Going beyond 40% - options to ensure LULUCF maintains high environmental integrity of the EU climate and energy package

As the ratification process for the Paris Climate Agreement begins, a new study produced by the Oeko-Institut for Fern has shown how the EU’s new policy on land and forests could help it to be more ambitious on its climate change targets, and set a positive precedent globally by developing a separate pillar - with its own target - for the so-called LULUCF sector.

Read a briefing summary on this issue.

The European Union (EU) has a target to reduce emissions by at least 40 per cent by 2030. This is an economy-wide target and therefore includes the Land Use, Land Use Change and Forestry (LULUCF) sector. During the first half of 2016, the European Commission will make a legislative proposal for how to link LULUCF to the EU’s climate and energy framework. The Commission has outlined three possible ways for integration in the impact assessment prepared for the 2030 Climate and Energy Framework:

• Option 1: LULUCF pillar: maintain non-CO2 agriculture sector emissions in the Effort Sharing Decision (ESD), and further develop a LULUCF sector policy approach separately
• Option 2: Land sector pillar: merge the LULUCF and non-CO2 agriculture sector emissions into one new independent pillar of the EU’s climate policy
• Option 3: include LULUCF in the Effort Sharing Decision (ESD)

Böttcher and Graichen (2015) showed that if all LULUCF credits were included in the Effort Sharing Decision (Option 3), depending on accounting rules used, the effort needed to reach the 40 per cent target would be reduced by between 7.5 and 16 per cent of total emissions. This means a 2030 target for sectors in the ESD and EU ETS of between 37 per cent and 33.6 per cent (instead of an at least 40 per cent target). The study highlighted that implications of the different options depend to a large degree on the design of accounting rules for different land use activities. The scientists concluded that the LULUCF sector should be accounted for separately to not harm ambition in other sectors.

Independent of the question which option will be chosen and what level of flexibility will be allowed between different sectors, there is the need to develop a target for LULUCF. This target can either be a separate target without any flexibility between sectors or an integrated target allowing for a certain exchange between sectors. In any case criteria and rules for accounting are needed that ensure environmental integrity as required by the Paris Agreement. Such a target would be a prerequisite for exploiting the term ‘at least’ and increasing the EU’s overall target beyond 40%.

The aim of the study is to develop options to identify LULUCF credits with high environmental integrity that could help the EU to formulate a target for the sector. These options are developed by applying criteria and indicators that ensure environmental integrity of potential LULUCF credits. Where possible the volume of credits resulting from the sector is determined. The options are evaluated regarding how they reflect data availability, how robust the metrics are (low uncertainty when measured/collected, low inter-annual variability), whether they follow a transparent approach, and how relevant they are to the LULUCF sector. Also the question how suitable metrics are to set incentives to improve management in the LULUCF sector is of relevance.

Results

Based on available data and assumptions on future development of GHG emissions and removals from the LULUCF sector, we find that options exist to allow the EU to increase its level of ambition by including LULUCF in its 40% target and ensuring environmental integrity. Current rules are not sufficient to fulfil principles of environmental integrity such as those defined in the Marrakech Accords. A number of basic changes are proposed, such as moving towards land-based accounting, changing base years for cropland and grazing land management, changing accounting for afforestation and forest management.

The level of ambition could be increased further if accounting was made conditional to environmental performance, e.g. the maintenance or increase of carbon stocks. The additionality of mitigation in LULUCF can only guaranteed if the target is set after such rules have been formulated.

Despite the fact that challenges of data availability exist for some MS (e.g. regarding data on emissions and removals from cropland and grazing land management) most options can be implemented without additional efforts. Data gaps need to be identified and addressed by research and the development of guidance. In order to develop accounting rules further and increase coherence and consistency of the generation and use of rules, especially regarding FMRLs, an oversight body would help to provide independent guidance and supervision.

Category: Reports