The EU’s inclusion of forest uptake explained

Why did the EU include the LULUCF sector in their climate targets? We asked Giacomo Grassi of the European Commission’s Joint Research Centre.

Climate policy pundits were surprised when the European Commission in 2020 proposed a tougher climate target for 2030, which was later adopted. The target of a 55 per cent emission cut was a net target. That is, emissions and uptake of carbon dioxide in the land use, land use change and forestry sector (LULUCF) were also to be taken into account. Since the sector had a net uptake, critics accused the commission of both bookkeeping tricks and greenwashing.

A conversation with

Giacomo Grassi is Scientific officer at European Commission’s Joint Research Centre (JRC) and Bureau member of the IPCC’s Task force on GHG inventories. His views may not be regarded as stating an official position of the European Commission.

Leter du etter en norsk, forkortet utgave? Klikk her.

What was the reasoning behind this change? And what role does the forestry and land use sector play in the further efforts of the EU to cut emissions? Giacomo Grassi is a senior scientific officer at the European Commission’s Joint Research Centre JRC. One of the centre’s tasks is to ensure that policy is research-based.

<2°C: – The term Land Use, Land-Use Change, and Forestry (LULUCF) gained prominence following the establishment of the Kyoto Protocol in 1997. Which introduced detailed rules for accounting emissions in this sector. Can you elaborate on the development of this approach?

Giacomo Grassi: – In the late 1990s, when the Kyoto Protocol was established, the process of estimating emissions and removals within the land use sector was a largely uncharted territory. As a result, the Kyoto baselines and targets for Annex I Parties at the time did not directly incorporate land. However, a provision allowed for the inclusion of credits or debits resulting from “direct human induced” land activities, which were calculated using specific accounting rules and subsequently added to the overall performance of other sectors, thus contributing to the achievement of the targets.

The complexity of these accounting rules – such as “gross net”, “net-net” and “reference level” soon transformed the LULUCF sector in an area for super-experts. Nobody beyond a circle of relatively few people could really understand what was happening in it. There was a widespread perception that this complexity created accounting loopholes. That is, an excuse for countries to avoid strong emission reductions in other sectors. I would say this view dominated of debate around LULUCF for two decades.

A need to simplify the reporting rules

– So, when the time came to revise the EU regulations, how did you approach this?

– In 2018, when the previous LULUCF regulation was agreed, we were still in this Kyoto era. We already had an EU-wide emissions reduction target without the LULUCF sector. That is, minus 40 percent in 2030 compared to 1990. So, for LULUCF it was decided to adopt just an increment improvement to the Kyoto-style accounting rules, including the “forest reference levels” that are still the basis for accounting the climate performance of forest in EU Member States until 2025.

With the Green Deal and the European Climate Law adopted in 2021, there was the need to increase the climate ambition for the whole EU. But also to simplify the reporting rules in LULUCF. This was a very ambitious, long-term vision: To become climate neutral in 2050 (i.e. net zero greenhouse gas emissions). In addition, The Paris Agreement calls for an economy-wide target. The question, therefore, was: Why do we not make an EU-wide target with the LULUCF sector fully included, almost like any other sector?

A complicated sector with specific features

– But that was probably not all that straightforward?

– Well, the LULUCF sector has some very specific features that no other sectors have. In other sectors, energy, buildings, industry, transport, agriculture, you have emissions only, no removals, and everything is anthropogenic. The LULUCF sector is much more complicated. There are emissions, and there are removals, absorption of CO₂. Which is, to a certain extent, part of the natural carbon cycle. It is very difficult to separate the anthropogenic part from the natural one.

In fact, the accounting rules for LULUCF that dominated the sector for 15-20 years can be seen as an attempt from policymakers to agree on rules that could distinguish more or less between these anthropogenic and natural components.

In 2021, as part of the Green Deal vision, the European Commission proposed a 55 percent economy-wide net emission reduction by 2030 relative to 1990. One difference, though, compared to the previous policy landscape, is that the 1990 value in that case includes the LULUCF sector.

Treating LULUCF as any other sector

– It wasn’t included in previous targets?

– No, until that time all the previous EU targets excluded the LULUCF sector in the base year. LULUCF credits and debits were eventually added in the compliance year, on top of the performance of the other sectors. But since the minus 55 percent target in 2030 compared to 1990 now includes the full LULUCF net sink in the base year (1990), then, for consistency, you have to include the same net flux also in the target year, 2030.

This opened up the possibility to treat LULUCF almost as any other sector. We still have some special rules and flexibilities, because this sector has some specificities. Also, one should keep in mind that the 2050 climate neutrality goal is a net target. The main focus is of course on emission reductions, but all emissions cannot be brought to zero. Hence, there will always be some residual emissions which have to be compensated by removals. The main sector that is expected to contribute to that, is LULUCF. At present, this sector compensates for about 6-7 percent of the emissions of all other sectors. However, with the strong emissions reduction planned for other sectors, in 2050 LULUCF will compensate the majority of residual emissions from the other sectors. Thus, the relative importance of LULUCF will considerably increase.

Returning to the rationale of this revised regulation of LULUCF, there were also a number of specific issues that the legislators wanted to address, apart from what I said above.

Navigating with a GPS with a five day lag

– Such as?

– First, the decreasing forest sink. This sink has been quite stable from the year 2000 to around 2013-14, when it started to decrease, a trend which is well documented and very worrying. The first objective of the LULUCF regulation is to reverse this decline of the sink through ambitious LULUCF targets for 2030.

Second, simplifying the accounting rules. As mentioned previously, we were coming from a period where LULUCF accounting rules were extremely complex and really hampered proper communication and dialogue with the wider public. So, from 2026 onward, including the 2030 target, all emissions and removals are accounted as they are reported by member states in the GHG inventory.

Third, monitoring. We currently do not use all the resources that we have, especially the growing, potential contribution from remote sensing. Hence, it is paramount that we use more accurate, more detailed, and more timely data – that is already available to us – to manage our sinks more effectively. We sometimes use the analogy of a GPS in a car: When we are on an unfamiliar road, the GPS tells us where we are and helps to position ourselves well and to guide us in the right direction. But it only helps if the GPS provides the actual position on time. If it gives the accurate position of five days ago, it is useless.

A similar thing applies to the LULUCF greenhouse gas inventories, which are typically largely based on national forest inventories. Since these forest inventories are often carried out periodically, every five or ten years, they may inform the policy makers with a delay of a few years. Given the decreasing sink and the need to increase the resilience of our land sinks and therefore to adapt them to the existing and future climate change, as well as the enhanced ambition for 2030, this delay is problematic. A greater integration of remote sensing may help obtaining more timely estimates of emissions and removals in the LULUCF sector.

Capping the contribution from LULUCF sinks

– There has been some discussion about strengthening the EU 2030 target to –57 percent. How is that connected to LULUCF?

–  The minus 55 target is the EU economy-wide target for 2030. It includes all sectors including the LULUCF sector. But as mentioned earlier, the LULUCF sector is more uncertain. The data is not always up to date and can be partly incomplete. Incomplete in the sense that some land use and carbon pools, especially soil, is not reported by all countries. Moreover, methodologies for LULUCF reporting evolve over time, and rightly so, given the rapid developments in terms of the availability of better-quality data. Hence, recalculations of inventories often occur in the LULUCF sector.

During the co-legislation process related to the European Climate Law, there was the concern that adding LULUCF (which also comprises sinks) to the overall EU-wide target of -55 percent, could undermine the emission reduction ambition in other sectors. Therefore, the contribution of LULUCF sinks to the -55 percent economy-wide EU target was capped to -225 million tonnes CO₂ equivalent.

But the LULUCF sector also has its own separate target of -310 million tonnes of CO₂eq. or, more precisely, an increase of the sink of 42 million tonnes of CO₂eq in 2030 compared to the yearly average of the period 2016-2018. In a recent paper, we explored to what extent the LULUCF sector, and specifically forests are on track to reaching the 2030 target. We have found that the EU is not on track, with its sinks actually shrinking in recent years.

This means in practice that if the LULUCF 2030 target is met, and assuming the other sectors reach their respective targets, the EU will have reached approximately -57 percent net emissions in 2030 compared to 1990.

What about bioenergy?

– Bioenergy is a huge part of renewable energy consumption in the EU – the share in 2021 was 59 percent. Do the new LULUCF rules have an impact on the future use of bioenergy?

–  Bioenergy has always been a very polarized topic. Some argue it is an essential component of the mitigation pathway, others that it is absolutely negative from all points of view.

Emissions from forest bioenergy are not counted at the point of biomass combustion (i.e., in the energy sector), because they’re already counted under LULUCF, as a loss of carbon in living biomass. This approach is what IPCC recommends and it will remain. But I think the new LULUCF-regulation makes the accounting of bioenergy more transparent than before, because not filtered with complex accounting rules.

The challenge for forest bioenergy in my view relates to the interplay between the RED III-directive, LULUCF and in the end, Member States. In the new LULUCF regulation all the emissions from bioenergy are fully accounted, and this already provides a quite strong incentive for a country to use forest bioenergy in a climate-smart way.

Don’t shoot yourself in the foot

– Which is?

– Don’t cut forests just for burning. Use it wisely, otherwise you are shooting yourself in the foot. Use a cascading principle: First use wood for construction material, for material that can store carbon for decades and then, for bioenergy, only use the residues that cannot be used for anything else. Which already covers most of the cases in Europe.

On the other hand, there are potentially conflicting messages, in my view: The LULUCF-target gives a medium-term signal to countries, implicitly saying, “burning forests is not an efficient way to reach your target, please prioritize residue for that”. Some argue that, since RED III considers forest biomass to be renewable, it implicitly leaves a short-term signal that incentivises more use of wood for bioenergy.

In my view, this can be solved at the Member State-level. They could somehow calibrate their incentive to bioenergy in a way which is consistent with their climate targets.

– Finally: A Norwegian expert group delivered a report this autumn, a green paper for Norway’s 2050 target. They recommend not including LULUCF in the overall target but isolate it and formulate a specific target for the sector. Thoughts?

– Transparency and ambition are the main points there.

In the EU there is an economy-wide target, but the LULUCF component can be tracked. This is not always the case for all the world’s NDCs. They might say they want to cut 50 percent of their emissions including LULUCF, but they don’t specify the LULUCF contribution. So having separate targets is something that would help the transparency, I agree.

When scientific models and green house gas inventories part ways

There is a substantial discrepancy between anthropogenic LULUCF estimates depending on method: The ‘national inventory approach’ based on reported inventories under the UNFCCC, and the ‘bookkeeping approach’ that uses global climate models to estimate carbon fluxes, and that is often used by climate scientists. We ask Giacomo Grassi: Why the discrepancy, and what can we do about it?

Giacomo Grassi: – We have actually published a series of papers on this. At a global level we find a gap of 6 gigatonnes of CO₂. So nearly twice all the emissions of the EU, or 15 percent of global anthropogenic CO₂ emissions. Which is enormous. However, it is mostly an issue on the global level. In Europe, the difference between the two approaches is less evident.

It comes down to different definitions of what is anthropogenic. Essentially, we have two different approaches to estimate anthropogenic sinks. The main aim of these global models – the bookkeeping approach – is to provide global numbers of direct human-induced effects. By contrast, country inventories include both direct and most of the indirect human-induced effects, such as the impact of the increasing atmospheric CO₂ concentration, which is enhancing plant growth.

In practice, countries consider human-induced a part of the sink that global models consider as natural. In addition, at country level, often global models are not as detailed as you would expect most country inventories to be. At least from the developed countries. For instance, in Europe, most of the country inventories are more disaggregated and complete than these global models. Both approaches are justifiable depending on the context and aims of what you are doing. But we should avoid comparing them because that would be comparing apples to oranges.

– How?

– The IPCC says that from the year 2020 we have about 500 gigatonnes of CO₂ left to reach 1.5 degrees. This ‘remaining global carbon budget’ is based on the global models approach. It does not take into account the six gigatonnes per year gap that we have with inventories. In order to make this budget comparable to countries, recent studies show that it should be reduced by 15-18 percent.

– Is it fixable?

– We have proposed a concrete approach to translate between the two, and it is to some extent already partly taken into account by the IPCC. Our plan is to coordinate an international effort to develop a translation system, so the groups using the different approaches are able to understand each other better.