a Member State 
to  improve  its  LULUCF  performance,  as  it  strongly  correlates  with  the  area 
available  for  action,  either  via  positive  land  use  change  or  by  improved  land 
management practices. 

129 The current LULUCF Regulation (Regulation 2018/841) does not include net carbon stock changes and 
GHG  emissions  from  “Settlements  remaining  Settlements”,  “Settlements  converted  to  Other  Land”, 
“Other  Land  converted  to  Settlements”  and  “Other”.  The  Regulation  is  unclear  on  the  inclusion  of 
Emission  from  indirect  N2O  emissions  from  managed  soils  by  atmospheric  deposition  or  Nitrogen 
leaching and run-off. The Baseline at the scope of the current LULUCF Regulation is -229 MtCO2eq. 
130 In the 4th Assessment Report Global Warming Potentials (GWP) for 100 years are 25 for CH4 and 298 
for N2O; in the 5th Assessment Report GWPs for 100 years are 28 for CH4 and 265 for N2O.  
131 The  differences  between  GWPs  for  both  gases  combined  for  Forests  at  the  level  of  the  EU  is  below 
300kt yr-1. 

84 

 
 
 
                                                 
 
The proposed target allocation for each Member State (𝑇𝑀𝑆) is the result of the following 
sum:  

𝑇𝑀𝑆 = 𝐿𝑈𝐿𝑈𝐶𝐹𝑀𝑆 +

𝐴𝑟𝑒𝑎𝑀𝑆
𝐴𝑟𝑒𝑎𝐸𝑈

 (𝑇𝑎𝑟𝑔𝑒𝑡𝐸𝑈 − 𝐿𝑈𝐿𝑈𝐶𝐹𝐸𝑈) 

Where: 

  𝐿𝑈𝐿𝑈𝐶𝐹𝑀𝑆 is the Member State’s 2016-2018 average LULUCF net emissions or 

removals as reported the 2020 GHG inventory; 

  𝐴𝑟𝑒𝑎𝑀𝑆
𝐴𝑟𝑒𝑎𝐸𝑈
EU area of managed land132; 

 is the percentage of a Member State’s area of managed land over the total 

  𝑇𝑎𝑟𝑔𝑒𝑡𝐸𝑈 is  the  overall  target  of  LULUCF  net  emissions  or  removals  set  for 

2030. In Option 1.2 this target is set to -310 MtCO2eq 

  𝐿𝑈𝐿𝑈𝐶𝐹𝐸𝑈 is the sum of all Member State’s average (2016-2018) LULUCF net 
emissions or removals and corresponds to -267.7 MtCO2eq as reported the 2020 
GHG inventory. 

  Option 2 

This option calculates an EU target of -267.7 MtCO2eq equal to the sum of all Member 
State’s average (2016-2018) LULUCF net emissions or removals. Like in Option 1.2, the 
target  is  set  in  terms  of  the  overall  amount  of  emissions  and  removals  reported  in  the 
2020 GHG inventory. In addition, flexibilities as set out in Annex III of Regulation (EU) 
2018/842 may be added (26.2MtCO2eq per year on average).  

  Option 3 

Under  this  option  the  EU  achieves  land  neutrality  by  combining  agriculture  emissions 
with  LULUCF  net  removals.  However,  individual  Member  States  may  have  land  net 
emissions  or  net  removals  targets,  depending  on  their  capacity  to  reduce  Agriculture 
emissions  and  reduce  emission  or  enhance  removals  in  the  LULUCF  sector.  Target 
setting  considers  the  Agriculture  emission  reduction  potential  per  Member  state,  and 
based  on  this  collective  EU  achievement  the  remaining  emissions  are  balanced  by 
LULUCF removals. Based on the 2020 GHG inventory, the calculations use the average 
Agriculture  emissions  and  LULUCF  net  emissions  or  removals  of  2016-2018  as  a 
starting level and 2018 as starting year for the trajectory. 

Two approaches are considered for emission reductions in agriculture: 

  Flat  reduction:  a  reduction  of  agriculture  emission  by  20%  in  each  Member 
State.  At  the  EU  level,  this  corresponds  to  a  decrease  of  agricultural  emissions 
from 403.4 MtCO2eq in 2016-2018 to 322.7 MtCO2eq in 2035. 

The  assumption  of  an  EU  20%  reduction  by  2035  in  Agriculture  non-CO2 
emissions is justified on the grounds of three elements: 

 i.

In  the  Climate  Target  Plan  analysis133,  potential  emission  reductions  of 
non-CO2  greenhouse gases by the sector in 2030 in the EU27 compared 
to baseline (AR5) are computed as 30.6 MtCO2. Including the modelling 

132 Managed land areas are the average of 2016 to 2018 reported in the greenhouse gas inventory, Table 
4.1. Areas are assumed not to change significantly over time. 
133 SWD(2020) 176 final part 2/2, p88 and Table 44. 

85 

 
 
 
                                                 
baseline  reduction,  this  leads  to  an  overall  reduction  of  the  sector  of 
around 15% by 2030. 

 ii.

A  further  modelling  exercise  conducted  by  the  European  Commission’s 
Joint  Research  Centre  provides  a  narrowly  focused  assessment  of  the 
effects of achieving the targets stemming from the Biodiversity and Farm 
to  Fork  Strategies,  in  combination  with  the  implementation  of  the  2018 
Legal Proposal of the Common Agricultural Policy (CAP) and associated 
Strategic Plan implementation. This work confirms the significant role the 
CAP  would  play,  in  particular  the  boosted  uptake  of  mitigation 
technologies  and  upgrading  of  farming  practices,  resulting  in  17.4% 
reduction of non-CO2 GHG emissions in the agricultural sector by 2030, 
going  up  to  19.0%  with  additional  budget  potentially  made  available 
under the “Next Generation EU”.134   

iii.

The  2016  LULUCF  impact  assessment 135 also  worked  on  the  guiding 
assumption  of  a  20%  reduction  compared  to  2005  in  this  sector’s 
emissions, in the discussion on needs for flexibility with the ESR. 

  GDP-based  reduction:  a  reduction modulated by  GDP/capita  adapted from  the 
fairness  distribution  key  of  the  Effort  Sharing  Regulation.  In  this  option  we 
applied  the  reduced  ESR  scope  and  an  overall  -27%  emission  reduction 
(following  Option  2.2  of  the  ESR  Impact  Assessment)  only  to  the  agriculture 
sector,  extended  the  period  for  reductions  to  2035  and  removed  the  LULUCF 
flexibility from each MS target136. For the EU, this reduction corresponds to 21% 
or  a  decrease  of  agricultural  emissions  from  403.4  MtCO2eq  in  2016-2018  to 
318.0 MtCO2eq in 2035. 

Balancing of the remaining removals follows the same principle as outlined under option 
1.2.  
The  national  contributions  to  the  2035  objective  (𝐿𝑀𝑆)  are  composed  of  two  additive 
parts  in  brackets  corresponding  to  Agriculture  and  LULUCF  and  are  computed  as 
follows:  

𝐿𝑀𝑆 = [𝐴𝐺𝑅𝐼𝑀𝑆 − 𝐴𝐺𝑅𝐼𝑀𝑆 ∗ 𝑅𝑒𝑑𝑢𝑐𝑡𝑖𝑜𝑛𝑀𝑆] + 

[𝐿𝑈𝐿𝑈𝐶𝐹𝑀𝑆 +

𝐴𝑟𝑒𝑎𝑀𝑆
𝐴𝑟𝑒𝑎𝐸𝑈

 (𝑇𝑎𝑟𝑔𝑒𝑡𝐸𝑈 − 𝐿𝑈𝐿𝑈𝐶𝐹𝐸𝑈)]  

Where: 

  𝐴𝐺𝑅𝐼𝑀𝑆  is  the  Member  State’s  2016-2018  average  Agriculture  emissions  as 

reported the 2020 GHG inventory 

  𝑅𝑒𝑑𝑢𝑐𝑡𝑖𝑜𝑛𝑀𝑆 is the percent reduction for agriculture as explained above. 

  𝐿𝑈𝐿𝑈𝐶𝐹𝑀𝑆 is the Member State’s 2016-2018 average LULUCF net emissions or 

removals as reported the 2020 GHG inventory; 

134 SWD(2020) 176 final part 2/2, p90  
135 SWD/2016/0249 final.  
136 Annex III of Regulation (EU) 2018/842, annualized. 

86 

 
 
 
                                                 
  𝐴𝑟𝑒𝑎𝑀𝑆
𝐴𝑟𝑒𝑎𝐸𝑈
EU area of managed land137; 

 is the percentage of a Member State’s area of managed land over the total 

  𝑇𝑎𝑟𝑔𝑒𝑡𝐸𝑈  is  the  overall  target  of  LULUCF  net  removals  and  equals  the 
remaining  emissions  in  the  agriculture  sector  after  applying  the  emission 
reductions  (the  result  of  the  first  bracketed  term).  Depending  on  the  chosen 
emission reduction approach this equals -322.7 MtCO2eq or -318.0 MtCO2eq.  

  𝐿𝑈𝐿𝑈𝐶𝐹𝐸𝑈 is the sum of all Member State’s average (2016-2018) LULUCF net 
emissions  or  removals  and  corresponds  to  -267.7  MtCO2eq  as  reported  in  the 
2020 GHG inventory. 

The national targets for 2030 are then found by drawing, for each Member State, a linear 
trajectory between the 2016-2018 average performance of the land sector (starting in year 
2018) and their 2035 contribution as computed above. Summing up all national targets, 
the EU-wide 2030 target corresponds to total net emissions from the land sector equal to 
39.9  MtCO2eq,  implying reductions in agricultural emissions and  reduced emission or 
enhanced  removals  in  LULUCF.  It  is  important  to  stress  that  this  trajectory  is  only 
indicative,  and  the  proportion  between  the  reduction  of  agricultural  emissions  and  the 
efforts  in  LULUCF  can  vary  depending  on  national  circumstances,  as  long  as  the  net 
national targets for the land sector are achieved. 

The emission reductions and enhanced removals may be reached by various strategies or 
combinations of those. The strategies may include planting of perennial crops, increases 
of the forest biomass, significant action on organic soils, implementation of practices and 
technologies  in  the  agriculture  sector,  dietary  changes,  or  the  general  application  of  a 
carbon price.  

Planting  of  perennial  crops  for  bioenergy  hold  significant  potential  of  increasing  the 
LULUCF  sink,  albeit  with  a  short-term  effect.  Once  the  rotation  length  of  the  energy 
crops  is  reached,  the  sink  will  begin  to  decline  and  in  the  longer  run  even  fall  below 
previous levels (this measure is favoured under the 1.5TECH scenario of the long-term 
strategy). Increases of the forest biomass may be reached through reduced deforestation, 
increased afforestation and limited harvest, even though the latter may lead to overaging 
of forests with reduced carbon sequestration potential (this measure is favoured under the 
1.5LIFE  scenario).  Organic  soils  hold  a  particular  potential  for  LULUCF  mitigation, 
ranging  from  passive  interventions  like  fallowing  to  active  restoration  actions  such  as 
rewetting.  

While action in the agriculture sector hold a wide variety of choices, a significant impact 
is  reached  via  dietary  changes  in  the  food  consumption  with  significant  domestic  and 
international  implications  on  the  food  production  sector.  Dietary  changes  have  double 
benefit  as  the  land  freed  from  food  production,  with  consequently  less  emissions, 
becomes  available  for  perennial  cropping  of  biomass  feedstock  with  an  increase  in  the 
LULUCF removals and related material or energy substitution effects.  

Modelling (see also Annex 10.4.1) is largely based on economic criteria and will trigger 
certain mitigation actions at specific carbon prices while taking into account constraints 
like the general applicability or saturation effects. However, active land management also 
considers  environmental,  socio-cultural  or  political  criteria.  This  can  result  in  not 

137 Managed land areas are the average of 2016 to 2018 reported in the greenhouse gas inventory, Table 
4.1. Areas are assumed not to change significantly over time. 

87 

 
 
                                                 
applying  a mitigation measure  even  if it is  economically beneficial or applying a more 
expensive mitigation action instead.  

88 

 
 
 
 
10.5. Results of target computations 

The  modelling  presented  in  this  impact  assessment  shows  that,  with  no  additional 
actions, the EU net removals in 2030 will be similar to the levels today (-256 MtCO2eq), 
and that a net removal target above -300 MtCO2eq can be achieved at relatively low cost. 
This  shows  clearly  the  potential  for  EU  mitigation  supporting  a  net  removal  target 
of -310MtCO2eq in 2030. Nevertheless, the linking of mitigation potential (shown by the 
modelling  framework)  for  each  Member  State  to  the  direct  allocation  of  Member  State 
targets should be done with caution and take into account: 

First,  some  of  the  GLOBIOM  output  appears  to  generally  make  rather  conservative 
estimates  for  removals,  especially  in  forest  management,  where  modelled  harvest 
demand is driven with limited recognition of some boundary assumptions (for example, 
local  governance  or  national  commitments  to  ensure  no  depletion  of  removals)  or 
economic  considerations  intrinsic  to  the  model  (higher  price  mostly  results  in  higher 
biomass  supply,  irrespective  of  e.g.  biodiversity  policies).  This  may  result  in 
disproportional  market-driven  demand  in  certain  Member  States,  and  correspondingly 
lower removal potential.  

Second,  under  the  existing  LULUCF  Regulation,  a  Member  State  may  make  use  of 
flexibility  to  compensate  debits  in  managed  forest  land.  Under  certain  conditions, 
Member States that find themselves at non-compliance with emissions accounted against 
the FRL, are entitled to benefit from a certain amount of the surplus of the other Member 
States. This flexibility mechanism can only enter into force in the case, inter alia, that the 
“no-debit” rule is fulfilled at EU level. Furthermore, Member States may engage in trade 
with  another  Member  State.  Both  the  flexibility  and  the  trading  routes  can  be  used  by 
Member States, since the EU level modelling projects a reasonable level of net removals 
above the EU targets of every option evaluated. 

89 

 
 
 
Figure 17 – LULUCF targets under the baseline, Option 1.1, Option 1.2 and Option 2. For comparison, the graph also 
shows  the  recent  performance  of  the  LULUCF  sector  (2016-2018)  and the  2030  projections  from  the  Commission's 
policy scenario (MIX 2030 with carbon price equal to 0, 5 or 10 EUR/tCO2eq). Unit of measure: MtCO2eq. 

90 

 
 
 
 
 
 
B
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M
I
X
1
0

-3,7 

-1,5 

-9,9 

-2,4 

-0,4 

1,4 

2,6 

1,4 

-20,8 

-17,7 

-17,8 

-14,9 

-14,9 

-13,0 

-20,4 

-23,0 

-43,0 

-30,9 

-34,0 

-27,4 

-27,4 

-34,7 

-42,3 

-43,3 

6,1 

-2,9 

-0,7 

9,1 

-24,3 

-30,8 

-27,1 

-27,1 

-35,2 

-45,4 

-47,2 

-2,6 

-4,3 

7,7 

-4,4 

-5,7 

3,7 

-3,2 

-4,8 

4,4 

-3,2 

-4,8 

4,4 

-1,7 

-4,5 

4,7 

-3,1 

-8,0 

4,3 

-3,3 

-8,0 

4,3 

-21,0 

-26,5 

-35,8 

-32,6 

-32,6 

-36,4 

-39,9 

-40,0 

3,7 

-3,7 

-0,4 

0,0 

5,1 

-0,3 

-3,2 

-0,3 

0,0 

5,3 

-0,6 

-4,6 

-0,4 

0,0 

4,5 

0,0 

-4,0 

-0,4 

0,0 

5,0 

0,0 

-4,0 

-0,4 

0,0 

5,0 

-1,0 

-3,2 

-0,3 

0,0 

4,5 

-1,4 

-3,9 

-0,5 

0,0 

4,1 

-1,6 

-3,9 

-0,5 

0,0 

3,9 

-26,0 

-36,1 

-38,1 

-34,8 

-34,8 

-22,8 

-33,5 

-33,8 

-10,8 

-0,9 

-1,4 

-0,4 

-0,4 

-5,3 

-6,7 

-6,7 

-24,0 

-26,0 

-25,7 

-23,3 

-23,3 

-16,3 

-17,5 

-19,3 

-6,1 

-3,9 

-6,1 

0,1 

-6,8 

-0,1 

-6,3 

0,1 

-6,3 

0,1 

-3,3 

-2,9 

-4,7 

-4,2 

-4,7 

-4,3 

-33,3 

-31,7 

-43,6 

-38,3 

-38,3 

-39,7 

-42,2 

-42,5 

-34,1 

-44,7 

-47,3 

-43,4 

-43,4 

-36,9 

-37,3 

-38,1 

-224,9 

-259,7 

-310,0 

-267,7 

-267,7 

-256,3 

-314,6 

-324,6 

Austria 

Belgium 

Bulgaria 

Croatia 

Cyprus 

Czechia 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

EU-27 

Table 12 – LULUCF targets under the baseline, Option 1.1, Option 1.2 and Option 2. For comparison, the table also 
shows the recent performance of the LULUCF sector (2016-2018) and the 2030 projections from the Commission's 
policy scenario (MIX 2030) with carbon price equal to 0 or 5 EUR/tCO2eq. Unit of measure: MtCO2eq. 

91 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 18 – Option 3 land targets in 2030 under two approaches for emission reductions in agriculture (flat reduction 
or  GDP-based  reduction).  For  comparison,  the  graph  also  shows  the  recent  performance  of  the  land  sector  (2016-
2018) and the 2030 projections from the Commission's policy scenario (MIX 2030) with zero additional carbon price 
per tonne CO2. Unit of measure: MtCO2eq. 

92 

 
 
 
 
 
2030 targets 

2030 targets 

2016 to 2018 

2030 MIX 

(flat) 

(GDP) 

0,9 

7,5 

-4,3 

-3,1 

0,1 

6,2 

15,0 

-1,3 

-11,9 

32,0 

26,2 

2,6 

0,3 

21,3 

-8,3 

1,6 

-0,9 

0,2 

0,1 

21,3 

-10,2 

4,7 

-8,1 

-4,5 

1,4 

-8,1 

-41,1 

39,9 

0,2 

6,8 

-3,8 

-2,4 

0,1 

6,6 

14,7 

-1,3 

-12,3 

28,3 

19,2 

4,0 

0,6 

21,4 

-9,5 

1,9 

-0,1 

0,1 

0,1 

19,8 

-6,5 

5,3 

-3,1 

-4,2 

1,6 

-6,4 

-41,3 

39,9 

2,8 

9,2 

-2,3 

-2,2 

0,2 

8,2 

17,0 

-0,7 

-8,4 

49,0 

39,0 

4,8 

2,2 

24,8 

-0,9 

2,6 

0,3 

0,3 

0,1 

24,4 

-2,6 

6,6 

-3,1 

-3,6 

1,9 

2,5 

4,8 

8,3 

-3,6 

0,5 

0,1 

9,9 

13,6 

3,2 

-7,1 

31,9 

24,7 

5,9 

2,9 

27,9 

-6,8 

1,5 

0,9 

0,4 

0,1 

24,3 

9,3 

1,6 

4,0 

-1,0 

-1,2 

-5,5 

-36,5 

135,7 

-30,4 

120,5 

Austria 

Belgium 

Bulgaria 

Croatia 

Cyprus 

Czechia 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

EU-27 

Table 13 - Option 3 land targets in 2030 under two approaches for emission reductions in agriculture (flat reduction 
or GDP-based reduction). For comparison, the table also shows the recent performance of the land sector (2016-
2018) and the 2030 projections from the Commission's policy scenario (MIX 2030) with zero additional carbon price 
per tonne CO2. Unit of measure: MtCO2eq. 

93 

 
 
 
 
 
 
 
10.6. Win-win solutions for climate, biodiversity, and bioeconomy  

This annex provides more details on the synergies between enhancing carbon removals in 
the LULUCF sector and other land-related policy objectives, in particular: 

  biodiversity and climate change adaptation (section 10.6.1), 

  a sustainable bioeconomy (section 10.6.2), 

  a sustainable agricultural sector (section 10.6.3), and 

  a sustainable food system (section 10.6.4) 

For  each  section,  the  text  clarifies  why  such  synergies  are  important,  describes  the  EU 
policy framework to enhance them, and elaborates on the most relevant win-win actions. 

10.6.1. Biodiversity and climate change adaptation 

  Why are these synergies important? 

Climate  change  and  biodiversity  loss  are  interdependent  and  mutually  reinforcing 
emergencies and closely interconnected threats, and therefore they need to be addressed 
together:  climate  change  is  one  of  the  main  drivers  of  biodiversity  loss,  while 
biodiversity  loss  and  ecosystem  degradation  have  implications  for  climate  change 
through  feedbacks,  and  for  the  capacities  and  limits  of  nature-based  adaptation  and 
mitigation efforts.  

Ambitious global mitigation measures are necessary to avoid the most dangerous impacts 
of climate change, because there are many limits and barriers to adaptation. At the same 
time, climate change is already occurring, and it will continue for many decades to come 
(or even centuries, in the case of sea level rise), even under the most stringent mitigation 
policies. Short term adaptation solutions can risk being antagonistic to climate change – 
for  example  desalinating  water  using  energy  intensive  processes.  However,  strong 
synergies can be found by combining actions, such as ecosystem-based adaptation which 
can  also  contribute  to  climate  change  mitigation  by  reducing  emissions  caused  by 
ecosystem degradation and/or by enhancing carbon stocks138. 

Box 6  – Climate change threats to the land sector 

Forest growth is generally projected to increase in northern Europe and to decrease in 
southern Europe, but with substantial regional variation. As acknowledged in the new 
EU  Adaptation  Strategy 139 ,  the  increasing  frequency  and  severity  of  climate  and 
weather  extremes  has  caused  a  surge  in  the  number  of,  and  damages  from,  disasters 
over  the  last  two  decades,  particularly  on  the  land  sector.  These  extremes  –  which 
result  in  high  level  of  localised  impacts  –  include  forest  fires,  heatwaves,  droughts, 
hurricanes,  and  pest  outbreaks.  Slow  onset  processes,  such  as  desertification,  loss  of 
biodiversity, land and ecosystem degradation, ocean acidification or sea level rise are 
equally  destructive  over  the  long  term.  These  combined  impacts  considerably  affect 

138  European  Environment  Agency.  (2019).  The  European  environment  state  and  outlook  2020: 
Knowledge for transition to a sustainable Europe. Retrieved from https://doi.org/10.2800/96749 
139 COM (2021) 82 final 

94 

 
 
 
 
                                                 
forest structure and  the  functioning  of  forest  ecosystems and their services, a finding 
that also applies to other sensitive ecosystems, including wetlands140. Climate change 
may  therefore  also  locally  impact  ecosystems,  reducing  land  carbon  stocks  and 
undermining  their  ecosystem  function  of  carbon  removal,  thus  working  against 
mitigation objectives.  

Climate  change  has  already  negatively  affected  the  agricultural  sector  in  many 
locations  across  Europe,  and  this  trend  will  continue  in  the  future.  Future  climate 
change  might  in  contrast  have  some  positive  effects  on  the  sector  in  some  locations 
due  to  longer,  more  favourable  growing  seasons  and  more  suitable  cropping 
conditions. However, the number of extreme climate events that will negatively affect 
agriculture at varying locations in Europe is projected to increase, affecting the price, 
quantity  and  quality  of  products,  trade  patterns  and  therefore  agricultural  incomes  in 
rural areas where the sector is dominant.  

Other  complications  and  dangers  arise  from  ‘tipping  points’  or  thresholds  such  as 
temperature  increase141 or  massive  forest  dieback142.  In  the  longer  run,  reduced  CO2 
uptake  under  average  growing  conditions  or  falling  soil  moisture  levels143 could  also 
be  a  major  risk.  Feedback  loops  resulting  in  continued  global  warming  could  occur 
beyond these thresholds even if anthropogenic emissions were reduced to almost zero. 
Several  of  these  tipping  points  would  occur  at  temperature  increases  between  2  and 
3°C144.  The  uncertainty  as  to  whether  under  future  climate  change  the  current  EU 
forest sink will be maintained or turn it into a carbon source is large145, although it is 
unlikely these thresholds will be breached in the near term. The longer that mitigation 
efforts are delayed, however, the greater the inevitable impact of climate change will 
be  and  the  more  effort  will  needed  to  scale  up  and  enhance  land  carbon  sinks  in 
response. 

  What is the EU policy framework? 

Following  the  large  scientific  evidence  highlighting  the  importance  of  linking 
biodiversity  protection  and  restoration,  carbon  sequestration  and  adaptation  to  climate 
change146, the Biodiversity Strategy for 2030147 and the new Adaptation Strategy148 put a 

140 Salimi,  S.,  Almuktar,  S.  A.  A.  A.  N.,  &  Scholz,  M.  (2021).  Impact  of  climate  change  on  wetland 
ecosystems:  A  critical  review  of  experimental  wetlands.  Journal  of  Environmental  Management,  286, 
112160. https://doi.org/10.1016/j.jenvman.2021.112160 
141 Duffy, K. A., Schwalm, C. R., Arcus, V. L., Koch, G. W., Liang, L. L., & Schipper, L. A. (2021). How close are 
we  to  the  temperature  tipping  point  of  the  terrestrial  biosphere?  Science  Advances,  7(3),  eaay1052. 
https://doi.org/10.1126/sciadv.aay1052  
142 Neumann, M., Mues, V., Moreno, A., Hasenauer, H., & Seidl, R. (2017). Climate variability drives recent 
tree mortality in Europe. Global Change Biology, 23(11), 4788–4797. https://doi.org/10.1111/gcb.13724  
143 Green, J. K., Seneviratne, S. I., Berg, A. M., Findell, K. L., Hagemann, S., Lawrence, D. M., & Gentine, P. 
(2019). Large influence of soil moisture on long-term terrestrial carbon uptake. Nature, 565(7740), 476–
479. https://doi.org/10.1038/s41586-018-0848-x 
144 Steffen,  W.,  et  al.,  2018,  ‘Trajectories  of  the  Earth  system  in  the  Anthropocene’,  Proceedings  of  the 
National Academy of Sciences 115(33), pp. 8252-8259 https://doi.org/10.1073/pnas.1810141115. 
145 Valade, A., Bellassen, V., Magand, C., & Luyssaert, S. (2017). Sustaining the sequestration efficiency of 
the  European 
forest  sector.  Forest  Ecology  and  Management,  405(Supplement  C),  44–55. 
https://doi.org/10.1016/j.foreco.2017.09.009 
146 Including the following:  Shukla, P. R., Skea, J., Calvo Buendia, E., Masson-Delmotte, V., Pörtner, H. O., 
Roberts, D. C., … Van Diemen, R. (2019). IPCC, 2019: Climate Change and Land: an IPCC special report on 
climate  change,  desertification,  land  degradation,  sustainable  land  management,  food  security,  and 
greenhouse gas fluxes in terrestrial ecosystems. http://www.ipcc.ch/srccl; IPBES thematic assessment on 
land degradation and restoration (https://ipbes.net/assessment-reports/ldr); Strassburg, et al. (2020) Global 

95 

 
 
                                                 
 
strong emphasis on carbon-rich ecosystems, areas most vulnerable to climate change, and 
the need to enhance resilience.  

Both strategies highlight the implementation of nature-based solutions on a larger scale 
as a way to increase climate resilience and contribute to multiple Green Deal objectives, 
including  mitigation  and  carbon  sequestration.  For  example,  protecting  and  restoring 
carbon-rich  ecosystems  such  as  forest,  grasslands,  wetlands  and  peatlands;  promoting 
sustainable  management  of  land,  including  agroecology,  agroforestry  and  sustainable 
forest management; and improving soil health, will help to mitigate and adapt to climate 
change while reversing biodiversity loss in a cost-effective way.  

The  Biodiversity  Strategy  contains,  among  other  provisions,  nature  protection 
commitments (protect 30% of EU land and strictly protect a third of these areas) and an 
EU Nature Restoration Plan, whose main element is an EU legally binding instrument for 
nature  restoration  to  be  proposed  in  2021.  Other  actions  target  agricultural  area  (10% 
under high-diversity landscape features; 25% under organic farming management, and a 
significant increase of the uptake of agro-ecological practices, 50% reduction of use and 
risk  of  pesticides,  reduction  of  pollution  from  fertilisers  by  50%  which  will  lead  to  a 
reduction of 20% their use); the planting of  at  least  three billion additional trees in  the 
EU  by  2030,  in  full  respect  of  ecological  principles,  development  of  close-to-nature 
forest  management,  and  the  protection  of  all  primary  and  old  growth  forest;  and 
significant progress in the remediation of contaminated soil sites.  

The  restoration  priority  makes  a  significant  contribution  to  climate  action  and  this 
implies  to  identify  ecosystems  which  have  the  highest  potential  for  both  biodiversity, 
climate  adaptation,  and  carbon  sequestration  and  storage.  At  the  same  time,  successful 
ecosystem restoration will also require information on climate risks and vulnerabilities of 
ecosystems, and on projected shifts and vegetation zones in order to ‘restore forward’ to 
future  in  bioclimatic  conditions.  Because  of  this  climate  prism,  the  EU  Nature 
Restoration  Plan  needs  to  be  articulated  in  coherence  with  the  review  of  the  LULUCF 
regulation and with the implementation of the new EU adaptation strategy.  

The  2030  goals  of  this  legally  binding  instrument  are  to  restore  significant  areas  of 
degraded and carbon-rich ecosystems; to prevent any deterioration in conservation trends 
and status of habitats and species; to ensure that at least 30% of them reach favourable 
conservation status or at least show a positive trend; and to increase the EU’s resilience, 
and contribute to climate change mitigation and adaptation and disaster risk reduction as 
a  key  nature-based  solution.  Target  would  be  legally-binding  at  EU  level,  based  on 
pledges  made  by  Member  States.  For  these  pledges,  there  would  be  a  pool  of  targets, 
some in expressed in hectares, other in biodiversity metrics (e.g. status of conservation, 
land  degradation  neutrality,  river  continuity  or  indicators  related  to  pressures  and 
conditions of ecosystems and their services).  

priority areas for ecosystem restoration. Nature 586, 724–729. https://doi.org/10.1038/s41586-020-2784-
9.  Goldstein,  A.,  et  al.  (2020).  Protecting  irrecoverable  carbon  in  Earth’s  ecosystems.  Nature  Climate 
Change  10,  287–295.  https://doi.org/10.1038/s41558-020-0738-8.  Stanturf,  J.  A.,  et  al.  (2015)  Forest 
landscape  restoration  as  a  key  component  of  climate  change  mitigation  and  adaptation.  Vienna: 
International Union of Forest Research Organizations (IUFRO). Bonn, A., et al. (2016) Peatland restoration 
and ecosystem services: science, policy and practice. Cambridge University Press.  Cole, A. J., et al. (2019) 
"Grassland biodiversity restoration increases  resistance of  carbon fluxes to drought." Journal of Applied 
Ecology 56.7 (2019): 1806-1816. https://doi.org/10.1111/1365-2664.13402 
147 COM/2020/380 final, https://europa.eu/!PJ43Qg  
148 COM/2021/82 final, https://europa.eu/!pq73pH  

96 

 
 
                                                                                                                                                 
A number of these targets address climate mitigation, adaptation as well as disaster risk 
reduction, and should therefore be linked with climate legislation including the LULUCF 
Regulation. In this prospect, there are at least two possibilities to reflect the restoration 
objectives: 

1. 

2. 

Mapping  and  monitoring  provisions  could  be  introduced  in  order  to  require 
Member  States  to  have  geographically  explicit  information  to  identify  priority 
areas to be  or  being  restored. This information could reinforce  field and  remote 
sensing monitoring of biodiversity and ecosystem services and would contribute 
to the Green Deal data space foreseen in the European Data Strategy. As part of a 
general  improvement  of  monitoring,  reporting  and  verification,  the  work  could 
also  focus  on  refining  databases  of  activity  and  emissions  factors  to  improve 
greenhouse  gas  inventories;  and  on  how  to  embed  indicators  of  pressures  and 
condition for biodiversity and ecosystem services.  
Reporting  provisions  could  consist  of  either  sub-categories  of  additional  land 
dedicated  to  the priority  areas  at stake for restoration - this would  allow annual 
monitoring  of  emissions  and  removals  from  these  areas  and  include  this 
information  in  the  national  inventory  reports  -  or  specific  additional  sections  in 
any reporting scheduled between Member States and the Commission (sections in 
climate  reporting  and  in  biodiversity  reporting  could  be  dedicated  to  synergies 
between climate action and biodiversity action on land, for example). 

The  precise  articulation  between  biodiversity  protection  and  restoration  and  climate 
action could rely on existing and upcoming reporting, mapping, modelling and research 
works, including: 

- 

- 

- 

- 

- 

The Mapping and Assessment of Ecosystems and their Services (MAES) whose 
final report 149, just published, presents an analysis of the pressures and condition 
of  terrestrial,  freshwater  and  marine  ecosystems  using  a  single,  comparable 
methodology  based  on  European  data  on  trends  of  pressures  and  condition 
relative to the policy baseline 2010. 
EU    Natural  Capital  Accounting  (NCA) 150  and  proposed  EU  ecosystem 
accounting  legislation,  based  on  the  System  of  Environmental-Economic 
Accounting  (SEEA)151,  which  is  a  UN  framework  that  integrates  economic  and 
environmental  data  to  provide  a  more  comprehensive  and  multipurpose  view  of 
the  interrelationships  between  the  economy  and  the  environment  and  the  stocks 
and changes in stocks of environmental assets.  
The newly  created  Knowledge  Centre for Biodiversity152 that  needs  to  organise, 
store  and  provide  easy  access  to  a  wide  variety  of  information  sources  that 
produces  regular  updates  on  pressures,  biodiversity,  ecosystem  condition  and 
ecosystem services.  
The upcoming Biodiversity Partnership under Horizon Europe which will provide 
an  overarching  platform  connecting  national,  local  and  European  Research  & 
Innovation programs 
The  Taxonomy  Regulation  and  its  delegated  acts,  which  would  allow  for 
connecting  green  investment  from  stakeholder’s  initiatives  (e.g.  carbon  farming 

149 Maes, J.,  et al. (2020), Mapping and Assessment of Ecosystems and  their Services: An  EU ecosystem 
assessment,  EUR  30161  EN,  Publications  Office  of  the  European  Union,  Ispra,  doi:10.2760/757183, 
JRC120383 
150 https://ec.europa.eu/environment/nature/capital_accounting/index_en.htm  
151 System of Environmental-Economic Accounting (SEEA) https://seea.un.org/  
152 https://ec.europa.eu/knowledge4policy/biodiversity_en  

97 

 
 
                                                 
- 

- 

removal certificates, wetland and peatland restoration activities) to restoration for 
biodiversity and climate. 
The  new  EU  Adaptation  Strategy,  which  announces  action  to  propose  nature-
based  solutions  for  carbon  removals  and  to  continue  to  incentivize  and  assist 
Member  States  to  rollout  nature-based  solutions  through  assessments,  guidance, 
capacity building and EU funding.  
Resilience and Restoration Plans, the revision of the civil protection mechanism 
(EUCPM) and setting up EU disaster resilience  goals to stimulate investment in 
building  resilience  and  preventing  natural  disasters  and  the  JRC/SG  Resilience 
Dashboard153  

Highlighting  biodiversity  issues  in  the  review  of  the  LULUCF  Regulation  would 
constitute  a  concrete  signal  for  Member  States  to  seize  the  opportunity  for  synergies 
between EU  climate and biodiversity policies. These synergies  can  be reflected in land 
mapping,  field  monitoring,  remote  sensing  and  monitoring,  reporting  and  verification 
systems. This would  benefit to  other policies, including agriculture and would improve 
policy coherence as committed in the European Green Deal. 

The  new  EU  Adaptation  Strategy  paves  the  way  for  a  higher  ambition  on  climate 
resilience:  in  2050,  the  EU  will  be  a  climate-resilient  society,  fully  adapted  to  the 
unavoidable impacts of climate change. For this reason, climate change adaptation is an 
integral part of the European Green Deal and its external dimension, and firmly anchored 
in the European Climate Law. The Adaptation Strategy seeks to step up action across the 
economy  and  society  to  bring  us  towards  the  2050  vision  for  climate  resilience,  while 
increasing  synergies  with  other  policy  areas  such  as  biodiversity.  The  implementation 
will be conducted in close concert with the other elements of the European Green Deal. 

The new  EU adaptation  strategy and the new proposed common agricultural policy for 
2021‑ 2027, which has adaptation as a clear objective, will continue to enable adaptation 
action on agriculture.  Solutions are  urgently needed to help  farmers and land managers 
tackle  climate  risks.  Member  States  have  defined  the  agriculture  sector  as  a  priority  in 
their national adaptation strategies or national adaptation plans. Measures at national or 
regional levels include awareness raising, practical measures to decrease the impacts and 
risks of extreme weather events and implementing infrastructure for irrigation and flood 
protection.  There  are  opportunities  for  implementing  a  wide  variety  of  existing  and 
proven measures  at farm level that aim to improve the management of soils and water, 
which can provide benefits for adaptation, mitigation, the environment and the economy. 
The  objectives  of  these  potential  measures  are  therefore  to  sustain  resilient  production, 
conserve soil and water resources, reduce pests, droughts and other weather and climate 
threats, as well as to reduce emissions or sequester carbon154.  

  What are the win-win actions? 

Meeting  higher  carbon  removal  targets  and  higher  resilience  of  land  while  addressing 
biodiversity challenges will require strong action to change land management practices, 
in  combination  with  adequate  spatial  planning,  including  the  expansion  of  protected 
areas,  the  restoration  of  degraded  areas  and  the  sustainable  management  of  land  and 
forests, and  targeting  a  balance between CO2  removals and higher carbon stocks in all 
carbon pools. 

153

 https://ec.europa.eu/info/strategy/priorities-2019-2024/new-push-european-democracy/strategic-

foresight/2020-strategic-foresight-report_en 
154 European Environment Agency. (2019). Climate change adaptation in the agriculture sector in Europe. 
Retrieved from https://doi.org/10.2800/86966 

98 

 
 
                                                 
Synergies and trade-offs between mitigation, adaptation and biodiversity have led strong 
research  efforts  and  policy  interest  to  put  forward  nature-based  solutions,  with  a 
particular focus  on land.  Nature-based  solutions are an umbrella concept  standardised 
by the International Union for the Conservation of Nature (IUCN)155. As highlighted in 
the  2019  IPCC  Special  Report  on  Climate  Change  and  Land  (SRCCL)156 and  the  2019 
IPBES Global assessment report on biodiversity and ecosystem services157, nature-based 
solutions  have  a  large  potential  to  contribute  to  the  climate  change  mitigation  efforts 
needed  to  meet  the  long-term  goals  of  the  Paris  Agreement,  as  well  as  reversing 
biodiversity  loss.  Land-use  actions  are  indispensable,  in  addition  to  strong  actions  to 
reduce greenhouse gas emissions from fossil fuel use and other industrial and agricultural 
activities. 

sustainable 

A wide range of land-based mitigation options, such as protection and restoring natural 
(including  agroecology), 
land  management  practices 
ecosystems, 
agroforestry,  crop  rotation  with  leguminous  crops,  fire  management,  soil  management, 
sustainable  forest  management,  reduced  erosion  and  increasing  soil  organic  matter,  do 
not  increase  competition  for  land.  Such  options,  based  on  a  smart  use  of  natural 
ecological processes and improved technologies, reducing the use of synthetic pesticides 
and fertilisers and promoting integrated pest management, such as biocontrol, contribute 
to  improving  the  quality,  diversity  and  resilience  of  ecosystems,  all  of  which  have 
substantial benefits for biodiversity.  

In  contrast,  if  applied  at  large  scale,  some  land-based  mitigation  measures  such  as 
afforestation,  reforestation  and  intensive  bioenergy  production,  including  monocultures 
replacing natural forests and subsistence farmlands, could increase the demand for land 
conversion,  with  adverse  side-effects  for  adaptation  and  biodiversity.  Such  measures 
could  also  threaten  food  and  water  security  as  well  as  local  livelihoods,  including  by 
intensifying  social  conflict.  The  choice  of  species  and  management  practices,  the 
implementation  of  these  measures  at  appropriate  scales  and  on  relevant  locations,  and 
their  integration  into  sustainable  managed  landscapes  can  attenuate  these  adverse 
impacts, and  even deliver co-benefits  when established on  degraded lands or as  part  of 
ecological connectivity. A recent JRC report158 on the use of woody biomass for energy 
production in the EU highlights synergies and trade-offs between bioenergy production, 
climate change mitigation and biodiversity (see section 10.6.2 below for more details). 

The  SRCCL  also  highlights  the  mitigation  and  adaptation  potential  of  various  options 
throughout  the  food  system,  from  production  to  consumption,  including  food  loss  and 
waste.  These  options  include  sustainable  intensification,  in  a  land  sparing  logic,  or  the 
expansion  of  extensive  food  systems,  in  a  land  sharing  logic.  In  both  cases,  dietary 

155

 IUCN. 

(2020). 

IUCN  Global 

Standard 

for  Nature-based 

Solutions: 

First 

edition. 

https://doi.org/10.2305/IUCN.CH.2020.08.en  
156 Shukla,  P.  R.,  Skea,  J.,  Calvo  Buendia,  E.,  Masson-Delmotte,  V.,  Pörtner,  H.  O.,  Roberts,  D.  C.,  …  Van 
Diemen,  R.  (2019).  IPCC,  2019:  Climate  Change  and  Land:  an  IPCC  special  report  on  climate  change, 
desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes 
in terrestrial ecosystems. http://www.ipcc.ch/srccl 
157  IPBES 
(2019):  Global  assessment  report  on  biodiversity  and  ecosystem  services  of  the 
Intergovernmental  Science-Policy  Platform  on  Biodiversity  and  Ecosystem  Services.  E.  S.  Brondizio,  J. 
Settele,  S.  Díaz,  and  H.  T.  Ngo  (editors).  IPBES  secretariat,  Bonn,  Germany.  https://ipbes.net/global-
assessment  
158  Camia  et  al. 
(https://europa.eu/!Bn46df) 

(2021),  “The  use  of  woody  biomass 

for  energy  production 

in  the  EU” 

99 

 
 
                                                 
changes  (see  10.6.4)  favouring  plant-based  food 159 could  improve  nutrition  and  food 
safety, while also freeing large amounts of land that can be devoted to other uses, more in 
favour of mitigation, adaptation and biodiversity.  

These results at the global level also apply at the European level, where a growing body 
of evidence  underlines the potential  for mitigation, adaptation and biodiversity  of land-
based  options,  following  in  particular  the  impulse  of  the  European  Commission160.  A 
recent  analysis  of  EU-funded  projects  of  nature-based  solutions  for  climate  mitigation 
identifies opportunity to scale-up such options for land and forest management, wetland 
restoration and urban greening161.  To be robust and resilient, the design of nature-based 
solutions  has  to  address  jointly  the  challenges  of  climate  change  and  biodiversity  loss 
while also considering other sustainable goals162.  

Regarding  forests,  the  apparent  trade-offs  between  maximising  carbon  stocks  and 
maximising  carbon  removals  are  at  the  origin  of  ongoing  debates  about  optimum 
management  strategies  to  achieve  climate  change  mitigation  in  forests.  Some  studies 
stress  the  need  to  increase  forest  carbon  sequestration,  e.g.  up  to  1200 MtCO2e/yr163, 
highlighting not just above ground biomass carbon stocks but also the increased carbon 
stock  in  soils,  improved  resilience  of  natural  forests  to  climatic  hazards  and  high 
biodiversity  benefits.  Other  studies164 highlight  the  saturation  of  the  removal  capacity, 
the  issues  of  adaptation  in  the  face  of  increased  risks  of  natural  disturbance,  and  bio-
economy  issues,  and  promote  other  models,  based  on  a  balanced  combination  of 
increased carbon storage in forests and wood products, adaptive forest management and 
wood-based substitution. Such improvements in EU forest management could double the 
forest  management  climate  mitigation  potential  by  2050 165 ,  up  to  -440 MtCO2e/yr. 
Although  forest  restoration  aims  to  achieve  multiple  benefits  other  than  climate 
mitigation166,  recent  analysis  suggests  that  under  current  climate  conditions,  restoring 

of 

for 

Analysis 

solutions 

EU-funded 

climate  mitigation: 

159 Willett, W., Rockström, J., Loken, B., Springmann, M., Lang, T., Vermeulen, S., … Murray, C. J. L. (2019). 
Food in the Anthropocene: The EAT–Lancet Commission on healthy diets from sustainable food systems. 
The Lancet, 393(10170), 447–492. https://doi.org/10.1016/S0140-6736(18)31788-4  
160 Faivre, N., Fritz, M., Freitas, T., de Boissezon, B., & Vandewoestijne, S. (2017). Nature-Based Solutions 
in  the  EU:  Innovating  with  nature  to  address  social,  economic  and  environmental  challenges. 
Environmental Research, 159, 509–518. https://doi.org/10.1016/j.envres.2017.08.032  
161 Wild, T., Freitas, T., Vandewoestijne, S., Bulkeley, H., Naumann, S., Vojinovic, Z., … Whiteoak, K. (2020). 
Nature-based 
projects. 
https://doi.org/10.2777/236007  
162 Seddon,  N.,  Smith,  A.,  Smith,  P.,  Key,  I.,  Chausson,  A.,  Girardin,  C.,  …  Turner,  B.  (2021).  Getting  the 
message  right  on  nature-based  solutions  to  climate  change.  Global  Change  Biology,  n/a(n/a). 
https://doi.org/10.1111/gcb.15513  
163 Roe,  S.,  Streck,  C.,  Obersteiner,  M.,  Frank,  S.,  Griscom,  B.,  Drouet,  L.,  …  Lawrence,  D.  (2019). 
Contribution  of  the 
land  sector  to  a  1.5  °C  world.  Nature  Climate  Change,  9(11),  817–828. 
https://doi.org/10.1038/s41558-019-0591-9  
Based on Griscom, B. W., Adams, J., Ellis, P. W., Houghton, R. A., Lomax, G., Miteva, D. A., … Fargione, J. 
(2017).  Natural  climate  solutions.  Proceedings  of  the  National  Academy  of  Sciences,  201710465. 
https://doi.org/10.1073/pnas.1710465114 
164 Verkerk,  P.  J.,  Costanza,  R.,  Hetemäki,  L.,  Kubiszewski,  I.,  Leskinen,  P.,  Nabuurs,  G.  J.,  …  Palahí,  M. 
(2020).  Climate-Smart  Forestry:  The  missing 
link.  Forest  Policy  and  Economics,  115,  102164. 
https://doi.org/10.1016/j.forpol.2020.102164  
165 Nabuurs, G.-J., Delacote, P., Ellison, D., Hanewinkel, M., Hetemäki, L., & Lindner, M. (2017). By 2050 
the Mitigation Effects of EU Forests Could Nearly Double through Climate Smart Forestry. Forests, 8(12), 
484. https://doi.org/10.3390/f8120484  
166 Borrelli,  P.,  Panagos,  P.,  &  Wuepper,  D.  (2020).  Positive  cascading  effect  of  restoring  forests. 
International 
102. 
Soil 
https://doi.org/10.1016/j.iswcr.2019.12.002 

Conservation 

Research, 

Water 

8(1), 

and 

100 

 
 
                                                 
global  tree  cover  to  900  Mha  could  store  some  200 Gt  of  carbon  at  full  maturity167. 
Concerns  have  nevertheless  also  been  raised  that  such  potential  relies  on  plantation 
forests,  generating  monocultures  with  little  biodiversity  value  and  degradation  of  good 
conservation  status  of  habitats  and  species,  while  evidence  that  such  systems  can 
contribute to the long-term storage of carbon is still limited168. 

Regarding  peatlands,  a  large  mitigation  potential  lies  in  stopping  new  drainage  and 
rewetting the  lands that  have  been  artificially drained, and which  are estimated to emit 
around 220 MtCO2e/yr in the EU169. Rewetting peatlands can potentially protect existing 
and  remaining  carbon  stocks  in  organic  soils,  sequester  carbon  as  the  degraded  land 
recovers, and help to improve water quality, protect against flooding, provide habitats for 
biodiversity  restoration,  and  can  still  be  used  for  production  of  biomass  (or 
‘paludiculture’),  

A  large  body  of  research  has  also  explored  options  for  improving  the  sustainability  of 
European  agriculture,  highlighting  three-fold  solutions  in  terms  of  climate  action, 
biodiversity  and  food  security  (see  also  section  10.6.3  below).  Some  of  this  research, 
including those based on EcAMPA 3 and CAPRI modelling170, focuses on a sustainable 
intensification  of  agriculture  production,  in  a  land  sparing  logic.  On  the  crop  sector, 
various options can reduce the use of fertilisers, through legume cultivation or precision 
agriculture.  By  reducing  the  consumption and the loss of fertilisers, such measures  can 
contribute  to  reduce  both  GHG  emissions  and  nitrogen  pollution,  with  significant 
benefits  for  biodiversity,  particularly  in  soil  and  aquatic  environments.  Other  measures 
such  as  the  use  of  cover  crops,  the  fallowing  of  organic  soils,  are  practices  increasing 
carbon  sequestration  while  helping  reducing  soil  erosion,  and  delivering  biodiversity 
benefits. Other works, such as the Ten Years for Agroecology scenario171, are based on a 
more  extensive  food  system,  in  a  land  sharing  logic,  relying  on  the  generalisation  of 
organic  farming,  the  extension  of  agroecological  infrastructures,  including  agroforestry 
and  high  diversity  landscape  features172,  and  the  adoption  of  healthy  diet.  In  terms  of 
biodiversity,  these  options  can  contribute  significantly  to  the  recovery  of  biodiversity 
through the redeployment of food webs at all scales, from soil to landscape. Continuous 
soil cover through the development of intermediate crops can also ensure healthier soils 
and  water  body  status  to  be  achieved  simultaneously.    The  diversification  of  plant 
systems,  the  reconnection  of  crop  and  livestock  systems  and  the  improvement  of  soil 
health are also key aspects to increase the adaptation capacity of the agricultural sector to 

B: 

of 

the 

Royal 

Society 

Sciences, 

Biological 

375(1794), 

167 Bastin, J.-F., Finegold, Y., Garcia, C., Mollicone, D., Rezende, M., Routh, D., … Crowther, T. W. (2019). 
The global tree restoration potential. Science, 365(6448), 76–79. https://doi.org/10.1126/science.aax0848  
168 Seddon, N., Chausson, A., Berry, P., Girardin, C. A. J., Smith, A., & Turner, B. (2020). Understanding the 
value  and  limits  of  nature-based  solutions  to  climate  change  and  other  global  challenges.  Philosophical 
Transactions 
20190120. 
https://doi.org/10.1098/rstb.2019.0120 
169 Tanneberger, F., Appulo, L., Ewert, S., Lakner, S., Ó Brolcháin, N., Peters, J., & Wichtmann, W. (2021). 
The  Power  of  Nature‐Based  Solutions:  How  Peatlands  Can  Help  Us  to  Achieve  Key  EU  Sustainability 
Objectives. Advanced Sustainable Systems, 5(1), 2000146. https://doi.org/10.1002/adsu.202000146  
170  Pérez Domínguez I., Fellmann T., Witzke P., Weiss F., Hristov J., Himics M., Barreiro-Hurle J.,  Gómez 
Barbero M., Leip A., Economic assessment of GHG mitigation policy options for EU agriculture: A closer 
look at mitigation options and regional mitigation costs (EcAMPA 3), EUR 30164 EN, Publications Office of 
the European Union, Luxembourg, 2020, ISBN 978-92-76-17854-5, doi:10.2760/4668, JRC120355  
171 Poux, X., & Aubert, P.-M. (2018). Ten Years for Agroecology in Europe: A multifunctional agriculture for 
healthy  eating.  Findings  from  the  Ten  Years  For  Agroecology  (TYFA)  modelling  exercise.  Paris,  Iddri,  73, 
789–815.  Retrieved  from  https://www.iddri.org/en/publications-and-events/study/agroecological-europe-
2050-multifunctional-agriculture-healthy-eating  
172 These include, inter alia, buffer strips, rotational or non-rotational fallow land, hedges, non-productive 
trees, terrace walls, and ponds 

101 

 
 
                                                 
climate  change  impacts:  increased  water  stress,  emergence  of  new  parasites/diseases, 
irregular rainfall. 

10.6.2. A sustainable bioeconomy 

  Why are these synergies important? 

The  bioeconomy  sector  is  key  for  stepping  up  Europe’s  2030  climate  ambition173.  In 
particular,  the  land  sector  will  have  to  provide  food,  feed  and  materials  in  a  climate-
neutral  economy,  increasing  the  use  of  sustainably  produced  biomass  and  the  use  of 
durable  harvested  wood  products.  The  bioeconomy  is  one  of  the  seven  main  strategic 
building blocks to achieve the EU strategic long-term vision, as described in the “Clean 
Planet for all” communication174. This vision highlights the role of sustainable biomass 
in  a  net-zero  greenhouse  gas  emissions  economy,  as  provider  of  heat,  of  biofuels  and 
biogas, of bio-based products to substitute for carbon intensive materials, particularly in 
the  building  sector  and  in  biochemistry.  Regarding  the  sources  of  biomass,  the  vision 
takes  note  of  the  limited  potential  of  EU  forests  to  increase  biomass  production  in  a 
sustainable  way  and  the  risks  associated  to  biomass  imports,  in  particular  raising 
emissions  due  to  indirect  land  use  changes.  Instead,  the  increased  biomass  production 
need  to  come  from  a  combination  of  sources  from  agriculture,  animal  farming, 
the 
aquaculture  and  forestry  production,  while  ensuring 
enhancement  of    natural  sink.  The  main  source  of  increased  biomass  would  be 
agriculture, involving agroforestry techniques, the cultivation of abandoned land, and the 
conversion  of  land  currently  used  for  food-based  bio-fuels.  The  vision  highlights  the 
issue of land availability, and the preservation of natural resources as critical factors in 
ensuring  the  efficiency  and  the  sustainability  of  the  biomass-based  transition.  In  this 
perspective, the biomass extracted from aquatic and marine resources is considered as a 
way to relive the pressure on agricultural lands. 

the  maintenance  and 

Box 7  - Statistics on EU biomass 

Using  the  latest  available  data175 (2017  for  agriculture,  2015  for  forestry,  2011  for 
fisheries), the total supply of biomass in the EU27+UK amounted to approximately 
1218 Mtdm (tonnes of dry matter), mostly originating in the land-based sectors. 1141 
Mtdm were produced  domestically, 76 Mtdm are net imports and 32 Mtdm are net 
exports of biomass.  

The  major  sources  of  biomass  are:  (i)  agricultural  biomass  (791  Mtdm,  or  69%  of 
total  biomass  production;  net  imports:  50  Mtdm;  net  exports:  22  Mtdm);  (ii)  woody 
biomass (348 Mtdm, or 30% of total biomass production; net imports: 24 Mtdm; net 
exports 9 Mtdm), including primary (240 Mtdm, 69%) and secondary (91 tdm, 26%) 
sources of woody biomass, and post-consumer wood (17 tdm, 5%); (iii) seafood from 
capture fisheries and aquaculture (1.6 Mtdm or 0.1% of total biomass production; net 
imports of fish and seafood products were approximately 1.7 Mtdm).  

The total biomass use in the EU27+UK (including exports) amounted to 1218 Mtdm, 
of which feed and food was the most important category (588 Mtdm, 48% of biomass 
supply),  accounting  for  69%  of  the  total  agricultural  biomass  supply.  Biomaterials 

173 COM(2020)562 final, https://europa.eu/!uR93tq 
174 COM/2018/773 final, https://europa.eu/!VU93kN. 
175 Gurría,  P.,  et  al.,  (2020)  Biomass  flows  in  the  European  Union:  The  EU  Biomass  Flows  tool,  version 
2020,  EUR  30454  EN,  Publications  Office  of  the  European  Union,  Luxembourg,  ,  doi:10.2760/14342, 
JRC122379 https://datam.jrc.ec.europa.eu/datam/mashup/BIOMASS_FLOWS/index.html.  

102 

 
 
 
                                                 
(mostly solid wood products, followed by wood pulp) were the second most important 
category (220 Mtdm, 18% of biomass supply) and accounted for around 60 % of forest 
biomass. A significant amount of biomass is either lost or its uses are unknown (256 
Mtdm, 21% of biomass supply).  

When it comes in particular to assessing the role of the forest sector in mitigating climate 
change, it is important to take a “system-perspective” that balances two directly opposed 
mitigation  options:  increasing  carbon  stocks  (‘net  removals’)  in  forest  land  vs.  using 
wood for substituting other materials or energy sources. A recent brief by the European 
Commission’s Knowledge Centre for Bioeconomy176 provides some elements to qualify 
the  balance  between  carbon  storage  in  forest  land  and  material  substitution.  The  brief 
recognises  that decreasing harvests appears  as a  simple  and  direct approach to increase 
the net forest sink in the short-medium term (2030-2050). However, this strategy would 
have  negative  socio-economic  impacts  in  the  forest  sector,  would  likely  lead  to  a  net 
forest sink saturation in the medium-long term. Whether or not forest harvest and use of 
biomass is contributing to net reductions of atmospheric carbon depends on carbon losses 
during and following harvest, rates of forest re-growth, and the use of the harvested wood 
and the  carbon  retention in long-lasting or short-lived products  as well as the emission 
reductions  achieved  through  the  substitution  of  emission-intensive  products  with  wood 
products.  Studies  that  ignore  changes  in  forest  carbon  stocks,  ignore  changes  in  wood 
product  pools  or  ignore  changes  in  emissions  from  substitution  benefits  will  arrive  at 
diverging conclusions. The apparent trade-offs between maximising forest carbon stocks 
and  maximising  ecosystem  carbon  sinks  are  at  the  origin  of  ongoing  debates  about 
optimum management strategies to achieve negative emissions177.  

Increasing  harvest  would  make  more  wood  available  for  carbon  storage  in  Harvested 
Wood Products (HWP) and for material substitution in general. However, in the short to 
medium term, the potential additional benefits from HWP and material substitution will 
unlikely  fully  compensate  for  the  immediate  reduction  of  the  net  forest  sink  associated 
with the increased harvest.  

Increasing the forest net annual increment – or net annual forest growth – through forest 
management  and  new  forest  area,  is  therefore  crucial  to  align  the  forest  sector 
contribution  with  the  EU  goal  of  climate  neutrality  by  2050.  Economic  incentives  to 
trigger this enhancement – through better forest management and efficient use of biomass 
resources, especially from forests – will be a key driver. This extra increment can be used 
partly to reverse the current trend and projected decline in net forest sink, and partly to 
increase HWP and material substitution. A shift to wood products with higher service life 
and substitution benefits may also play an important role also in function of the circular 
economy. 

  What is the EU policy framework? 

LULUCF Regulation 

Contrary to the past legislative framework under the Kyoto Protocol, woody bioenergy is 
not  automatically  assumed  “carbon  neutral”  within  the  EU  climate  and  energy  policy 

176 Grassi, G., et al., (ibid) European Commission, 2021, JRC124374.  
177 Shukla,  P.  R.,  Skea,  J.,  Calvo  Buendia,  E.,  Masson-Delmotte,  V.,  Pörtner,  H.  O.,  Roberts,  D.  C.,  …  Van 
Diemen,  R.  (2019).  IPCC,  2019:  Climate  Change  and  Land:  an  IPCC  special  report  on  climate  change, 
desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes 
in terrestrial ecosystems. http://www.ipcc.ch/srccl. Chapter 4. Pages 4-65-67. 

103 

 
 
                                                 
framework for the period after 2020178. Through the LULUCF Regulation, the LULUCF 
sector now accounts the emissions (or removals) due to changes in forest carbon stocks 
and  removals  against  Member  State  accounts  and  targets,  and  consequently  biomass 
emissions  are  not  accounted  again  in  the  energy  sector  under  the  recast  Renewable 
Energy Directive. 

Recast Renewable Energy Directive (RED II) 179 

The  2018  Renewable  Energy  Directive  (RED  II)  extends  the  scope  of  the  EU 
sustainability criteria by covering not only biofuels but also biomass and biogas in heat 
and power.  

In  addition,  RED II  includes  a  new  set  of  risk-based  sustainability  criteria  for  forest 
biomass, in order to ensure that forest biomass is sourced from sustainably management 
forests and that impacts on forest carbon stock are tracked. More specifically, operators 
need  to  demonstrate  that  the  forest  biomass  used  is  subject  to  national  or  sub-national 
legislation ensuring the following: i) legal logging; ii) forest regeneration, iii) protection 
of  sensitive  areas,  iv)  minimization  of  harvesting  impacts  on  soil  quality  and 
biodiversity; and v) maintenance or strengthening of long-term forest productivity. If this 
cannot be shown, economic operators need to provide additional sustainability evidence 
through management systems at the forest sourcing area level.  

Furthermore,  the  new  sustainability  criteria  require  that  forest  biomass  is  sourced  only 
from  countries  that  (i)  are  a  Party  to  the  Paris  Agreement,  and  (ii)  have  Nationally 
Determined  Contributions (NDCs)  that account any changes in carbon stock associated 
with biomass harvest towards the national GHG reduction targets, or have national laws 
ensuring  that  the  reported  LULUCF-sector  emissions  do  not  exceed  removals.  If  these 
conditions are not met, economic operators need to provide additional evidence, through 
management systems, that forest carbon stocks and sinks are maintained or strengthened.  

RED II also contains a set of no-go areas for the sourcing of agriculture biomass. More 
specifically, to be considered as renewable, agriculture biomass shall not be made from 
raw  material  obtained  from  land  with  has,  in  or  after  January  2008,  i)  a  status  of  land 
with  high  biodiversity  value  (primary  forest  or  human-undisturbed  forests,  highly 
biodiverse  forest,  nationally  and  internationally  protected  areas,  highly  biodiverse 
grassland), or ii) a status of land with high-carbon stock (wetlands, continuously forested 
areas,  some  other  forests),  or  iii)  peatland  (except  without  drainage).  RED II  includes 
also  a  new  requirement  to  minimize  soil  quality  and  soil  carbon  impacts  that  could  be 
associated  to  the  harvesting  of  agricultural  waste  and  residues  for  advanced  biofuel 
production. Besides, the directive calls for Member States to take into consideration the 
biomass  cascading  principle  and  requires  large-scale  bio-electricity  generation  to  meet 
minimum  efficiency  standards  or  use  of  highly  efficient  combined  heat  and  power 
technology. 

RED II is also being reviewed in the context of the Fit for 55% package, and synergies 
between  the  various  LULUCF  approaches  and  the  RED  II  bioenergy  sustainability 
options can be identified. Indeed, approaches for strengthening the sustainability criteria 
may  be  complemented  by  the  biomass  emissions  reporting  and  accounting  under  the 

178 This is explained in details in the JRC report on the use of woody biomass for energy purposes in the 
EU mentioned above. 

179 Directive 2018/2001, https://europa.eu/!Jk96MM  

104 

 
 
                                                 
LULUCF  regulation,  which  are  needed  to  underpin  the  correct  working  of  the  RED  II 
and (therefore) ETS and ESR sector “zero-rating” of biomass emissions. In this respect, 
all biomass net emissions – whether categorised as sustainable within the scope of RED 
II or otherwise – should be reported against a target in the LULUCF regulatory scope, as 
a priority for the Fit for 55% review proposals. 

Moreover, considerations for restricting sourcing areas may well align with the LULUCF 
options  for  target  setting,  which  may  also  look  to  consider  highlighting  areas  of  high 
carbon stock. These could produce synergies of protecting forest stock (i.e. areas where 
harvest  would  risk  releasing  large  levels  of  CO2)  as  identified  in  the  JRC  analysis  of 
forest management pathways (see Figure 19 below). 

The ILUC Directive180 

In  2015  the  so-called  “ILUC  Directive”  addressed  Indirect  Land-Use  Change  (ILUC) 
emissions  associated  with  the  displacement  of  agricultural  production  resulting  from 
increased demand for crop-based biofuels. The directive places a 7% cap on crop-based 
biofuels that can count towards the RED target. Member States are still able to use (and 
import) fuels beyond the cap, but they do not count towards the targets for renewables. 
Average ILUC values are provided by MS for reporting purposes. 

RED II maintains the concept of a cap on crop-based feedstocks. The cap is determined 
by  consumption  levels  in  each  Member  State  in  2020  (with  1%  flexibility).  The 
maximum share cannot exceed 7%. RED 2 allows MS to set lower limits for crop-based 
biofuels, bioliquids or biomass fuels reducing downwards the overall compliance target. 
Moreover,  biofuels,  bioliquids  or  biomass  fuels  considered  high-ILUC  risk  are  first 
frozen at 2019 shares and gradually phased out between 2024 and 2030. 

The  2019  Commission  Delegated  Regulation 181 identifies  “high-ILUC  risk”  based  on 
land expansion of biofuel , bioliquids or biomass fuels feedstocks into high-carbon stock 
areas.  Conversely,  biofuels,  bioliquids  or  biomass  fuels  can  be  certified  as  “low-ILUC 
risk” if feedstocks used to produce them are: grown on abandoned or severely degraded 
land;  cultivated  using  duly  verifiable  measures  to  increase  productivity  beyond  the 
increases  which  would  be  already  achieved 
in  a  business-as-usual  scenario 
(additionality);  grown  by  independent  smallholders  on  plots  of  land  smaller  than  two 
hectares.  Upcoming  Commission  Implementing  Regulation  on  implementing  rules  for 
voluntary  schemes  under  RED  2  (to  be  adopted  in  2021)  will  also  cover  a  module  on 
Low ILUC certification. 

ETS 

The  accounting  convention  that  treats  biomass  combustion  in  the  LULUCF  sector  and 
not in the energy sector, leads to biomass considered as “zero-rated” being an abatement 
option that can lower the amount of EU allowances that need to be surrendered under the 
Emission Trade  Scheme182. However,  the ETS Monitoring and Reporting  Regulation183  
specifies that only biomass that complies with the requirements of the Renewable Energy 
Directive can be ‘zero-rated’. During ETS phase 3 (2013-2020) and in 2021, this means 
compliance  with  the  sustainability  criteria  from  RED I,  therefore  only  for  biofuels  and 

180 Directive (EU) 2015/1513 
181 Commission Delegated Regulation (EU) 2019/807 
182 Directive 2018/410 
183 Regulation 601/2012 during ETS phase 3, Regulation 2018/2066 from 1 January 2021, as amended by 
Regulation 2020/2085 

105 

 
 
                                                 
bioliquids. Indeed, there are no sustainability criteria in RED I for solid biomass, which 
is  therefore  always  ‘zero-rated’.  From  1  January  2022,  only  the  biomass  that  complies 
with  the  sustainability  criteria  and  GHG  emission  savings  from  RED II  will  be  zero-
rated.  This  will  apply  to  biofuels,  bioliquids  and  solid  biomass,  as  defined  in  RED II. 
Biomass that is not compliant with RED I (and, from 2022, with RED II) is regarded as 
fossil  fuel:  the  emissions  have  to  be  reported  and  allowances  have  to  be  surrendered. 
However,  if  an  installation  exclusively  uses  biomass  for  combustion,  then  that 
installation  will  be  wholly  excluded  from  the  ETS  and  its  compliance  obligations, 
regardless of the compliance with RED I or RED II criteria. 

State aid 

In the EU, bioenergy is promoted as a form of renewable energy. Governmental support 
for bioenergy may have the form of both a financial measure or a favourable regulatory 
framework. EU State aid rules allow Member States to support bioenergy under certain 
conditions. Bioenergy is promoted by other EU support policy tools including the Energy 
Taxation  Directive  (ETD)  and  various  EU  funding  programmes  such  as  research  and 
development funding, and rural development. 

Where public support for bioenergy falls under the category of State aid (in accordance 
with  Article  107  TFEU),  depending  on  the  type  of  measure,  it  can  be  allowed  on  the 
basis of different State aid rules or be exempted from State aid control. The most relevant 
State  aid  instrument 184  to  cover  such  support  are  the  Guidelines  on  State  aid  for 
environmental protection and energy (EEAG)185.  

The  EEAG,  adopted  in  2014  and  prolonged  until  end  of  2021,  lay  down  conditions, 
under which aid aimed at increasing the level of environmental protection – notably the 
GHG emissions reduction – to the level that would not have been achieved in the absence 
of  the  aid,  may  be  compatible  with  the  internal  market.  Under  the  EEAG,  biomass  is 
supported  as  a  renewable  energy  source  used  for  heating/cooling,  electricity  and 
transport, with the rationale to facilitate renewables to compete with less environmentally 
friendly  and  less  costly  forms  of  energy  source.  The  EEAG  attempt  to  address  market 
failures in the energy sector that prevent an optimal outcome in terms of environmental 
objectives, including the negative externality of greenhouse-gas emissions for as long as 
these are not priced in186.  

The revision of the initial Guidelines on State aid for environmental protection187 of 2009 
intended  to  allow  Member  States  to  support  renewable  energies  and  meet  the  EU 
renewables  objective,  while  encouraging  innovation  and  the  decrease  of  renewable 
energy  production  costs  (for  instance  by  requiring  the  organisation  of  competitive 
tenders). Stricter rules were introduced under the EEAG, particularly since the operating 
aid, which is essential to biomass, shifted from ‘Feed-in-Tariffs’ to ‘Feed-in-Premium’. 
Beneficiaries  selling  renewable  electricity  directly  in  the  markets  are  eligible  for  a 

184 Support  with  relation  to  biomass/bioenergy  projects  could  be  covered  also  under  the  General  Block 
Exemption  Regulation  (Commission  Regulation  (EU)  651/2014,  OJ  L  187,  26.6.2014,  p.  1);  the  EU 
Guidelines for State aid in the agricultural and forestry sectors and in rural areas (OJ C 204, 1.7.2014, p. 
1);  the  Agricultural  Block  Exemption  Regulation  (Commission  Regulation  (EU)  702/2014,  OJ  L  193, 
1.7.2014, p. 1); the RD&I Guidelines (OJ C 198 of 27.06.2014, p. 1) and the de general Minimis Regulation 
(Commission Regulation (EU) 1407/201, OJ L 352, 24.12.2013, p. 1). 
185 OJ C 200, 28.6.2014, p. 1.  
186 Zuidema,  L.  (2020).  State  aid  for  solid  biomass:  The  case  for  improved  scrutiny.  Retrieved  from 
European University Institute website: https://cadmus.eui.eu//handle/1814/68737 
187 OJ C 82, 1.4.2008, p.1.  

106 

 
 
 
                                                 
premium in addition to the market price, compensating only for the difference between 
the market price and the operating costs and being flexible enough to adjust to changes in 
costs as well as market developments.  

Operating  aid  may  be  granted  after  plant  depreciation  only  under  certain  conditions,  if 
the beneficiary can prove that the operating costs are still higher than the market price of 
the  energy  concerned,  eventually  if  the  use  of  fossil  fuels  as  an  input  is  economically 
more advantageous than the use of biomass in plants, which can operate with both types 
of  input.  However,  the  aid  must  be  strictly  limited  only  to  compensate  the  difference 
between the market price and the operating costs, eventually the difference in operating 
costs when using biomass compared to fossil fuels. In addition, a monitoring mechanism 
must be put in place, which will supervise that these conditions are respected. 

Moreover,  since  2017  aid  to  renewables  generating  electricity  is  to  be  granted  in  a 
competitive  bidding  process  on  the  basis  of  clear,  transparent  and  non-discriminatory 
criteria,  in  order  to  be  deemed  as  proportionate  and  not  distorting  competition  to  the 
extent contrary to the internal market. Biomass is also reflected among the exceptions to 
the  general  principle  of  technology  neutrality,  where  possible  distortions  on  the  raw 
material markets could occur due to the aid. 

The general assumption of EEAG is that renewables will become competitive with other 
energy sources between 2020 and 2030 and until then the aid will gradually phase out as 
technologies  mature.  For  instance,  no  operating  aid  may  be  granted  to  food-based 
biofuels  after  2020  (i.e.  after  2021  with  the  extension  of  the  EEAG).  In  any  case, 
Member  States  need  to  comply  with  the  applicable  sustainability  criteria  to  be  able  to 
support the production of biofuels and energy from biomass. 

The  Commission  has  recently  published  a  fitness  check  of  the  2012  State  aid 
modernisation  package 188 ,  an  inception  impact  assessment  for  the  revision  of  the 
guidelines and a public  targeted consultation189. This revision should reflect the policy 
objectives  of  the  European  Green  Deal 190 ,  supporting  a  cost-effective  transition  to 
climate  neutrality  by  2050,  and  facilitating  the  phasing  out  of  fossil  fuels,  in  particular 
those that are most polluting, ensuring a level-playing field in the internal market.  

The updated Bioeconomy Strategy191 

In  2018,  the  Commission  published  an  update  of  the  bioeconomy  strategy,  with 
strengthened links with the renewed Industrial Policy Strategy192, the Circular Economy 
Action  Plan 193  and  the  Communication  on  Accelerating  Clean  Energy  Innovation. 
Regarding  climate  action,  the  updated  bioeconomy  strategy  highlights  the  role  of 
sustainable and circular bioeconomy to achieve climate neutrality in the EU, and to help 
fulfil  the  goals  of  the  Paris  Agreement.  The  strategy  aims  to  increase  the  potential  to 
reduce  emissions  by  promoting  resource  efficient,  active  and  sustainable  primary 
production  practices  on  land  and  sea,  as  well  as  the  enhancement  of  the  capacity  of 
ecosystems  to  regulate  climate,  for  instance  through  the  deployment  of  carbon  farming 
innovations. The updated Bioeconomy Strategy has been supported in the context of the 

188 SWD (2020) 257 final 
189  https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12616-Revision-of-the-Energy-
and-Environmental-Aid-Guidelines-EEAG-  
190 COM (2019) 640 final 
191 COM (2018) 673 final and SWD (2018) 431 final.  
192 COM (2017) 479 final 
193 COM (2015) 614 final 

107 

 
 
                                                 
European Green Deal by the Council194, while 9 Member-States (AT, DE, ES, FI, FR, IE, 
IT, NL, LV) have elaborated national bioeconomy strategies.  

The  European  Green  Deal  communication195 confirms  the  cross-cutting  nature  of  the 
bioeconomy, which will also be relevant for two upcoming strategies: the Forest Strategy 
and  the  long  term  vision  for  rural  areas.  Climate-friendly  action  in  the  bioeconomy 
sectors  is  also  promoted  in  the  Horizon  Europe  Programme,  the  Circular  Economy 
Action  Plan  (see  below),  the  Regulatory  framework  for  biodegradable  and  bio-based 
plastics, and the blue economy. 

The new Circular Economy Action Plan196 

The  new  Circular  Economy  Action  Plan  enshrines  the  objective  of  supporting  the 
sustainable and circular bio-based sector through the implementation of the Bioeconomy 
Action Plan, including actions aiming to ensure the sustainability of renewable bio-based 
materials.  It  sets  out  the  agenda  of  interrelated  initiatives  to  establish  a  strong  and 
coherent  product  policy  framework  to  contribute  to  GHG  emission  reduction  in  key 
sectors. The Action Plan addresses reduced material use overall and stimulates the use of 
renewable  materials.  Dedicated  actions  are  also  considered  for  bio-based  plastics.  The 
Action  plan  includes  the  development  of  a  regulatory  framework  for  certification  of 
carbon removals, that can be nature-based or based on increased circularity, for instance 
through long-term storage in wood construction. This framework will be based on robust 
and  transparent  carbon  accounting  to  monitor  and  verify  the  authenticity  of  carbon 
removals. 

The Renovation Wave197 and other building-related policies 

The  Renovation  Wave  for  Europe  recognises  the  bioeconomy  as  one  of  the  areas  of 
intervention.  Circular  solutions,  the  use  and  reuse  of  sustainable  materials  and  the 
integration of nature-based solutions are presented as a pillar of sustainable renovation, 
while the use of bio-based products will be part of the 2050 roadmap for reducing whole 
life-cycle carbon emissions in buildings. A 2050 whole life-cycle performance roadmap 
will  be  developed  to  reduce  carbon  emissions  from  buildings  and  advancing  national 
benchmarking in Member States. 

Several  initiatives,  including  the  review  of  the  Construction  Product  Regulation198,  the 
climate change category of the Product Environmental Footprint (PEF) methodology199, 
and the initiative on substantiating green claims200 have been launched or are expected in 
order to obtain a comprehensive information of life-cycle environmental performance of 
buildings.  This  could  include  valuing  wood  products  as  a  natural  carbon  sink  in  the 
construction sector, taking account of the scientific developments. The development of a 
methodology  to  quantify  the  net  carbon  storage  of  wood  products,  building  on  the 
existing methodologies for measuring the embodied carbon (such as e.g. EN 15804) and 
the  biogenic  carbon  (i.e.  temporary  storage  function)  could  lead  to  harmonisation  of 
assessment  of  climate  impact  of  buildings  within  EU  regulatory  framework  and 

194 ST 14954/19 Council Conclusion, 29/11/2019 
195 COM (2019) 640 final 
196 COM (2020) 98 final 
197 COM (2020) 662 final 
198 https://ec.europa.eu/growth/sectors/construction/product-regulation/review_en 
199 https://eplca.jrc.ec.europa.eu/EnvironmentalFootprint.html 
200 https://ec.europa.eu/environment/eussd/smgp/initiative_on_green_claims.htm  

108 

 
 
                                                 
accelerating work  with standardisation organisations on climate resilience standards for 
buildings. 

The Biodiversity Strategy for 2030 

In order to ensure the land use sink can continue to strengthen and improve biomass for 
energy  use  in  the  EU  should  to  be  produced  sustainably,  and  environmental  impacts 
should  be  minimised.  The  EU  Biodiversity  Strategy  for  2030 201  contains  several 
commitments  related  to  biomass,  including  the  following:  minimise  the  use  of  whole 
trees  and  food  and  feed  crops  for  energy  production;  avoid  any  unsustainable 
intensification  of  forest  harvesting  for  bioenergy  purposes;  prioritise  renewable  energy 
solutions favourable to biodiversity. Besides, the Biodiversity Strategy proposes several 
limitations  to  the  production  of  biomass.  At  least  30%  of  the  EU’s  land  area  will  be 
legally  protected.  The  EU’s  primary  and  old-grown  forests  are  to  be  strictly  protected, 
while  also  stipulating  that  the  EU’s  actions  should  not  cause  deforestation  in  regions 
outside the EU’s border. The Biodiversity Strategy also anticipates a dedicated EU Forest 
Strategy in 2021 in line with the wider biodiversity and climate neutrality ambitions, and 
stresses  the  need  to  link  the  management  of  forests  for  biomass  to  biodiversity 
considerations.  

Sustainable finance 

Regarding sustainable finance policies, the Commission published on 21 April 2021 the 
text of the delegated act202 on the climate change mitigation and adaptation objectives of 
the  EU  Taxonomy  Regulation 203 ,  which  creates  a  classification  system  for 
environmentally  sustainable  economic  activities  (‘taxonomy’).  For  multiple  activities, 
including  forest  activities,  restoration  of  wetlands  and  electricity  generation  from 
bioenergy,  the  delegated  act  provides  two  sets  of  technical  screening  criteria  for  a 
substantial contribution to climate change mitigation and adaptation, respectively, while 
doing no significant harm to other environmental objectives.  

The  EU  Taxonomy  is  part  of  the  EU's  overall  efforts  to  reach  the  objectives  of  the 
European  Green  Deal  and  make  Europe  climate-neutral  by  2050.  There  are  some 
mandatory  disclosure  rules  defined  in  the  Taxonomy  Regulation  in  relation  with  the 
Non-Financial  Reporting  Directive 204  and  with  the  sustainable  finance  disclosure 
regulation205.  Companies  can  also  use  the  EU  taxonomy  voluntarily.  In  addition,  there 
are other EU policies that may refer to the Taxonomy Regulation. An important example 
is  the  use  of the  ‘do  no significant  harm’  principle  of  the  Taxonomy  Regulation  in  the 
Recovery  and  Resilience  Facility 206.  Here,  the  ‘do  no  significant  harm  principle’  is 
applied   within  the  meaning  of  Article  17  of  the  Taxonomy  Regulation  but  without 
requiring  the  use  of  the   delegated  acts  and  related  technical  screening  criteria 207 . 
Similarly,  for  the  period  of  2021-2027,  budget  expenditure  as  part  of  those  funds  will 
also need to respect the ‘do no significant harm’ principle within the meaning of Article 
17 of the Taxonomy Regulation but without requiring the use of the delegated acts and 
related  technical screening criteria.  

201 COM (2020) 380 final 
202 https://europa.eu/!Fv64fP  
203 Regulation (EU) 2020/852 
204 Directive  2014/95/EU,  named  after  revision  as  Corporate  Sustainability  Reporting  Directive,  see 
COM/2021/189 final. 
205 Regulation (EU) 2019/2088 
206 https://europa.eu/!jt78Jr  
207 See Commission technical guidance document C(2021) 1054 final. 

109 

 
 
                                                 
  What are the win-win actions? 

Bioenergy 

Responding  to  a  need  identified  in  the  EU  Biodiversity  Strategy  for  2030 208 ,  the 
Commission committed to publishing a report209 on the use of forest biomass for energy 
production.  Bioenergy  is  the  main  renewable  energy  source  in  the  EU  and  in  many 
Member States, accounting for over 10% of EU final energy consumption and about 60% 
of  renewable  energy  consumption.  An  objective  was  to  ascertain  if  synergies  could  be 
identified to inform the EU climate and energy policies governing the sustainable use of 
forest biomass for energy production and the accounting of associated carbon impacts.  

The report notes that EU legislation focuses the definition of environmentally sustainable 
bioenergy  on  biodiversity  conservation  and  climate  change  mitigation  (see  below  for 
more information on the policy framework), because bioenergy sits at the nexus of two 
of  the  main  environmental  crises  of  the  21st  century:  the  biodiversity  and  climate 
emergencies. Wood-based bioenergy has the potential to provide part of the solution to 
both crises, but only when biomass is produced sustainably. 

The  JRC  analysis  shows  an  increasing  overall  use  of  woody  biomass  in  the  EU  in  the 
past two decades (around 20% since 2000). Similarly, the subset of woody biomass used 
for  the  specific  purpose  of  energy  has  followed  an  increasing  trend  until  2013  (about 
87%  from  2000-2013),  after  which  the  growth  has  slowed.  According  to  the  JRC 
analysis,  wood-based  bioenergy  production  is,  to  a  large  extent,  based  on  secondary 
woody biomass (forest-based industry by-products and recovered post-consumer wood), 
which  makes  up  almost  half  of  the  reported  wood  use  (49%).  Nevertheless,  primary 
woody biomass (stemwood, treetops, branches, etc. harvested from forests) makes up at 
least 37% of the EU input mix of wood for energy production (and the remaining 14% is 
uncategorised in the reported statistics). Considerable inconsistencies in reported data are 
identified: it is estimated that in the EU, the amount of woody biomass used exceeds the 
total  amount  of  reported  as  sources  by  more  than  20%,  with  large  differences  among 
Member  States.  This  identified  gap  also  highlights  a  specific  need  to  improve  tracking 
and  reporting  of  a  crucial  climate  policy  resource,  and  the  report  identifies  also  Earth 
observation  (remote  sensing,  and  Copernicus  services)  as  a  suitable  and  potent  tool  to 
address this. 

The JRC report provides detailed assessments of a wide variety of pathways for biomass 
sourcing.  Summarised  in  Figure  19,  these  show,  on  the  one  hand,  that  it  is  indeed 
possible to highlight several pathways that can both reduce greenhouse gas emissions in 
the  short  term  while  not  damaging,  or  even  improving,  the  condition  of  forest 
ecosystems.  For  example,  afforestation  on  former  agricultural  land  with  mixed  species 
plantations or with naturally regenerating forests would enhance the terrestrial sink even 
before  producing  biomass  for  energy  and  thus  would  contribute  to  climate  change 
mitigation, while at the same time improving ecosystems’ conditions. 

On the other hand, several pathways are categorized negatively on both biodiversity and 
climate counts, and should be discouraged. In this respect, it can be highlighted that the 
conversion of natural (primary)  and old growth forests to plantations aiming to provide 

208 COM/2020/380 final, https://europa.eu/!PJ43Qg 
209 Camia A., Giuntoli, J., Jonsson, R., Robert, N., Cazzaniga, N.E., Jasinevičius, G., Avitabile, V., Grassi, G., 
Barredo,  J.I.,  Mubareka,  S.,  The  use  of  woody  biomass  for  energy  purposes  in  the  EU,  EUR  30548  EN, 
Publications  Office  of 
ISBN  978-92-76-27867-2, 
the  European  Union,  Luxembourg,  2021, 
doi:10.2760/831621, JRC122719, https://europa.eu/!Bn46df  

110 

 
 
                                                 
wood for bioenergy would be extremely negative for local biodiversity, and at the same 
time  it  would  provide  no  carbon  mitigation  in  the  short-medium  term.  Similar 
considerations are valid also for the conversion of naturally regenerating forests to high-
intensity  management  plantations:  the  impact  on  local  biodiversity  is  highly  negative 
while,  even  though  wood  production  might  increase,  the  benefits  in  terms  of  carbon 
mitigation are only accrued in the medium to long term. 

111 

 
 
 
 
Figure 19 – Qualitative assessment of the archetype pathways based on their climate and biodiversity impacts. Black 
symbols represent pathways referring to ‘logging residues removal’ intervention, yellow symbols refer to pathways for 
‘afforestation’, and blue symbols refer to ‘conversion to plantation’ interventions. Uncertainty ranges are placed 
where payback time for carbon emissions could not be placed within a single one of the already broadly defined levels. 
The position of the interventions within each sub-section is arbitrary. (Source: Camia A., Giuntoli, J., Jonsson, R., 
Robert, N., Cazzaniga, N.E., Jasinevičius, G., Avitabile, V., Grassi, G., Barredo, J.I., Mubareka, S., The use of woody 
biomass for energy purposes in the EU, EUR 30548 EN, Publications Office of the European Union, Luxembourg, 
2021, ISBN 978-92-76-27867-2, doi:10.2760/831621, JRC122719,  Fig. 42) 

112 

 
 
 
 
 
 
 
Box 8 – Biomass projections in 2030 and 2050 

According  to  the  analysis  underpinning  the  communication  “Stepping  up  Europe’s 
climate  ambition  for  2030” 210  and  previously  the  “a  Clean  Planet  for  all” 
communication 211,  bioenergy  use  is  projected  to  increase  in  a  limited  way  in  the 
coming  years.  In  the  period  after  2030,  bioenergy  demand  may  increase  more 
significantly  in  order  to  stabilise  the  electricity  grid,  replace  fossil  fuels  in  hard  to 
decarbonise sectors, and deliver negative emissions. The analysis shows this could be 
achieved without unintended environmental impacts.  

All  the  scenarios  analysed  rely  on  a  substantial  use  of  biomass  for  energy  with  a 
consumption of bioenergy by 2030 at around 150 Mtoe. By 2030, the use of biomass 
in the residential sector is expected to decrease slightly but the overall picture will not 
change  dramatically.  The  combination  of  feedstock  used  to  supply  the  demand  in 
bioenergy  by  2030  is  similar  to  today’s  needs  with  in  particular  biofuels  relying  on 
cereal  and  oil  crops.  In  all  the  scenarios,  more  than  93%  of  the  bioenergy  feedstock 
used in the EU economy is produced domestically in 2030. 

By  2050  the  use  of  biomass  in  the  residential  sector  is  expected  to  significantly 
decrease  in  all  scenarios.  The  power  sector  would  absorb  most  of  the  additional 
demand  in  bioenergy  in  all  scenarios,  with  more  than  a  doubling  of  the  bioenergy 
dedicated to the production of electricity. A significant share of the feedstock used to 
produce  this  bioenergy  is  coming  from  the  waste  sector  that  could  supply  about  100 
Mtoe of feedstock to the energy sector. The use of harvested stemwood stays at 2015 
level  in  all  scenarios  while  the  sustainable  extraction  of  forest  residues  increases 
strongly,  in  total  the  forest  sector  provides  60  to  65  Mtoe  of  wood  for  energy.  This 
increase implies an increase in primary production, and thus the residues, or otherwise, 
it  will  affect  negatively  the  material  sector.  Biogas  or  biofuels  produced  from  food 
crops will be very marginal in EU by 2050 but more agriculture residues are used for 
the  production  of  biogas  or  solid  biomass.  The  optimisation  of  the  sustainable 
exploitation of all these classical sources of biomass could supply just over 200 Mtoe 
of feedstock for bioenergy production to the EU economy. Fast growing energy crops 
will  provide  for  the  rest  of  needs  in  biomass.  Scenarios  vary  substantially  in  their 
demand for these new energy crops. Most of the demand is supplied via lignocellulosic 
grass  such  as  switchgrass  and  miscanthus  while  short  rotation  coppices,  poplar  and 
willow, provide only 20 to 25% of the demand in energy crops. 

Long-lived Harvested Wood Products 

Buildings  are  responsible  for  40%  of  EU  energy  consumption  and  36%  of  greenhouse 
gas  emissions  in  the  EU,  which  mainly  stem  from  construction,  usage,  renovation  and 
demolition212. They need to become less wasteful, less expensive and more sustainable. 
Scientific  evidence213 is  accumulating  to  show  that  the  construction  sector  can  even  be 

210 COM (2020) 562 final 
211 COM (2018) 773 
212 https://ec.europa.eu/info/news/focus-energy-efficiency-buildings-2020-feb-17_en 
213 Churkina,  G.,  Organschi,  A.,  Reyer,  C.  P.  O.,  Ruff,  A.,  Vinke,  K.,  Liu,  Z.,  …  Schellnhuber,  H.  J.  (2020). 
Buildings  as  a  global  carbon  sink.  Nature  Sustainability,  3(4),  269–276.  https://doi.org/10.1038/s41893-
019-0462-4.  Himes,  A.,  &  Busby,  G.  (2020).  Wood  buildings  as  a  climate  solution.  Developments  in  the 
Built  Environment,  100030.  https://doi.org/10.1016/j.dibe.2020.100030.  Pomponi,  F.,  Hart,  J.,  Arehart,  J. 
H.,  &  D’Amico,  B.  (2020).  Buildings  as  a  Global  Carbon  Sink?  A  Reality  Check  on  Feasibility  Limits.  One 
Earth, 3(2), 157–161. https://doi.org/10.1016/j.oneear.2020.07.018 

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turned from a carbon source into a carbon sink, if organic building materials like wood 
and smart technologies like artificial intelligence are applied214.  

The potential of EU forests to increase supply of wood for the EU construction sector is 
limited  and  raises  sustainability  issues,  particularly  with  regard  to  biodiversity  aspects. 
However,  several  barriers  could  be  lifted  to  increase  the  demand  of  wood  construction 
products and induce changes in the use of wood products in favour of longer-lasting uses. 
The positive climate mitigation effect of long-lasting wood products could be maximised 
by re-directing the uses from short-live uses such as energy. The whole value chain could 
gain in skills, including through the implementation of climate-oriented improvements in 
forest  management,  the  equipment  of  sawmills  to  better  handle  wood  of  lower  quality 
grade  or  from  broadleaves;  the  promotion  of  wood-based  buildings  design  and 
engineering; the facilitation of access to wood waste to promote its recovery and reuse.215 
The  climate  benefits  of  using  wood  construction  products,  compared  to  using  mineral-
based materials,  are computed  with heterogeneous methods,  so  that the results lack  the 
legitimacy that could convince customers.  

10.6.3. A sustainable agricultural sector 

  Why are these synergies important? 

In  2018,  the  agricultural  sector  emitted  487  million  tonnes  of  CO2eq  in  the  EU-28, 
corresponding to 12% of total EU GHG emissions216. This figure includes both non-CO2 
emissions  (e.g.  methane  from  livestock  digestion  processes,  manure  management  and 
rice cultivation; nitrous oxide from the use of organic and mineral nitrogen fertilisers and 
from  manure  management),  and  LULUCF  CO2  emissions  from  agricultural  soils  and 
biomass, as a result of land management activities, ploughing, or conversion of land uses 
(e.g. from grassland to cropland) resulting in a mineralisation of the soil organic carbon 
to CO2 emitted in the atmosphere. It does not include CO2 emissions from fossil energy 
consumption (fossil energy is used in the form of fuels for agricultural machinery, as an 
energy source for heating greenhouses and livestock buildings, or for operating tools and 
other devices on the farm). 

Emissions  from  agriculture  have  consistently  decreased  for  two  decades  between  1990 
and  2010,  notably  due  to  declines  in  herds.  However,  the  decline  in  greenhouse  gas 
emissions  from  EU  agriculture  has  stagnated  in  recent  years,  and  even  risen  in  some 
Member  States  –  whether  from  livestock  or  soil  management.  Due  to  the  parallel 
decrease in  emissions in other  sectors  of  the  economy, the share of  total  EU emissions 
that can be attributed to the agricultural sector has increased.217  

In order to ensure that the agricultural sector contributes in an effective way to European 
Green Deal, it is important to ensure the transition towards a sustainable food system and 

214  State  of  the  Union  address  2020.  https://ec.europa.eu/info/strategy/strategic-planning/state-union-
addresses/state-union-2020_en  
215 A question in the Open Public Consultation on the LULUCF Review (see Annex 10.2.3) asked about the 
best policy approach to harness the substitution effect and carbon storage potential of long-lived wood 
products  and  bio-based  and  renewable  materials.  More  than  half  of  respondents  selected  support  for 
research and innovation into more sustainable production of woody biomass and more sustainable use of 
wood-based  materials,  products  and  by-products  (72%/153),  and  training  (e.g.,  for  land  managers, 
engineers, architects) and awareness raising (58%/122). Other effective policy options to incentivise the 
use of wood products are a carbon farming approach (46% of respondents) or tax incentives (45%). 
216 Agridata dashboard, https://europa.eu/!uW84RN 
217 SWD(2021) 115 final – Evaluation of the impact of the Common Agricultural Policy on climate change 
and greenhouse gas emissions 

114 

 
 
 
                                                 
to strengthen the efforts of European farmers to contribute to the EU’s climate objectives. 
‘Smarter’,  more  precise  and  more  sustainable  farming,  drawing  from  knowledge  and 
digital  technologies,  can  produce  jointly  more  private  goods  and  environmental  public 
goods with lower levels of input use and negative externalities; many of these approaches 
can  also  translate  into  economic  benefits  for  farmers,  especially  if  they  are  directly 
rewarded  for  environmental  and  climate  action  via  carbon  farming  approaches  (see 
Annex 10.7), creating new business opportunities for rural areas.218 

  What is the EU policy framework? 

The Common Agricultural Policy (CAP) will be instrumental in managing this transition. 
In June 2018 the Commission adopted the legislative proposals of the CAP for the period 
2021-2027219. The proposal has nine specific objectives, one of which is to increase the 
contribution  of  EU  agriculture  to  climate  change  mitigation  and  adaptation.  To  reach 
these  objectives,  the  future  legislation  requires  each  Member  State  to  draw  up  a  single 
CAP  strategic  plan.  The  Commission  Staff  Working  Document  ‘Analysis  of  links 
between  CAP  Reform  and  Green  Deal’ 220  lists  the  key  features  related  to  the 
environment and climate in the CAP proposal, and concludes that the proposal could be 
up to the task of delivering the Green Deal objectives, but this also depends on whether 
the European Parliament and the Council maintain this ambition and strengthen some of 
its elements in the current co-legislative process221. 

  What are the win-win actions? 

Agriculture can mitigate climate change not only by reducing GHG emissions but also by 
increasing removals through the sequestration of carbon in soils, by supplying bio-based 
materials to replace fossil-based ones, and by producing renewable energy.  

In  December  2020,  the  Commission  provided  each  Member  State  with  tailor-made 
recommendations  to  assist  in  the  drafting  of  the  national  CAP  strategic  plans222.  The 
recommendations  identified  the  key  areas  on  which  each  EU  country  should  focus  to 
ensure  the  achievement  of  the  nine  CAP  specific  objectives,  which  include  climate 
change  adaptation  and  mitigation.  To  provide  an  overview  of  promising  climate 
mitigation  actions  in  the  agricultural  sector,  Table  14  summarises  the  relevant 
recommendations per Member State. 

218 COM(2020) 846 final, Recommendations to the Member States as regards their strategic plan for the 
Common Agricultural Policy, https://europa.eu/!yg49tp  
219 COM(2018) 392 final (https://europa.eu/!cy47Kc) 
220  SWD(2020)  93 
https://europa.eu/!vt78Pp 
221 Factsheet « Working with Parliament and Council to make the CAP reform fit for the European Green 
Deal”, November 2020, https://europa.eu/!ju99cJ  
222 https://europa.eu/!Tp83cR  

the  Green  Deal”, 

final  “Analysis  of 

the  CAP  and 

links  between 

the 

115 

 
 
 
 
                                                 
Climate mitigation measures in Commission’s CAP recommendation 

Austria 

Belgium 

Bulgaria 

Croatia 

Cyprus 

Czechia 

Improve the health of agricultural soil and its capacity for storing carbon by supporting appropriate management practices  
Foster climate change mitigation in particular by reducing the impact on the climate from livestock farming 
Fostering sustainable forest management, enhancing multi-functionality, forest protection and restoration of forest ecosystems 
Reduce nutrient losses in areas with high nitrate figures 
Promote the use of woody biomass for long-living materials, namely in the building sector 
Reducing non-CO2 emissions from the livestock sector and soil fertilisation and maintaining and improving the carbon storage capacity by 
supporting grassland maintenance and conservation/zero tillage via carbon farming approaches and the shift to a bio-based and circular 
economy 
Contributing to the EU Green Deal target to reduce nutrient losses (of both nitrates and phosphorus) 
Fostering  sustainable  forest  management  and  afforestation,  enhancing  multifunctionality,  forest  protection  and  restoration  of  forests 
ecosystems 
Addressing  the  increasing  trends  of  non-CO2  greenhouse  gas  emissions  and  ammonia  from  soils,  notably  brought  about  by  increased 
fertilisation. 
Reducing  air  pollution  and  non-CO2  greenhouse  gas  emissions  by  improving  manure  management    and  by  using  manure  for  the 
sustainable production of biogas 
Fostering a sustainable management of forestry land and afforestation, enhancing multi-functionality, forest protection and restoration of 
forests ecosystems 
Support for management practices that increase the carbon uptake of forests and grasslands (carbon farming) and reduce emissions from 
enteric  fermentation,  as  well  as  investments  in  energy  efficiency  and  renewable  energy  production,  and  the  promotion  of  carbon 
assessment tools 
Contribute to the EU Green Deal target on nutrient losses by improving the application of fertilisers 
Increasing the sustainable production of renewable energy from agricultural waste and by-products, solar and wind energy 
Contribute to the EU Green Deal target to reduce nutrient losses, while increasing soil organic matter and reducing soil erosion 
Improving feed and manure management and investing in anaerobic digestion, supporting carbon sequestration by the farming and forest 
sectors;  promoting  on-farm  GHG  emissions  assessment  tools  to  help  lower  environmental  footprint;  supporting  investments  in 
afforestation/reforestation and forest protection (from fires, pests and diseases); reducing nitrogen excess 
Enhancing multifunctional and sustainable forest management, forest protection and restoration of forests ecosystems 
Supporting practices to improve soil management. Enteric fermentation of livestock should be addressed by adopting low emission feeding 
strategies.  Integrated  land  use  systems  such  as  agroforestry  and  carbon  farming  approaches  to  increase  carbon  sequestration  should  be 

116 

 
 
 
 
promoted. Also, efforts to reduce energy reliance of agricultural sector should be strengthened 
Promoting the development of agricultural practices that limit substantially NH3 emissions and that improve the management of nitrogen 
fertilizers and organic manures 
Contributing  to  climate  change  mitigation  and  adaptation  in  forests  by  applying  sustainable  forest  management  adapted  to  current  and 
projected climate change impacts 
Reducing  greenhouse  gas  emissions,  in  particular  from  enteric  fermentation  and  manure.  Measures  could  target  improved  feed 
management. Encourage carbon farming and improve management practises for carbon-rich soils and peatlands in order to enhance the 
current carbon sinks and reduce carbon losses. Consider rewetting of peatlands. 
Contribute to the EU Green Deal target on reducing nutrient losses and address the impact of intensive farming on water quality and air 
emissions. 
Increase sustainability in production and use of energy along the food supply chain. 
Fostering  sustainable  forest  management  and  afforestation,  enhancing  multifunctionality,  forest  protection  and  restoration  of  forest 
ecosystems. 
Ensure improvement in nutrient management 
Reduce GHG emissions from enteric fermentation in farmed livestock 
Ensure adequate protection of Estonian peatlands – including through effective design of related conditionality elements and support for 
carbon farming. Rewetting may also be appropriate in some cases. 
Encourage the timely regeneration of harvested forest, in such a way as to maximise long-term carbon capture 
Encourage effective management of semi-natural grasslands 
Promoting climate change mitigation: special focus should be on forests and carbon-rich soils (peatland and cropland), in order to enhance 
the  current  carbon  sinks  and  reducing  greenhouse  gas  emissions.  Further  attention  is  also  needed  for  reducing  methane  emissions,  for 
example, by promoting biogas production. 
Increasing nutrient use efficiency 
Fostering sustainable forest management, enhancing multifunctionality, forest protection and restoration of forests ecosystems 
Strengthening  efforts  to  reduce  GHG  emissions,  to  improve  energy  efficiency,  to  foster  renewable  energy  production  and  to  reduce 
ammonia emissions 
Halting the decline and degradation of permanent grasslands, and remunerating the protection of these carbon stocks and the enhancement 
of carbon removals as a key carbon farming action 
Fostering uptake of farming practices to reduce nutrient pollution from fertiliser use and nitrogen surplus 
Foster  climate  change  mitigation  by  promoting  less  intensive  management  of  arable  land  to  increase  carbon  sequestration  and  of 
permanent  grassland  for  carbon  storage  as  well  as  protection  of  carbon-rich  soils  through  rewetting  and  restoration  of  peatlands  and 
wetlands.  
Reduction of GHG emissions from agriculture, particularly methane emissions, should be promoted.  

Denmark 

Estonia 

Finland 

France 

Germany 

117 

 
Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Preservation of tree stocks and increase of carbon sinks in forests should be enhanced, as well as the multifunctional forest management 
that makes the most of all the ecological services provided by forests. 
Developing  the  Greek  bio-economy  by  increasing  the  contribution  of  agricultural  waste  and  by-products  in  the  production  of  total 
renewable energy 
Contributing to the EU Green Deal target on reducing nutrient losses and improving soil health 
Contributing to climate change mitigation by encouraging carbon sequestration though carbon farming, the sustainable management of the 
existing forests as well as the timely replacement of harvested or damaged forest 
Improve  the  efficiency  of  nutrient  management  by  applying  reduction  measures  ranging  from  low-emission  animal  housing  to  manure 
storage and fertilisation application techniques 
Promote  climate  mitigation  practices,  for  instance  by  designing  carbon  farming  approaches  to  remunerate  carbon  sequestration, 
afforestation,  incentivising  soil  carbon  sequestration  and  the reduction  of  soil erosion  (e.g.  catch  and  cover  crops), improving  feed  and 
manure management to decrease methane emissions 
Ensure  a  widespread  improvement  in  nutrient  management  through  optimised  fertilisation  (and  potentially  limited  fertilisation  in  some 
cases), improved manure management and a wider transition to precision farming.  
Encourage improvements to the efficiency of enteric fermentation in farmed livestock 
Halt  the  deterioration  of  Irish  peatlands  and  encourage  their  restoration  –  including  through  appropriate  design  of  elements  of 
conditionality, and potentially through funded schemes for carbon farming and more extensive grazing. 
Step up efforts to encourage tree-planting in various configurations – including agro-forestry systems 
Improve the conservation status of grasslands and heathlands. 
Increasing  the  sustainability  of  production,  while  mitigating  climate  change  and  reducing  GHG  and  air pollutant  emissions,  through an 
appropriate blend of voluntary interventions and obligations such as supporting practices leading to more efficient input use (in particular 
harnessing  the  potential  of  carbon  farming,  precision  farming,  low  input  and  agro-ecological  methods),  adopting  low  emission  feeding 
strategies,  improving  manure  management,  increasing  the  use  of  energy  from  renewable  sources,  improving  the  management  of 
agricultural residues, grassland and forest areas and their valorisation as a carbon sink 
To mitigate and adapt to climate change, Latvia should address primarily nutrient management, sustainable crop rotations, the protection 
and, if appropriate, restoration of peatlands and wetlands as well as improved drainage systems 
Ensuring  improvement  in  nutrient  management  through  the  application  of  tailored  emission  reduction  measures  such  as  the  manure 
management systems and precision farming 
Fostering sustainable forest management and promoting the efficient use of biomass, enhancing multi-functionality of forest, promoting 
forest protection and restoration of forests ecosystems 
Reducing agricultural emissions of greenhouse gases by fostering climatefriendly farming methods, with a particular focus on the livestock 
sector, nutrient management, peatlands and carbon-rich soils, and promoting the production of on-farm renewable energy 
Reducing pressure from the agricultural sector on natural resources by cutting ammonia emissions, increasing soil organic carbon content, 

118 

 
better nutrient management and increasing nutrient use efficiency 
Ensuring resilient and sustainable forest management and promote the efficient use of biomass 

Luxembourg  Reducing non-CO2 emissions from the livestock sector and soil fertilisation, and maintaining and improving the carbon storage capacity of 
forests and permanent grasslands. In this regard, carbon farming approaches could be designed to remunerate carbon sequestration or the 
protection of existing carbon storage in forests and grassland 
Enhancing multifunctional and sustainable forest management, protection and restoration of forests ecosystems 
Improving the overall carbon farming capacity and reversing the trend in emissions from cropland, supporting the reintroduction of local 
breeds  and  crop  varieties  that  are  more resilient in  drier conditions,  promoting  afforestation,  improving  energy  efficiency  and fostering 
renewable energy production 

Malta 

Netherlands  Reducing  non-CO2  emissions  from  the  livestock  sector  and  soil  fertilisation,  and  improving  the  carbon  storage  capacity  by  supporting 

peatland/wetland restoration via carbon farming approaches and the shift to a bio-based and circular economy 
Foster  sustainable  forest  management  and  afforestation,  enhancing  multifunctionality,  forest  protection  and  restoration  of  forests 
ecosystems 
Reducing emissions related to fertilizer use on soils and avoiding carbon release from organic soils, including peatlands 
better livestock management (ruminants), especially by adapting feeding strategies so that to reduce emissions from enteric fermentation 
The role of forest in carbon removal must also be improved through sustainable forest management, enhanced multifunctionality, a greater 
reliance on agro-forestry, afforestation and improved forest resilience to climate change. 
Strengthen efforts on climate change mitigation by promoting precision farming and on-farm GHG assessment tools 
Incentivise  governance  measures  for  resilient  and  sustainable  forest  management,  addressing  the  atomisation  of  privately  owned  forest 
land. Enhanced governance should promote active forest management more consistently across forested landscapes. 
Improving  nutrient  management,  as  well  as  soil  protection  and  water  management,  by  supporting  appropriate  farming  practices, 
fertilisation techniques (including precision farming), longer and more diverse crop rotations, agro-ecological practices 
Fostering sustainable forest management and afforestation, enhancing multifunctionality and the role of forests as carbon sink, protecting 
forests and restoring forests ecosystems 
Keeping low levels of greenhouse gas and ammonia emissions from agriculture by supporting appropriate farming practices and systems – 
e.g. precision farming, as well as investments needed to apply them. Such actions are required particularly on livestock farms to decrease 
emissions from manure and enteric fermentation 
Reducing  greenhouse  gas  emissions  from  agriculture,  in  particular  by  mitigating  the  emissions  from  soils  through  practices  leading  to 
more efficient use of inputs; and addressing the intensity of enteric emissions from ruminants by adopting low emission feeding strategies 
Maintaining and strengthening the carbon sink in existing forests and implementation of afforestation programmes 
Fostering sustainable forest management and enhancing multifunctionality, forest protection and restoration of forests ecosystems 
Fostering  sustainable  forest  management  of  forestry  land,  enhancing  multifunctionality,  forest  protection  and  restoration  of  forests 
ecosystems 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

119 

 
Encouraging  farming  practices  aimed  at  improving  nutrient  (nitrogen,  phosphorous,  potassium  etc.)  management,  such  as  reduced  and 
improved fertilisation (including through precision farming) and adequate livestock manure management 
Strengthen the long-term capacity of forests to act as carbon sinks, in particular by: investing in adequate forest preservation and harvested 
wood  products,  timely  replanting  of  forest,  taking  into  account  the  projected  climate  trends  for  appropriate  species  selection,  and 
implementing the capacities for wood processing 
Strengthening the efforts to reduce ammonia and methane emissions, in particular from the livestock sector, including by improving the 
livestock manure management 
Support improved crop rotations, precision farming, carbon farming and improvement of manure management. Particular attention needs 
to be paid on reducing GHG emissions from enteric fermentation 
Fostering sustainable forest management, enhancing multifunctionality, forest protection and restoration of forests 
Contribute to sustainable energy by increasing renewable energy production and use on farms 
Promote climate change mitigation and GHG emissions reduction by restoring, preserving, improving the carbon sinks on forest land (e.g. 
by fostering sustainable forest management) and carbon-rich soils (e.g. peatland and wetland conservation). 
Reduce methane emissions in line with the Methane Strategy (e.g. with biogas production) 
Foster sustainable forest management, enhancing multifunctionality, forest protection and restoration of forests ecosystems 

Spain 

Sweden 

Table 14 – Overview of climate-related CAP recommendations 

120 

 
10.6.4. A sustainable food system 

  Why are these synergies important? 

The  important  role  of  more  sustainable  and  balanced  diets  in  the  fight  against  climate 
change  was  highlighted  by  many  scientific  publications,  including  the  IPCC  Special 
Report  on  Climate  Change  and  Land 223.  In  its  Communication  “A  Clean  Planet  for 
All”224, the Commission has presented eight scenarios to decarbonise the economy. One 
of  the  scenarios,  aiming  at  a  climate-neutral  EU  by  2050,  includes  climate-friendly 
consumers’  choices. The modelling exercise showed that even moderate changes in the 
consumption of food of animal origin in line with the World Health Organization (WHO) 
recommendations can significantly reduce emissions from agricultural production. 

  What is the EU policy framework? 

The  EU  Farm  to  Fork  strategy 225 ,  published  in  May  2020,  aims  to  increase  the 
sustainability of the EU food system. This includes ensuring that our citizens get healthy, 
affordable and sustainable food, that we tackle climate change, protect the environment 
and  preserve  biodiversity.  The  strategy  sets  out  both  regulatory  and  non-regulatory 
initiatives, with the common agricultural and fisheries policies as key tools to support a 
just transition. In particular, a proposal for  a legislative framework for sustainable food 
systems will be put forward to support implementation of the strategy and development 
of sustainable food policy; the strategy includes many more actions that the Commission 
will  take  in  the  next  years,  including  a  Carbon  Farming  Initiative  to  promote  a  new 
business model for land-based carbon sequestration in rural areas (see Annex 10.7). 

  What are the win-win actions? 

223 Shukla,  P.  R.,  Skea,  J.,  Calvo  Buendia,  E.,  Masson-Delmotte,  V.,  Pörtner,  H.  O.,  Roberts,  D.  C.,  …  Van 
Diemen,  R.  (2019).  IPCC,  2019:  Climate  Change  and  Land:  an  IPCC  special  report  on  climate  change, 
desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes 
in terrestrial ecosystems. http://www.ipcc.ch/srccl 
224 COM (2018) 773 and the accompanying in-depth analysis 
225 COM/2020/381 final, https://europa.eu/!rt73kQ  

121 

 
 
 
 
                                                 
A  recent  scientific  publication226 concurs  with  the  Climate  Target  Plan,  that  a  switch 
towards  a  plant  based  diet  can  have  important  impacts  on  our  planetary  boundaries.  In 
addition to notable reductions in GHGs by the food system, the diet switch also invokes 
resource  trade-offs.  More  specifically,  comparing  with  a  business-as-usual  baseline  to 
2050, increasing blue water and cropland requirements are accompanied by considerable 
savings in permanent pasture and (in particular) food system GHG emissions (see Figure 
20). On the latter, a realistic plant-based diet scenario could generate global food-system 
GHG  reductions  of  9%  by  2050,  whilst  European  Union  food  system  based  emissions 
actually fall 21% below 2015 levels. In a scenario that combines the diet change with the 
elimination of all red meat consumption, global GHGs fall by up to 22% (or only 12% 
above 2015 world GHG emissions). 

Figure 20 – Global virtual commodity consumption by scenario (2015=100) Notes: B2015 = Baseline in 
2015; B2050 = Baseline projection in 2050 (business as usual scenario); FRD = Feasible Reference Diet; 
FRDRMZ = Feasible Reference Diet, Red Meat Zero. Source: Philippidis et al.,ibid. 

The Farm to Fork strategy recognises that alternatives (such as plant, microbial, marine 
and insect-based proteins and meat substitutes) to protein from livestock, with a potential 
to lower environmental footprint and a higher sustainability potential, should be come a 
key area of research. It also stresses that sustainable aquaculture has an important role to 
play to lower the carbon footprint of our food system, including by providing alternative 
proteins  (e.g.  algae)  for  food  and  feed.  Another  possible  approach  could  be  to  include 
aquaculture more explicitly in land use and land use change analyses, leading to a wider 
consideration  of  options  for  emission  reductions.  Other  studies  have  suggested  that 

226 George  Philippidis,  Hugo  Ferrer-Pérez,  Pilar  Gracia-de-Rentería,  Robert  M'barek,  Ana  Isabel  Sanjuán 
López, Eating your greens: a global sustainability assessment, Resources, Conservation and Recycling, 
Volume 168, 2021, 105460, ISSN 0921-3449, https://doi.org/10.1016/j.resconrec.2021.105460 

122 

 
 
                                                 
cultured  meat  in  place  of  that  from  animals  is  a  promising,  innovative  solution,  with  a 
potentially lower environmental footprint and a higher sustainability potential227. 

10.7. Carbon farming  

Currently there is no targeted policy tool to significantly incentivise carbon removals and 
the  protection  of  carbon  stocks  at  the  level  of  the  individual  land  manager.  In  this 
context, the Farm to Fork Strategy announced that in 2021 the Commission will launch 
a  carbon  farming  initiative228 to  promote  carbon  sequestration  as  new  green  business 
model.  This  new  business  model  shall  reward  climate-friendly  practices  either  via  the 
common agricultural policy (CAP) or other public or private initiatives linked to carbon 
markets,  thus  providing  individual  farmers  or  foresters  with  a  new  source  of  income. 
These  financial  incentives  can  also  help  to  achieve  the  targets  set  out  in  the  Forest 
Strategy, the Biodiversity Strategy and the Adaptation Strategy. 

The  study  “Technical  Guidance  Handbook  –  setting  up  and  implementing  result-based 
carbon farming mechanisms in the EU”229 explored key issues, challenges, trade-offs and 
design  options  to  develop  carbon  farming.  It  reviewed  existing  schemes  that  reward 
climate-related  benefits  in  five  promising  areas:  peatland  restoration  and  rewetting; 
agroforestry;  maintaining  and  enhancing  soil  organic  carbon  (SOC)  on  mineral  soils; 
managing  SOC  on  grasslands;  and  livestock  farm  carbon  audit.  It  also  explored  how  a 
widespread adoption of carbon farming can be triggered in the EU.  

The study stressed that a particularly promising option for Carbon Farming is improved 
management and restoration, rewetting and conservation of peatlands. Due to their role 
as  a  permanent  carbon  stock  and  ongoing  sink,  peatlands  have  a  key  function  in  the 
carbon  cycle.  Cropping  under  wet  conditions  (paludiculture)  can  also  increase  the 
beneficial  impact  of  boosting  in-field  carbon  sequestration  by  delivering  bio-material 
feedstocks.  Climate  action  in  peatland  can  immediately230 deliver  significant  emission 
reductions in a relatively small area and has great potential in terms of climate benefits 
and co-benefits. Additionally, the experience based on existing peatland initiatives shows 
that some essential elements of Carbon Farming schemes such as Monitoring, Reporting 
and  Verification  aspects  can  be  simpler  and  more  cost  efficient,  as  emission  factors  in 
peatlands  are  well  correlated  to  water  table  levels,  land  use  and  vegetation  type,  thus 
payments  can  rely  on  monitoring  of  proxy  indicators,  rather  than  on  direct  measuring. 
Such  green  business  model  has  a  great  potential  in  rural  areas,  particularly  in  regions 
hosting extensive peatlands that could also make use of other types of support231. 

The study concluded that result-based carbon farming can contribute significantly to the 
EU’s efforts to tackle climate change, bringing benefits in terms of carbon sequestration 
and  storage  and  other  co-benefits,  such  as  increased  bio-diversity  and  preservation  of 
eco-systems.  Pilot  initiatives  should  be  developed  at  local  or  regional  level  in  order  to 
gather experience to upscale carbon farming. This will enable improving design aspects, 

227 A  recent  life  cycle  assessment  of  cultivated  (cell-cultured)  meat,  conducted  by  CE  Delft,  found  that 
cultivated meat could cause up to 92% less greenhouse gas emissions, 93% less pollution, and use up to 
95%  less  land  and  78%  less  water.  This  is  compared  to  an  ambitious  scenario  for  conventional  animal 
agriculture  in  2030  –  where  farmers  manage  to  cut  the  carbon  footprint  of  meat  by  15%  (beef),  26% 
(pork)  and  53%  (chicken).  Compared  with  current  average  environmental  impacts,  the  benefits  of 
cultivated  meat  are  even  greater  (https://www.cedelft.eu/en/publications/2610/lca-of-cultivated-meat-
future-projections-for-different-scenarios).  
228 https://ec.europa.eu/clima/content/carbon-farming_en  
229 https://europa.eu/!VW49yw  
230 Once the necessary restoration investment, which can take some years, is completed. 
231 For example the Just Transition Fund, in line with the Territorial Just Transition Plans. 

123 

 
 
                                                 
in  particular  the  certification  of  carbon  removals,  and  expanding  stakeholders’ 
knowledge and understanding of the potential benefits for them. The study can serve as a 
guidance  to  help  private  actors  and  public  authorities  start  up  an  increasing  number  of 
carbon farming initiatives.  

Carbon  farming  can  be  promoted  via  EU  and  national  policies  and  private  initiatives. 
This new type of financial support will create a new source of income for land managers. 
Member States will be able to accelerate the roll out of carbon farming practices in the 
context of the Common Agricultural Policy (CAP); in the Recommendations on the CAP 
Strategic  Plans 232,  the  Commission  already  highlighted  the  measures  that  look  more 
promising  to  realise  the  mitigation  potential  in  each  Member  State  (see  Table  14  in 
Section  10.6.3  for  a  summary).  In  particular,  the  relevant  GAECs  under  the 
conditionality ensure a basic protection of existing carbon stocks, whereas eco-schemes 
and rural development interventions can encourage the enhancement of carbon removals 
beyond  conditionality.  CAP  instruments  can  furthermore  support  a  wide  range  of 
measures (for example advisory services, knowledge transfer and training actions, non-
productive  investments),  which  are  useful  to  incentivise  uptake  and  promote  the  early 
involvement  of  land  managers.  Carbon  farming  schemes  could  also  combine  funding 
through  CAP  support  and  carbon  removal  markets.  In  such  a  scenario,  CAP  support 
would constitute a fundamental source of financing to cover the upfront costs of setting 
up  a  carbon  farming  scheme,  whereas  land  managers  would  benefit  from  revenues 
produced  through  the  selling  of  carbon  certificates  on  the  markets.    Due  to  the  time 
needed to generate and  correctly measure carbon removals,  the different forms of CAP 
support  (incentives  and/or  compensation  of  income  losses  and  additional  costs)  will  be 
important in order to support the farmer and foresters in building up their carbon removal 
business.  A  further  avenue  for  public  funding  could  be  State  aid,  as  Member  States 
might  consider  interesting  to  support  carbon  farming  initiatives  through  pure  national 
financing.   

Carbon  farming  incentives  should  be  based  on  a  clear  calculation  methodology  of  the 
CO2  units  sequestered  or  protected  and  for  the  baseline;  a  solid  framework  for 
Monitoring, Reporting and Verification (MRV); reward and sanction mechanisms; rules 
on  governance.  In  this  regard,  of  particular  relevance  is  the  ongoing  development  of  a 
Carbon  Removal  Certification  (CRC)  mechanism 233 ,  which  will  establish  the 
regulatory  framework  for  the  certification  of  carbon  removals  based  on  robust  and 
transparent carbon accounting to monitor and verify the authenticity of carbon removals. 
Also in view of the earlier experience with lower-quality carbon credits under the Clean 
Development Mechanism, it will be essential to establish a credible governance system 
that can guarantee the additionality and permanence of land-based carbon removals. The 
Commission  plans  to  publish  a  Communication  setting  out  an  action  plan  for  both 
initiatives (the carbon farming initiative and the carbon removal certification mechanism) 
by the end of 2021234.  

232  Adopted  in  December  2020,  available  here:  https://ec.europa.eu/info/food-farming-fisheries/key-
policies/common-agricultural-policy/cap-strategic-plans_en#cap-strategic-plans-recommendations. 
233 Announced  by  the  Circular  Economy  Action  Plan,  the  Carbon  Removal  Certification  initiative  will 
deliver a legislative proposal to be adopted by 2023. 
234 https://ec.europa.eu/clima/news/commission-sets-carbon-farming-initiative-motion_en  

124 

 
 
 
 
 
                                                 
10.8. Monitoring technologies and data standardisation  

The current regulation provides considerable scope and choice to Member States, leading 
to a high degree of divergence and issues relating to quality assurance.  For instance, in 
2021 quantitative assessments will be carried out for the first time in a trial with Member 
States  and  the  EEA.  This  will  lead  to  definitive  guidance  on  how  to  best  assure  high 
quality  estimates  for  reported  emissions  and  removals  in  the  annual  GHG  inventories. 
Much of this improvement process is also related to the collection of enhanced activity 
data  and  appropriate  application  of  emission  factor  methods  or  tiers  (see  Box  3  below 
and Section 9). 

Box 9 – Core monitoring indicators  

  Activity data shows the area land use and change between uses235, within a 

Member State, year-to-year.  

o  These data are aggregated in the Common Reporting Format (CRF) tables 

reported to UNFCCC, Table 4.1. 

o  The accuracy of these emission estimates relies on quality of the 

geographical data collected, including the attribute data (such as how the 
area of land has been managed; used for arable crops, grazing, mowing of 
grass, fertilizer application, etc.) 

o  Depending on the stratification of land use categories applied by Member 

States, activity data can be directly measured through a variety on 
information systems, already available at national level for policies such 
as the CAP, biodiversity monitoring, forest fire monitoring.  
  The estimates of emissions/removals within each land category in turn relies of 
the accurate application of emission factors to each of these activity data land 
units.  

o  The upgrading of these estimates relies on the application of correct 

emission factors (broadly described as Tiers by the IPCC), and the full use 
of the carbon pools (required by the LULUCF Regulation). 

o  Work on improving emission factors has been achieved by Member States 
through experimental work, in some cases236 supported by the EU’s LIFE 
programme, and sharing of information through Commission Working 
Groups and seminars.    

  The individual geographically explicit estimates are then then statistically 
aggregated and included in CRF Table 4, to provide the core monitoring 
indicators, namely reported estimates at national level per land use and land 
use change category. 

235 While IPCC guidance provides a broad definition of the different land use categories, it lacks  explicit 
definitions  and  blurs  the  distinction  between  land  use  (the  function  of  the  land,  for  example  grazing 
livestock) and land cover (the observed nature, e.g. grasses). Land use definitions proposed in the future 
ISO standard on land use may better reflect the LULUCF universe of discourse:  "Total of arrangements, 
activities and inputs that people undertake in a certain land cover type to maintain it or produce change", 
see New Work Item Proposal for the development of Land Use Meta Language (19144-3) within ISO/TC 
211/WG 7 (Information communities) 
236 For  example,  LIFE  CROLIS  -  CROatian  Land  Information  System.  The  main  aim  of  the  LIFE  CROLIS 
project  is  to  develop  and  implement  a  harmonised  land  monitoring  data  model  that  enables  the 
integration and processing of Land Cover (LC), Land Use (LU) and land management data from different 
data sources, and its use for a variety of purposes. This will be the first multi-scale and multi-purpose land 
information monitoring system in Croatia. https://europa.eu/!ry48db  

125 

 
 
                                                 
The principle behind IPCC and UNFCCC monitoring is to make the best use of available 
datasets,  avoiding  the  need  to  duplicate  costly  data  collection.    Relevant  activity  data 
have  already  been  collected  using  a  variety  of  techniques  under  other,  related,  policy 
areas  for  a  significant  number  of  years.  Nevertheless,  a  step  up  in  terms  of  re-use  of 
available  data  and  introduction  of  new  data  collection  techniques,  and  streamlining  of 
data  collection  with  new  initiatives  such  as  restoration  targets,  removal  certification 
objectives  and  prioritisation  of  protection  carbon  sinks  provides  a  pathway  towards 
increasing estimate accuracy and policy effectiveness.  

10.8.1. Agricultural land 

For agricultural land falling under the scope of the CAP, the Member States are required 
to  establish  and  operate  an  Integrated  Administration  and  Control  System  (IACS)  to 
manage  and  control  CAP  payments.    IACS  consists  of  a  number  of  interconnected 
databases and IT systems that help national administrations to grant the correct payment 
to the right  beneficiary.  In this  system  geographically  explicit data is the  foundation  of 
the system  for the identification of all agricultural parcels in Member States (known  as 
the  Land  Parcel  Identification  System,  LPIS) 237  and  the  aid  application  system 
(developed  in  geo-aid  application 238 ,  since  2018  for  both  area-  and  animal-related 
payments). 

Much of this information is therefore based upon a combination of remote sensing data 
and  underpinned  by  specialised  Copernicus  services,  which  provide 
in-season 
information  to  farmers  to  ensure  compliance  with  conditionality  and  other  contracted 
supplementary payments.  

Figure  21  Example  interaction  of  the  GeoSpatial  Aid  Application  (GSAA)  concept  developed  under  the  CAP, 
combining  information  within  a  Natura  2000  zone  in  Rayanovtsi  (BG)  related  to  organic  soils  (histosols)  and 
wetlands.  Using  information  for  the  Bulgarian  Paying  Agency  (Agricultural  State  Fund  -  DFZ)  and  Bulgarian  Soil 

237 The LPIS is built on the basis of maps, particularly aerial or satellite ortho-images, as well as land registry documents and other data which provide information 

on a certain parcel.  

238 LPIS 2014/640 art 6,  GSAA 2014/809 art 17, basic act 2013/1306 art 70 

126 

 
 
 
                                                 
 
Research Institute, individual fields declared for CAP payments that match organic soils can be determined, together 
with  remote  sensing  information  on  the  land  use/land  cover.  This  approach  also  permits  also  an  assessment  of  the 
contribution of such soils to emissions per administrative unit, if needed for greenhouse gas estimates.  

The CAP (IACS) data clearly offers a strong synergy with objectives of climate action. 
The high degree of auditing, due to the high financial motivation, of CAP beneficiaries’  
claims also provides for a very strong base quality  for the data collected. These annual 
databases  remain  accessible  for  a  minimum  of  10  years.  This  removes  a  risk  of 
uncertainty with respect to the activity data collected.  

A majority of Member States have already started exploring the combined use of these 
data  for  the  purpose  of  climate  activity  data  reporting,  but  some  time  is  still  needed  to 
achieve  the  necessary  semantic  interoperability  between  the  local  IACS  and  generic 
IPCC concepts, and thereby enable reporting quality upscaling.  The exploration of IACS 
data  sharing  under  INSPIRE  has  been  carries  out  by  the  JRC  in.  Trials  to  explore  the 
specific  issues  related  to  IACS/LULUCF  interoperability  have  been  conducted  for  a 
limited  number  of  Member  State  systems.  This  work  will  be  continued  by  the  JRC239 
facilitating relevant IACS data sharing across the EU240,in the respect of the relevant EU 
legislation (data protection, establishment of specific infrastructures, including the recent 
High  Value  Data  set  ‘initiative’)241 and  taking  into  account  the  EU  proposals  of  the 
evolution data ecosystems (INSPIRE  and EU common data space).  

For agricultural land outside CAP, while some Member States do provide coverage, there 
is no legal obligation and some gaps exist. Nevertheless, the same tools, if extended and 
including  Artificial  Intelligence  (AI)  based  segmentation  and  mapping,  could  provide 
activity data, at least to a certain degree. Furthermore, and complementing targeted tools 
using Copernicus Sentinel data, additional information could be derived and gaps could 
be filled using land use/land cover Copernicus Pan European products242 coordinated by 
the European Environment Agency, for example with the future Corine Land Cover Plus 
(CLC+)  service,  for  which  a  specific  LULUCF  instance  is  being  developed  to  be 
available  by  2023.  An  existing  alternative  still  within  the  Copernicus  Land  Monitoring 
Service  (CLMS)  are  the  high  resolution  layers  produced  periodically  –  that  include 
grasslands,  tree  cover  and  an  emerging  layer  on  production  by  crop  product  –  or  the 
products  from  the  global  component  of  CLMS243 such  as  the  annual  Copernicus  global 
land cover product at 100m resolution (Figure 22). It is notable that Copernicus products 
– derived from a global satellite system as well as specially contracted services – cover 
all the EU including the outermost six French regions plus the Azores, Madeira and the 
Canary  Islands 244 .  Continued  development  of  these  and  improved  services,  for  the 
current  EU  geographic  coverage  including  outermost  regions,  will  be  of  high  strategic 
importance for LULUCF monitoring.  

239 Article    65  in  the  Horizontal  Regulation  of  the  new  CAP  which  foresees  explicit  data  keeping  and 
sharing 
240 The  overall  objective  of  the  ‘IACS  data  sharing  process’  is  to  ensure  discoverability,  efficient  access 
(single entry point) and effective re-use of spatial IACS data (interoperability and use cases) in a coherent 
policy environment. Consequently, the soil health use cases proposed in this AA allow to prototype, test 
and illustrate the importance of data sharing in the domains of agriculture, environment and climate as 
well as the benefits for the administration in their evaluation, monitoring and reporting duties (notably in 
the LULUCF context).  
241 Implementing act under preparation following article 13 of the Open data and PSI Directive 
242 https://land.copernicus.eu/pan-european  
243 Annual global land cover change maps: Global component of the Copernicus Land Monitoring Service 
(https://lcviewer.vito.be/about).  
244 It should be noted that EEA products for Outermost regions are available through a specific technical 
download service on demand. Furthermore the region of Saint-Martin (FR) is only covered by the Global 
component of the Copernicus Land Monitoring Service at 100m ground sampling distance.  

127 

 
                                                 
Figure  22  -  Copernicus  annual  global  land  cover  product:  this  global  100m  resolution  map  product,  derived  from 
PROBA-V satellite observations, is processed to ensure continuity with Copernicus Sentinel-2 observations. 

Specifically  for  the  Wetlands  land  category  (and  land  converted  to  wetlands),  the 
Commission has set out a two-year programme with the Joint Research Centre to develop 
remote  sensing-based  methods  to  provide  annual  monitoring  for  LULUCF  reporting 
requirements. This work will be completed by the beginning of 2023.  

A further project245 has been contracted by the Commission to create a system to report 
on  land  cover  change  within  Natura  2000  sites,  on  an  annual  basis,  with  a  focus  on 
grasslands  is  also  underway.  Activities  that  could  correspond  to  an  intensification 
(ploughing and mowing events), will be included in a series of environmental indicators. 
The  monitoring  technology  will  use  both  Sentinel  1  (SAR)  and  Sentinel  2  (optical) 
satellite sensors.  

While  remote  sensing  can  provide  many  pertinent  land  cover  and  land  use  parameters, 
soil  is  far  more  complex  to  observe.  The  EU’s  LUCAS  Soil 246  dataset  is  the  only 
harmonised data collection programme on soil organic carbon covering all EU MS. Data 
are  available  for  2009,  2015  and  2018  (2021  Q2).  LUCAS  Soil  2022  has  been 
specifically  adapted  to  provide  statistically  robust  assessments  of  soil  carbon  stocks  in 
croplands at NUTS2 level and grasslands and woodlands at NUTS0. A major adaptation 
has  been  an  increase  in  sampling  depth  to  30  cm  to  comply  with  IPCC  Reporting 
obligations.   

10.8.2. Forest 

Current  activity  data  collection  for  forest  lands  (and  conversion  to  and  from  forests, 
afforestation and  deforestation) relies  heavily on  static ground surveys of small sample 
plots, collected through periodic national forest inventories, usually on a 5 or 10yr basis. 
These inventories provide a range of statistical sample data designed to provide estimates 

245 Copernicus For Natura 2000, http://www.cop4n2k.eu/  
246 https://ec.europa.eu/jrc/en/publication/lucas-soil-largest-expandable-soil-dataset-europe-review  

128 

 
 
 
                                                 
on  a  range  of  parameters  (e.g.  forest  type  and  tree  species,  age  class  distribution,  dead 
wood, etc) at a national or regional level. 

The  relative  richness  of  the  statistics  means  that  most  Member  States  with  significant 
forest  cover  apply  relatively  sophisticated  methods  (Tier  2  or  3)  for  the  estimating  of 
GHG  emissions  and  removals  from  forests.  However,  a  number  of  limitations  still 
remain: the data are difficult to interpret on an annual basis; they are not well harmonised 
between  Member  States;  for  most 247  Member  States  these  do  not  fully  deliver 
geographically  explicit  datasets,  especially  for  afforestation  and  deforestation,  and 
impacts  of  pest,  drought  and  fire  disturbance;  and  extending  the  data  collection  (for 
example,  annualising  data  sampling  or  increasing  sampling  density)  time  intensive  and 
very costly.  

Fortunately, it becomes more apparent that, like for agricultural land, remote sensing data 
in  combination  with  the  rich  data  source  of  the  inventories  helps  address  these  issues. 
The European Commission Knowledge Centre on Earth Observation (KCEO) established 
in April 2021248, will facilitate the uptake of products and information from Copernicus 
to  support  EU  Policies  in  various  sectors  including  LULUCF.  Furthermore,  the 
Commission has reported249 on recommendations to better leverage the potential of earth 
observation  tools  by  integrating  the  traditional  inventory  approaches  to  create  mutually 
beneficial synergies. The report notes that remote sensing is a powerful tool able to plug 
information gaps, because of its synoptic view and the possibility to monitor large areas 
with  sufficient  frequency.  In  Europe,  the  report  concludes  that  Copernicus  provides  all 
the  necessary  tools  to  produce  the  required  information  on  forest  disturbances  such  as 
fires250. These tools include data from seven Sentinel satellites and different sensors and 
six different  services  producing standardised datasets on regional,  European and  global 
level integrating Sentinel satellite imagery and data from complementary sources. Such 
tools  are  moreover  used  for  applications  in  different  parts  of  the  world,  such  as  by  the 
European  Commission  for  monitoring  of  forest  cover  changes  in  the  humid  tropics,251 
and  by  forest  remote  sensing  services  from  Brazil,  Canada  and  the  US  to  deliver 
operational applications especially in the fields of fire monitoring and deforestation. 

Concretely,  the  use  of  combined  time  series  from  Sentinel-1  and  Sentinel-2  for  the 
detection, mapping and accounting of forests activities as well as land cover conversions 
is  proposed  as  the  way  forward.  The  application  of  future  datasets,  for  example  those 
provided  by  the  European  Environment  Agency  (EEA)  through  CLMS  high  resolution 
layers on the tree cover and forest type (available in 10m resolution for 2018 and 20m for 
the earlier reference years), should be pursued so far as is currently technically feasible. 
The role of future of Corine Land Cover Plus (CLC+), will also be crucial in respect of 
land  use  change  information.  This  information  should  complement  earth  observation 
based  monitoring  of  natural  disturbances  in  forests,  facilitating  the  separation  in  GHG 
inventory  reporting  between  managed  and  non-anthropogenic  land  cover  changes.  To 
help  address  forest  data  standardisation  and  access  to  EU  harmonised  data,  the  EEA  is 
also  supervising  the  development  of  the  Forest  Monitoring  Information  System  for 

247 Except  for  those  EU  MSs  producing  and  maintaining  their  inventories  using  a  census  approach, 
bottom-up, forest management plans (occasionally integrated with the LPIS) 
248 https://knowledge4policy.ec.europa.eu/earthobservation_en  
249

 European 

Commission, 

2020,  Monitoring 

of 

Forests 

through 

Remote 

Sensing, 

https://op.europa.eu/s/oKot  
250 See for example the European Forest Fire Information System (EFFIS) under the Copernicus EMS Early 
Warning and Monitoring services  http://emergency.copernicus.eu/  
251 C.  Vancutsem,  F.  Achrad,  J.-F.  Pekel,  G.  Vielledent,  S.  Carboni,  D.  Simonetti,  J.  Gallego,  L.  E.  O.  C. 
Aragao, R. Nasi, 2021, SCIENCE ADVANCES Vol. 7, no. 10, eabe1603, DOI: 10.1126/sciadv.abe1603  

129 

 
                                                 
Europe (FISE), which promises to help facilitate timely, standardised reporting on forests 
by Member States relevant to all Green Deal objectives. 

The nature protection commitments of the Biodiversity Strategy for 2030 highlights the 
need to define, map, monitor and strictly protect the EU’s remaining primary252 and old-
growth forests253. Intact forest ecosystems dominated by natural processes are rare in the 
EU  and  represent  only  around  2-3%  of  the  total  forest  area  in  the  EU254.  Despite  their 
small areal extent, these primary and old-growth forests are an irreplaceable part of the 
EU’s natural heritage, still playing a key role for biodiversity conservation and providing 
a wide array of other critical ecosystem services. As well as being characterised by high 
carbon  stock  per  hectare,  these  forests  should  continue  to  accumulate  carbon  –  despite 
their  maturity  –  in  dead  wood  and  soil  organic  carbon  pools,  while  being  resistant  to 
climate  hazards255 relative  to  plantation  forests.  Stricter  protection  of  these  forests  to 
avoid  disturbance  will  reduce  loss  from  carbon  stocks  in  the  short  term  and  aid 
sequestration in a longer perspective. 

Box 10 – EU Soil Observatory  

Healthy soils are at the heart of the Green Deal for Europe. In addition to providing 
us with food, fibres and fuel, soils play a key role in regulating the Earth’s climate, 
provide us with clean water, protect us from floods and preserve our cultural heritage. 
To close the data gaps on the European soils, the JRC launched the EU Soil 
Observatory (EUSO) in December 2020. Over the next two years, the EUSO will 
become a dynamic and inclusive platform that aims to support policymaking by: 

  Providing the Commission Services and the broader soil user community with the 

soil knowledge and data flows needed to safeguard soils 

  Supporting EU Research & Innovation on soils 
  Raising societal awareness of the value of soils  

Sustainable soil management and the restoration of degraded land is critical if 
biodiversity protection targets are to be achieved. Efficient nutrient management, 
including carbon sequestration to offset climate change, are key measures in the 
Common Agricultural Policy, while reducing pesticide residue levels are aspirations 
under both the Farm to Fork Strategy and the Zero Pollution Action Plan. Reduced 
soil sealing and organic waste cycles are both targets of the Circular Economy Action 

252 Primary forests have been defined as naturally regenerated forest of native tree species, where there 
are  no  clearly  visible  indications  of  human  activities  and  the  ecological  processes  are  not  significantly 
disturbed,  see  FAO  (2018)  FRA  2020  -  Terms  and  Definitions  FRA  2020.  Forest  Resources  Assessment 
Working  Paper  188.  Food  and  Agriculture  Organization  of  the  United  Nations,  Rome,  pp.  26. 
http://www.fao.org/3/I8661EN/i8661en.pdf  
253 Old  growth  forest  stands  are  generally  considered  to  be  stands  in primary  or  secondary  forests  that 
have developed the structures and species normally associated with old primary forest of that type. See 
for example EC (2015) Natura 2000 and Forests - Part I-II. European Commission, Technical Report - 2015 
– 088, pp. 108. https://doi.org/10.2779/699873.  
254 Varying  according  to  different  sources:  FAO.  2020.  Global  Forest  Resources  Assessment  2020:  Main 
report. Rome. https://doi.org/10.4060/ca9825en; or Forest Europe, 2020: State of Europe’s Forests 2020. 
https://foresteurope.org/state-europes-forests-2020/  ;  or  Sabatini,  F.  M.,  Keeton,  W.  S.,  Lindner,  M., 
Svoboda,  M.,  Verkerk,  P.  J.,  Bauhus,  J.,  …  Kuemmerle,  T.  (2020).  Protection  gaps  and  restoration 
opportunities  for  primary  forests 
in  Europe.  Diversity  and  Distributions,  26(12),  1646–1662. 
https://doi.org/10.1111/ddi.13158  
255 Watson, J. E. M., Evans, T., Venter, O., Williams, B., Tulloch, A., Stewart, C., … Lindenmayer, D. (2018). 
The  exceptional  value  of  intact  forest  ecosystems.  Nature  Ecology  &  Evolution,  2(4),  599–610. 
https://doi.org/10.1038/s41559-018-0490-x 

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Plan, as is the development of an Integrated Nutrient Management Plan. The EU Soil 
Observatory256 supports these EU strategies by: 

  Collecting high-resolution, harmonised and quality-assured soil information 
(showing status and trends) to track and assess progress by the EU in the 
sustainable management of soils and restoration of degraded soils; 

  Supporting the outcomes of targeted research; 
  Fostering networking, cooperation and partnerships among users of soil data and 

information; 

  Underpinning policy development through meaningful indicators and 

assessments. 

10.8.3. Settlements 

The main remaining land category for which improved activity data and emission factors 
would  be  required  under  the  preferred  policy  option  is  settlements,  or  built-up  area. 
However,  the  IPCC  definition  of  this  category  is  very  generic  and  ‘delegates’  most 
features to national definitions. Settlements usually contain built-up areas and associated 
surfaces that are not sealed (for instance open vegetated spaces, parks). As with the other 
IPCC categories, the actual categorisation can be more land-use than land cover related.  

The main particularities of built-up land with respect to GHG flows are heterogeneity of 
how vegetation integrates with constructed areas, as well as the high dynamic pattern of 
the  land  use  boundaries.  An  increase  of  Carbon  stocks  of  such  lands  is  nevertheless 
expected,  as  a  consequence  of  both  the  EU  afforestation  initiative  announced  in  the 
Biodiversity Strategy (which includes urban areas), and steady (re)greening of inhabited 
areas during recent decades.  

Some  synergies  with  national  LPIS  (see  Agriculture,  above)  stores  up-to-date 
information  on  built-up  areas  within  agricultural  land,  and  may  contains  some  specific 
types,  such  as  farm  houses,  agricultural  facilities,  and  greenhouses.  Other  sources  of 
information are national territorial management plans, or from a pan-European datasets, 
the Global Human Settlement Layer of JRC could be an option as well. 

Copernicus  land  monitoring  products  and  high  resolution  layers  delivered  by  the  EEA 
can provide vital information at a harmonised level. Currently, assessment of soil sealing 
(thus,  corresponding  to  settlement  zones)  can  be  made  over  a  specific  period,  analysed 
within  user  defined  spatial  units  such  as  administrative  boundaries,  biogeographical 
regions  or  land  cover  classes.  Current  status  or  change  in  the  EU27  for  every  3  years 
between 2006 and 2015 are available, with the latest data (2018) analysis offering 10m 
resolution. Such spatial information can be easily reinforced and integrated with spatially 
explicit  information  on  built-up  areas  available  at  country  scale.  Current  practices  are 
that built-up areas represent the highest hierarchy in the databases used to build land use 
matrices  for  GHG  inventory  purposes.  Such  information  is  generally  available,  i.e. 
through  cadastral  information  (which  is  a  notable  INSPIRE  directive  theme),  which 
defines the most accurate administrative boundaries of built-up land. 

Standardised Carbon stock change and emission factors are, nevertheless, largely missing 
for  built-up  areas.  Given  the  heterogeneity  of  the  vegetation  types  and  how  it  is 
integrated  with  constructions,  a  generalization  of  such  Tier  1  factors,  would  lead  to 
inaccurate  estimation  of  C  stock  changes  in  the  relevant  carbon  pools.  Innovative 

256 https://ec.europa.eu/jrc/en/eu-soil-observatory  

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solutions  to  obtain  such  factors  may  include  exploring  databases  associated  to  the 
programs  of  monitoring  of  built-up  areas  by  LIDAR  technologies  and  cadastral 
volumetry,  records  by  local  citizen-based  or  research  projects  (including  on  soils  GHG 
in/outflows). 

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