Following the agreement on a 90% emissions reduction by 2040, the EU climate architecture is being revised to create the conditions to achieve this target. For this to work, all sectors of the economy must contribute their fair share.
Central to the current climate architecture and subject to imminent revision is the Land Use, Land Use Change, and Forestry (LULUCF) Regulation. This law aims to enhance the EU’s natural carbon sinks by setting both EU and nationally binding removals targets in the land sector. It therefore remains critical to achieving the EU’s overall climate goals.
With member states on track to miss their current targets, potential plans envisage allowing countries to utilise carbon farming certificates issued under the Carbon Removals and Carbon Farming (CRCF) Regulation to show investments in the sector. This significantly undermines the ability to meet binding targets.
From conversations with the Commission, this new plan would be implemented through two-tier targets for member states: a minimum target, requiring demonstrable progress, and an aspirational one, where countries might, instead, demonstrate their efforts to enhance the land sink through Key Performance Indicators (KPIs), with a potential KPI being the purchase of CRCF units.
Dangerous distraction and uncertain mitigation
There are several risks associated with this proposal. The most significant concern is that moving away from strong targets diverts attention from urgent measures needed to achieve crucial goals, such as reducing harvesting levels or shifting land management practices away from fast-growing monocultures. This is why any investment should be in addition to ambitious binding targets.
Furthermore, given that no carbon farming units have been issued yet and that not enough time has elapsed to evaluate how the CRCF works in practice, it remains uncertain whether investment in CRCF projects will truly enhance sinks and produce reliable mitigation results.
Further, to reach the mandated LULUCF goals with individual carbon farming projects and therefore make a difference at the national level, a vast number of them would be needed. Since purchasing certified units includes monitoring, reporting, and verification fees, this would also require a significant financial investment by member states. It is therefore questionable whether member states should or even would commit significant resources to projects with such uncertain outcomes.
Quality concerns
Another key point is the poor quality of carbon farming methodologies, which further contributes to uncertainty in mitigation potential. Examples include overestimating climate impacts due to flexibility in quantification methods, omitting key associated emissions, and taking a lax approach towards biodiversity and ecosystem benefits.
Additionality also comes into play. The methodologies allow for existing projects to be certified, meaning the project did not depend on the CRCF to materialise, and therefore no additional carbon was sequestered due to the CRCF. A subsequent purchase of credits issued by already existing projects does not increase the physical amount of carbon stored; it is rather a waste of public funding.
Lastly, the methodologies fail to responsibly manage non-permanence, making it difficult to guarantee whether such projects will benefit the sink in the long term. The rules to assess the risk of reversal and the liability mechanisms in place to address such reversals are widely insufficient. Any reversal would necessarily threaten the KPI.
In addition, CRCF units are programmed to expire after a set period, at which point the CO2 is assumed to be released back into the atmosphere if no renewal occurs. To ensure a continued CRCF contribution to the sink, there needs to be a mechanism that instantly replaces expired projects. There would also have to be equivalence between projects to ensure the risk of reversal is comparable. For instance, forestry projects using similar practices and in similar soil, climate, and weather conditions. Nonetheless, this could also raise a supply issue.
CRCF as a tool to improve LULUCF data?
A better reason to link the CRCF and the LULUCF is data gathering. Reporting on emissions and removals in the LULUCF inventory is notoriously challenging and highly uncertain due to the many natural processes occurring in the sector and the difficulties in measuring and monitoring changes in carbon stocks and pools. Member states also use different reporting methods, leading to disparities in how management practices and changes in the land sink are recorded.
In 2024, the European Environment Agency flagged that the ‘certificate of compliance’ issued to projects under the CRCF will contain relevant information which can help make national greenhouse gas inventory reporting more accurate. It could allow countries to replace generic default values with more detailed measurements, through, for example, plot-level information from soil and satellite data, or insights into impacts in specific geographical areas. This would in turn increase the ability of the inventories to capture the contribution of CRCF activities and ultimately improve national estimates.
Additionally, the CRCF should lead to a wider use, and thus gradual improvement of technologies such as modelling and remote sensing, benefiting those member states that rely on these same technologies for their inventory reporting.
Better data on emissions and removals means better policies to enhance the sink and more opportunities to evaluate their effectiveness. Nonetheless, there are limits to the extent to which the CRCF can help since its accounting system differs from that of the LUUCF. In addition, the quantification methods allow operators to resort to default values, limiting the potential for CRCF to provide additional or improve existing information.
Still, this approach is certainly preferable to using CRCF units to undermine or distract from binding LULUCF targets.
How else can we enhance the sink?
There are alternatives to using the CRCF to protect and enhance our natural sink. Key examples include limiting EU reliance on forest biomass and bioenergy, using the Common Agricultural Policy and aligning it with net zero goals, or creating a mandatory emissions pricing system for agriculture.
Fit for 90 now
An effective post-2030 package is key to achieving Europe’s climate objectives. Sacrificing ambitious climate objectives for the land-use sector, and replacing them with ineffective and unproven use of CRCF units, is not an option. The European Commission must also not forget that weakening the LULUCF will ultimately make the climate neutrality target much harder to achieve.
The EU has committed to reducing net greenhouse gas emissions by 90% by 2040. A robust LULUCF target, without KPIs or flexibilities that undermine its ambition, is essential to achieving this goal. Let’s be fit for 90.