Forests play an essential role in meeting the climate goals agreed in Paris in 2015.  The Paris Agreement aims to hold the increase in the global average temperature to below 2°C and to pursue efforts to limit the temperature increase to 1.5°C. The Agreement also requires its Parties to take concrete steps to conserve and enhance zero greenhouse gas (GHG) sinks and reservoirs.

About one-third of anthropogenic CO₂ emissions are removed by terrestrial ecosystems, mainly forests. When this carbon sink is reduced due to natural causes such as forest fires, or due to human activities such as deforestation, the carbon stored is released back into the atmosphere, thereby accelerating climate change. In the European Union (EU), the land use, land-use change and forestry (LULUCF) sector has been a relatively stable net sink of GHGs. However, it has been projected that as the demand for timber and biomass increases for example because of the need to switch from fossil fuel based energy to energy produced from renewable sources, this carbon sink risks declining also in the EU. This is a cause of concern as the Paris Agreement’s temperature goal requires reaching and sustaining net zero global anthropogenic CO₂ emissions between 2050-2075, and negative emissions (i.e. removal of CO₂ from the atmosphere) by the end of this century.  Forest management represents a scientifically feasible and cost-effective way of removing carbon from the atmosphere whereas other negative emissions technologies (such as bioenergy with carbon capture and storage) remain unproven.

In 2014, the EU agreed that all sectors should contribute to the EU’s 2030 emission reduction target, including the land use sector. The LULUCF Regulation adopted in May 2018 creates a third pillar under the EU 2030 climate and energy policy framework, complementing the existing two pillars made of the EU Emissions Trading System (EU ETS) that covers energy-intensive industries and the power sector, and the regulation of the non-ETS sectors under the Effort-Sharing Regulation. The Regulation is a part of the EU’s revised legal framework to implement its Nationally Determined Contribution under the Paris Agreement. The Regulation will apply from January 2021 onwards, and follows two compliance periods: 2021-2025 and 2026-2030.

The LULUCF Regulation is built around the so called no-debit rule that requires EU Member States to ensure that emissions from the LULUCF sector do not exceed removals from 2021 to 2030. In other words, the LULUCF sector may not become a net source of GHG emissions. For the Member States to comply with the legally binding no-debit rule, the Regulation lays down further rules for the accounting of emissions and removals from LULUCF as well as for checking Member States’ compliance with the rules. Although the no-debit rule is a central starting point, the new LULUCF regulation neither prohibits EU Member States from reducing their sinks nor pushes them to increase their sinks.

Compliance towards the no-debit rule is measured through a land-based approach to accounting. There are five land accounting categories under the Regulation: (1) afforested and forested land; (2) managed cropland, grassland and wetland; (3) managed forest land; (4) harvested wood products; and (5) natural disturbances. A land-based approach considers thus the change in the carbon stock in all carbon pools on all land areas.

The Regulation provides for general flexibilities and for a specified managed forest land flexibility. Flexibilities, for example, enable Member States to use allocations from the Effort Sharing sectors to meet their commitments. Member States can buy and sell net removals from and to other Member States, balance emissions from one land category against removals in another within the LULUCF sector, and enhance removals or reduce emissions in the LULUCF sector to support compliance in other sectors. Member States may also bank net removals from the first to the second compliance period.

The LULUCF Regulation makes accounting of managed wetlands mandatory from the second compliance period onwards. Reporting is required during the first period for all Member States. Wetlands are effective ecosystems for storing and sequestering carbon. The inclusion of wetlands in the LULUCF Regulation should provide an incentive for Member States to, for example, develop new removal-enhancing mitigation measures on wetlands, such as restoring previously drained peatlands.

The inclusion of emissions from the use of biomass for energy in the accounting is another first for the LULUCF Regulation. The emissions from the use of biomass can be accounted for as zero in the energy sector if these emissions are measured in the LULUCF sector. Forest biomass is set to play a key role on the European energy transition agenda, but its use in energy should be facilitated only if it is sustainable and contributes to climate mitigation. Overall, forest based bioenergy is an underlying issue for the Regulation.

The legal provision that has gained the most attention concerns the accounting of emissions and removals from managed forest land against a Forest Reference Level (FRL) that is included in the in the National Forestry Accounting Plans, also required by the Regulation. In many ways, the FRL is the Regulation’s key regulatory instrument. In principle, the FRL compares the size of the forest carbon sink to an earlier point in time. The LULUCF Regulation is an instrument that urges Member States to harness the climate mitigation potential vested in forest management in a way that does not compromise shared climate efforts nor national plans boosting the growth of bio-based economies. The FRLs are at the heart of making this balance happen.

Guided by the loose criteria under the Regulation and a non-binding Guidance Document, the Member States were requested to calculate their own FRLs in their NFAPs (for the first compliance period) and submit this proposal to the European Commission by the end of 2018. The Commission undertook a technical assessment to determine whether the proposed FRLs meet the requirements under the Regulation, and subsequently proposed revisions. All Member States that had submitted their FRL’s by the set deadline received proposals for revisions. The Member States have until the end of 2019 to submit their revised FRL’s, after which the Commission adopts delegated acts ‘with a view to laying down’ the FRLs to be applied by the Member States.

The provision on FRL must be interpreted in the context of the rest of the article, other relevant articles, recitals and annexes in the LULUCF Regulation. The Regulation guides the rather wide discretion and flexibility given to the Member States as to the establishment of the FRLs through a set of preconditions that relate to continuity, sustainability of forest management practices, age-related characteristics and the overarching objective to maintain or strengthen long-term carbon sinks.

Centrally, according to the Regulation’s Article 8, the FRL is tied to the continuation of sustainable forest management practices as they were documented in 2000-2009. The Regulation thus assumes that projected forest management practices, including harvest volumes, do not change much from the reference period but are continued around similar as they were in 2000-2009. With ‘continuity’ as the starting point, the objective of the FRL is to transparently, completely and consistently reflect the impacts of changes in forest management practices in relation to the reference period. Furthermore, due to national circumstances as well as the differences in the ways forests develop and are managed in Member States, the Regulation does not exhaustively define (sustainable) forest management practices. These practices refer to all activities to manage a forest and to practices that are aimed at fulfilling specific functions in a forest over time. Such activities could include planting of trees, the schedule and intensity of harvesting, and final cut.

Finally, as the age-related characteristics of a forest vary during the compliance period, forest management practices may need to be adapted. For example, the total harvest volume can fluctuate from one year to the other and can also differ from the total harvest volume during the reference period as forest reaches harvest maturity. The Member States are, for example, required to demonstrate through their FRLs how the age-related characteristics develop in the forest over time.

The LULUCF Regulation contains several clear references to the need to maintain, enhance and strengthen sinks in the context of the EU’s long-term climate strategy.

Accordingly, the managed forest land flexibility allows Member States to temporarily increase their harvest intensity in accordance with sustainable forest management practices, provided that this increase is consistent with the Paris Agreement’s objective and the EU collectively meets its no-debit rule. The purpose of the flexibilities is to help Member States meet their no-debit commitment rather than to compromise the EU’s GHG emission reduction targets. If a Member State increases its harvests in the short-term beyond what is assumed under the continuation of sustainable forest management practices, the increase would likely need to be justified both in light of the climate targets and because otherwise the Member State could not maintain and enhance the sink in the long term.

Moreover, actions taken within the LULUCF sector and actions within other sectors are interrelated. If the FRL is met or exceeded (i.e. removal of emissions), the excess can be used, for example, to offset emissions in another land use category or in the Effort Sharing sectors. From a climate perspective, a reduction in the forest sink leads to more CO₂ emissions, even if forests are managed sustainably. If the LULUCF sector is a source of emissions, it must be compensated for by action in other sectors. If a Member State allows its sink to decline in the long term, it is required to compensate for this decline elsewhere through, for instance, stronger emission reductions in sectors such as transport or agriculture.

The Regulation gives the EU Member States considerable room for discretion in sustainable forest management, but also trusts that climate impacts of the decisions made are accounted for in a transparent and reliable manner. The aim of the FRL is not to constrain the future forest management practices in the Member States who retain their freedom to pursue and develop their national management practices they consider appropriate under the prevailing regulatory conditions. The process of determining the FRLs affords Member States the opportunity to imbue sustainable forest management with content that not only enables full compliance with the no-debit commitment but also addresses the need to maintain or strengthen long-term carbon sinks.

Member States are required to report the balance of total emissions and total removals from the LULUCF sector to the Commission for its review. The Regulation entitles the Commission to make proposals, based on the compliance check, to ensure that the integrity of the EU’s overall 2030 GHG reduction target and its contribution to the Paris goals are respected. In fact, the Regulation’s review clause is explicitly tied to the Paris Agreement’s long-term goals and ambition mechanism. In this context, the Commission is entitled to make proposals for additional EU policies and measures, in view of a necessary increase in GHG emission reductions and removals.

The Regulation is a dynamic legislative instrument whose exact working will develop along its implementation. However, together with the overarching urgency to tackle climate change through cross-cutting and holistic approaches, the Regulation centrally underlines the need to craft progressive and ambitious climate policies in relation to forests.

In October 2014, the European Council agreed that the EU would by 2030:

(1) reduce GHG emissions by at least 40% (from 1990 levels);

(2) increase the share of renewable energy in final energy consumption to at least 32%);

and improve energy efficiency by at least 27% (compared to 2005).

Dr. Seita Romppanen is a Senior Lecturer in International Environmental Law at the UEF Center for Climate Change, Energy and Environmental Law (CCEEL). She is UEF Director of the Nordic Master’s Degree Programme in Environmental Law (NOMPEL).