Explanatory Memorandum to COM(2012)93 - Accounting rules and action plans on greenhouse gas emissions and removals resulting from activities related to land use, land use change and forestry - Main contents
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| dossier | COM(2012)93 - Accounting rules and action plans on greenhouse gas emissions and removals resulting from activities related to land use, ... |
|---|---|
| source | COM(2012)93  |
| date | 12-03-2012 |
At the end of 2010, in the context of the United Nations Framework Convention on Climate Change (UNFCCC), it was recognised that global warming must not exceed the temperatures experienced before the industrial revolution by more than 2˚ C. This is vital if the negative consequences of human interference with the climate system are to be limited. Global emissions must therefore start declining. This long-term goal requires global greenhouse gas emissions to be reduced by at least 50 % below 1990 levels by 2050.
Developed countries as a group should reduce emissions by 80 to 95 % by 2050 compared to 1990 levels. In the medium term, the Union has committed to reduce its greenhouse gas emissions by 20 % below 1990 levels by 2020, and by 30 % below if conditions are right. The land use, land use change and forestry (LULUCF) sector does not form part of that commitment.
However, Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community (the EU Emission Trading System, ‘EU ETS’) and Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020 (the Effort Sharing Decision, ‘ESD’) note that all sectors of the economy should contribute to reaching the Union’s greenhouse gas emission reduction target for 2020. Moreover, Article 9 of Decision No 406/2009/EC invited the Commission to assess the modalities for including emissions and removals from activities related to LULUCF in the Union reduction commitment and to make a legislative proposal, as appropriate, whilst ensuring the permanence and environmental integrity of the contribution of the sector, and providing for accurate monitoring and accounting.
Following wide consultation of Member States and stakeholders, and an impact assessment, the Commission accordingly proposes a Decision to provide, as a first step, a legal framework for robust, harmonised and comprehensive accounting rules for LULUCF that are designed to accommodate its specific profile. The proposal establishes a legal framework for the LULUCF sector which is separate from the frameworks regulating the existing commitments (the EU ETS and ESD), meaning that the sector would not formally be included in the 20 % greenhouse gas emission reduction target at this stage. Only once robust accounting rules and monitoring and reporting are in place, the LULUCF sector could be formally included in the Union’s emission reduction targets. To this end, the Commission has also put forward a proposal to repeal Decision No 280/2004/EC of the European Parliament and of the Council of 11 February 2004 concerning a mechanism for monitoring Community greenhouse gas emissions and for implementing the Kyoto Protocol, replacing it by a Regulation of the European Parliament and of the Council on a mechanism for monitoring and reporting greenhouse gas emissions and for reporting other information at national and Union level relevant to climate change[7].
In the Union, emissions of greenhouse gases come mainly from energy production and other man-made sources. At the same time, carbon is absorbed (removed) from the atmosphere through photosynthesis and stored in trees and associated wood products, and in other plants and soils. Therefore, appropriate land uses and management practices in forestry and agriculture can limit emissions of carbon and enhance removals from the atmosphere. Such practices are covered by the LULUCF sector, which comprises mostly carbon dioxide (CO2) emissions and removals by terrestrial ecosystems, generally estimated as carbon stock changes[8]. In 2009, LULUCF removed an amount of carbon from the atmosphere equivalent to about 9 % of the Union’s total greenhouse gas emissions in other sectors.
Agriculture, forestry, related industries and energy are the most important economic sectors relevant for LULUCF and they can contribute to the reduction of emissions and enhancement of sinks in several ways. Agricultural measures, aimed at reducing the conversion of grassland and carbon losses from the cultivation of organic soils, could include improving agronomic practices such as using different crop species (e.g. more leguminous crops) and extending crop rotations. Agro-forestry practices which provide higher soil carbon stocks could contribute by keeping livestock or growing of food crops on land on which trees are also grown for timber, energy or other wood products. Organic materials can also be returned to or left on the land to improve the productivity of croplands and grasslands, while rewetting, setting aside or not draining organic soils, including peat land, and restoring degraded soils can have significant mitigation and biodiversity benefits. In view of this, including cropland and grassland management into accounting of emissions would be a necessary step towards the full recognition of the contribution of these activities to meet the climate challenge commitments.
Forestry also has much potential to boost mitigation. This includes practices such as converting non-forest land to forest (i.e. afforestation)[9], avoiding the conversion of forest to other types of land (i.e. deforestation), storing carbon in existing forests through longer rotation periods of trees, avoiding clear-felling (e.g. forest management on thinning or selective logging) and conversion to undisturbed forests, and more widespread use of prevention measures to limit the impacts of disturbances such as fires, pests and storms. Equally importantly, existing forests can be made more productive by spacing rotations closer to the productive maximum, producing more from low-production forests and increasing the harvest of timber off-cuts and branch-wood, provided biodiversity, soil fertility and organic matter can be maintained. An impact could also be obtained by changing species composition and growth rates.
In addition to the opportunities directly linked to forestry and agriculture, there are potential mitigation benefits in the related industries (e.g. pulp and paper, wood processing) and renewable energy sectors if agricultural land and forests are managed for production of timber and energy. Whilst carbon is stored in trees and in other plants and soils, it can also be stored for several decades in products (e.g. construction wood). Industry and consumer oriented policies can make an important contribution to increasing the long term use and recycling of wood and/or the production of pulp, paper and wood products, thereby replacing more emission-intensive equivalents (e.g. concrete, steel, plastics made from fossil fuels). In fact, the bio-based industry can make use of crops grown for material substitution (e.g. hemp and grass for insulation instead of glass fibre, straw for furniture production, car door panels made from flax or sisal plants, bio-plastics) or for energy (e.g. using biomass instead of fossil fuels). Studies show that for each tonne of carbon in wood products substituted for non-wood products an average greenhouse gas emission reduction of approximately two tonnes of carbon can be expected[10].
The inclusion of mandatory accounting for forest management, cropland management and grazing-land management would make action taken by farmers, foresters and forest-based industries more apparent and provide the basis for designing policy incentives to increase their mitigation action. If such efforts are being accounted for, their overall greenhouse gas impact is more correctly reflected and the cost-efficiency of reaching emission reduction targets would be improved.
Given the fact that agricultural land use, forestry and related industries differ greatly between Member States in terms of their emission potential within the Union no single policy approach will fit them all. A tailored approach is needed to tackle the different forms of land uses and forestry practices. The fundamental pre-condition for protecting and enhancing carbon stocks, and the rate of removals is the provision of a level playing field between different types of measures in the various sectors in the Member States (e.g. grazing land management or bio-energy production), through accurate and harmonised accounting for emissions and removals from the LULUCF sector.
Although the LULUCF sector does not yet count towards the Union’s emission reduction target for 2020, it counts in part towards the Union’s commitment under the Kyoto Protocol (‘Kyoto Protocol’) to the UNFCCC, approved by Council Decision 2002/358/EC [11] for the period from 2008 to 2012. However, the existing international accounting rules, which are a mix of voluntary and mandatory practices, have significant drawbacks. Most importantly, accounting is voluntary for most LULUCF activities, notably for forest management (representing about 70 % of the sector) and for cropland and grazing-land management (representing about 17 % of the sector). As a result, accounting in this first commitment period under the Kyoto Protocol varies greatly between Member States. Another drawback is the lack of incentives for climate change mitigation in forestry. Improvements in accounting are necessary to create a level playing field within the agricultural, forestry and related industries and energy sectors in the Member States with a view to ensuring their consistent treatment within the Union’s internal market.
Robust and harmonised estimation of emissions and removals in agriculture and forestry requires investment in monitoring and reporting capacity. Nonetheless, there are still significant gaps and the accuracy and completeness of the reported data must be improved, especially as regards data on agricultural soils. Improvements in monitoring and reporting will therefore not only support accounting but also provide a robust, clear and visible indicator of progress in agriculture and forestry.
Fostering synergies with wider policy objectives is also important. Incentives do exist to promote the use of bio-energy[12] but currently there is no coherent approach to climate change mitigation in the LULUCF sector through measures in agriculture, forestry and related industries.
Indeed, climate change mitigation could play an increasingly important role in the Common Agricultural Policy (CAP). In the post-2013 Union rural-development policy, climate change mitigation and adaptation could be tackled by offering better incentives for carbon sequestration in agriculture and forestry. Some of them would at the same time enhance and protect carbon stocks and generate co-benefits for biodiversity and for adaptation by increasing water-retention capacity and reducing erosion. Mandatory accounting of associated carbon fluxes would make the positive contribution of these measures more visible and ensure their full contribution towards meeting the climate change challenge. Accounting for LULUCF would also clarify the benefits of sustainable bio-energy by better reflecting related emissions, in particular those resulting from the combustion of biomass, which is unaccounted for at the moment. This would strengthen the incentives provided by sustainability criteria in the context of renewable energy targets.
However, LULUCF is not like other sectors. Removals and emissions of greenhouse gases in this sector are the result of relatively slow natural processes. It can take decades before measures such as afforestation have a significant effect. Therefore, action to increase removals and reduce emissions in forestry and agriculture should be considered over the long-term. Moreover, emissions and removals are reversible: such reversals may be because extreme events such as fires, storms, droughts or pests have had an impact on forest and land cover or because of management decisions (e.g. to harvest or plant trees). In addition, annual fluctuations of emissions and removals in forests are high and can amount to as much as 35 % of the total annual emissions in some Member States as a result of natural disturbances and harvesting. This would make it difficult for Member States to comply with annual targets.
Although emissions and removals from LULUCF are reported under the UNFCCC and partially accounted under the Kyoto Protocol, the sector was left out of the Union’s climate commitments under the Climate and Energy Package due to the recognition of serious deficiencies in international accounting rules of emissions and removals from this sector. Also, the expectation at the moment of setting the Union emission reduction target was that the climate summit in Copenhagen in 2009 would deliver an international agreement on climate change, including revised accounting rules for LULUCF, which could then be adopted by the Union. This did not happen on that occasion.
However, during the 17th Conference of the Parties of the UNFCCC serving as the meeting of the Parties to the Kyoto Protocol in Durban in December 2011 progress was made. In this framework, Decision -/CMP.7 sets out the rules, definitions and modalities for accounting for the LULUCF sector as of a second commitment period under the Kyoto Protocol. In particular, accounting for forest management activities, including for harvested wood products, will be mandatory and definitions for natural disturbances and wetland drainage and rewetting were established. Therefore, it is important to proceed at Union level in parallel with the international processes. A legal proposal on accounting for emissions and removals from activities related to LULUCF in the Union needs to be in line with the decisions taken at international level in order to ensure the appropriate level of coherence; at the same time, however, it should give the Union a chance to lead by example with a view to an international agreement as of a second commitment period of the Kyoto Protocol.
The aim of this proposal is therefore to gradually integrate the LULUCF sector into the Union’s climate policy by means of a separate legal framework which addresses the sector’s specific profile and by ensuring a robust and harmonised accounting framework. Most importantly, it would complete the accounting of anthropogenic greenhouse gas emissions from all economic activities within the Union. As part of that it would increase the visibility of ongoing and new mitigation efforts in agriculture, forestry and related industries and provide a basis for designing adequate policy incentives (e.g. in the CAP and in view of the Roadmap to a Resource Efficient Europe[13]). Laying down common Union accounting rules would also level the playing field among Member States. It would capture the changes in carbon stocks due to the use of domestically produced biomass, thus completing the accounting of bio-energy at the level of the economy. This would strengthen the environmental integrity of the Union’s climate policy. Lastly, it would be an important and necessary move towards a cost effective pursuit of more ambitious climate targets. To this end, it is therefore important to establish robust and harmonised accounting rules for the sector and to ensure their contribution towards meeting the climate change challenges.
Contents
- RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- The need to act on climate change now
- The role of land use and forestry in climate change
- Current policies are not enough
- Consultations with stakeholders
- Impact assessment
- Summary of the proposal
- Legal basis
- Subsidiarity principle
- Proportionality principle
- 5. OPTIONAL ELEMENTS
In early 2010, an expert group on climate policy for LULUCF was established under the European Climate Change Programme. The group comprised a wide range of stakeholders: environmental NGOs, trade associations, experts from public administrations and researchers. The group’s objective was to define and provide input on critical issues related to the inclusion of the LULUCF sector in the Union’s climate change mitigation efforts. This helped define the scope and steer the work of the Commission. The summary report with the main findings is available on the relevant Commission websites[14].
An online public consultation was carried out in 2010 to collect views on the opportunities and challenges related to the inclusion of the LULUCF sector in the Union’s greenhouse gas emission reduction commitments[15]. A total of 153 responses were received, representing the views of private companies, business and industry organisations, individuals and private land owners, non-governmental organisations, academia and research, and public authorities. The same questions were subsequently used in a separate consultation with Member States and 14 responses were received. The following points can be made based on the data collected through the online public consultation:
· most of the respondents believe that land use activities could contribute to mitigating climate change even in the short term (until 2020) and in the longer term between 2020 and 2050;
· the majority replied that the LULUCF sector should be part of the Union’s greenhouse gas emission reduction targets for 2020, with a tendency in favour of including the sector only if the Union were to take on a more ambitious commitment;
· respondents tended to favour a separate accounting framework for the LULUCF sector, as opposed to inclusion in the EU ETS or ESD;
· the majority of respondents also agreed that there is a need for more harmonisation and standardisation in reporting and monitoring within the Union;
· the vast majority of respondents considered the existing Union and national policies to be insufficient to ensure that land use activities contribute to climate change mitigation.
The full results of the online public consultation and the consultation with Member States are available on the relevant Commission websites[16].
Finally, the Commission also held a stakeholder meeting on 28 January 2011 in Brussels. Around 75 participants representing Member States, trade associations, environmental NGOs and research institutes took part in the discussions. The proceedings are also available on the relevant Commission websites[17].
The impact assessment investigated three key issues that need to be addressed when assessing how LULUCF should be included in the Union’s greenhouse gas emission reduction commitments, namely how to:
· ensure robust accounting rules for emissions and removals;
· achieve robust monitoring and reporting;
· establish the appropriate policy context for bringing the sector into the Union’s climate change commitments.
Based on the policy context for including the sector in the Union’s commitments currently regulated by the ESD and the EU ETS, the impact assessment considered three options for including LULUCF, namely as part of the ESD, as a separate framework or by delaying inclusion altogether. Each option addressed the issues of accounting and monitoring. The potential social, economic and environmental impacts of the various options were considered in detail.
The impact assessment concluded that there were good reasons to include LULUCF in the Union’s greenhouse gas emission-reduction commitments, namely to improve their policy coherence, environmental integrity and economic efficiency. But this will only be possible if the right policy context for LULUCF is put in place. The high variability of emissions and removals in forests means that annual emission reduction targets of the kind that apply to other sectors are unsuitable. The long lead times needed for mitigation measures to take effect also set LULUCF apart from most other sectors. In view of this, the impact assessment indicated that a separate legal framework for LULUCF would be the preferred option. In terms of accounting, the suitable options identified included mandatory accounting of emissions and removals from both forestry and agricultural activities and giving equal weight to mitigation action irrespective of whether it was taken in the forestry, agriculture, related industries or energy sectors. This is more cost-efficient and will ensure a level playing field not only for Member States but also for the various sectors of the Union’s internal market. It will also provide a framework of incentives for mitigation action by farmers, foresters and related industries, ensuring that such action is visible and correctly recorded. Broad coverage of emissions and removals will also ensure that potential reversals are reflected in the accounting system. Mitigation actions should nevertheless not be put on hold. National action plans could be prepared to provide a strategy and forecast for LULUCF. This would be an intermediate step towards the sector’s full integration into current policies. Moreover, the impact assessment also indicated that monitoring and reporting needed to be improved to underpin the accounting framework and the indicators tracking progress in agriculture and forestry. The Commission proposes to achieve this through a separate framework, namely by revising the Monitoring Mechanism Decision. For reasons of comparability and cost-efficiency, better use could also be made of Union-wide monitoring instruments such as LUCAS and CORINE.
The full results are presented in the impact assessment accompanying the proposal.
The main objective of this Decision is to establish robust and comprehensive accounting rules for LULUCF as well as to enable future policy development towards the full inclusion of LULUCF in the Union’s greenhouse gas emission reduction commitments when the conditions are right. To this end this Decision establishes a framework for:
· a mandatory accounting obligation on Member States as regards greenhouse gas emissions by sources and removals by sinks associated with agricultural and forestry activities in the LULUCF sector and voluntary accounting for revegetation and wetland drainage and rewetting;
· the general accounting rules that must be applied;
· the specific accounting rules for afforestation, reforestation, deforestation, forest management, changes in the harvested wood products pool, cropland management, grazing land management, revegetation, and wetland drainage and rewetting;
· the specific rules for accounting for natural disturbances;
· adopting LULUCF Action Plans in Member States designed to limit or reduce emissions by sources and maintain or increase removals by sinks associated with LULUCF activities, and for the evaluation of those plans by the Commission;
· the Commission’s power to update the definitions laid down in Article 2 in the light of changes to definitions adopted by the bodies of the UNFCCC or the Kyoto Protocol or other multilateral agreement relevant to climate change concluded by the Union, to amend Annex I to add accounting periods and ensure consistency between those accounting periods and the relevant periods applicable to Union emission reduction commitments in other sectors, to amend Annex II with updated reference levels in accordance with the proposed reference levels submitted by Member States pursuant to Article 6 subject to corrections made in accordance with this Decision, to revise the information specified in Annex III in accordance with scientific progress and to revise the conditions relating to the accounting rules for natural disturbances laid down in Article 9 in the light of scientific progress or to reflect revisions to acts adopted by UNFCCC or Kyoto Protocol bodies.
The legal basis for the legislative proposal is Article 192 of the Treaty on the Functioning of the European Union. The proposal pursues a legitimate objective within the scope of Article 191 of the Treaty on the Functioning of the European Union, namely, combating climate change. The purpose of the legislative proposal is to ensure Member States’ accurate and consistent accounting of emissions by sources and removals by sinks related to LULUCF, and therefore to improve the availability of information for policy and decision making in the context of the Union’s climate change commitments and provide incentives for mitigation efforts. This objective cannot be achieved by less restrictive means than the legislative proposal.
For Union action to be justified, the subsidiarity principle must be respected.
(a) Transnational nature of the problem (necessity test)
Climate change is a trans-boundary issue which requires joint action by Member States. National actions alone would not achieve compliance with the common greenhouse gas emission reduction targets set at Union’s level; they would also neither meet the objectives nor fulfil internationally agreed commitments. It is therefore necessary for the Union to create an enabling legal framework to ensure harmonised accounting for the LULUCF sector wherever possible in order to further its contribution to the climate change commitments of the Union.
(b) Effectiveness test (added value)
By reason of its effectiveness, taking action at Union level would produce clear benefits compared to action at Member State level. As the overarching climate change commitments are made at the Union level, it is effective to also develop the required accounting rules at this level. Moreover, overcoming the problems that have been identified, such as the need to have accurate and consistent accounting methodologies for the different LULUCF activities, requires common rules across all Member States. This can be ensured only at the Union level.
This legal framework will ensure effectiveness by employing harmonised and sound accounting and LULUCF Action Plans, and by enabling a more detailed assessment and evaluation of progress in Member States. This will ensure the coherence of the Union’s climate policy, further improve the environmental integrity of the Union’s climate change commitments and enhance the economic efficiency of the Union’s climate policy.
The proposal complies with the proportionality principle for the following reasons:
It does not go beyond what is necessary in order to achieve the objectives of improving climate change data quality and ensuring compliance with international and Union requirements and commitments.
The proposal is proportionate to the Union’s overall objective of reaching the Union targets enshrined in the Climate and Energy Package, the Kyoto Protocol, the Copenhagen Accord and the Decisions 1/CP.16, 1/CMP.6 and 2/CMP.6 (‘Cancun Agreements’).
The proposal provides for the implementation of accounting rules which are similar to, but more robust and comprehensive than, the ones discussed and employed at international level, especially with regard to Decision -/CMP.7.
As specified in the financial statement accompanying this Decision, the Decision will be implemented using the existing budget and will not have an impact on the multi-annual financial framework.
The proposal includes a provision pursuant to which the Commission will review the accounting rules in this Decision at the latest within one year of the end of the first accounting period.