Land use sector as part of the EU’s climate objectives

In the EU, the emissions and removals of the land use sector are considered on the basis of the LULUCF Regulations. The Regulations determine how the emissions and removals of land use, land use change and forestry are taken into account in the climate objectives of the EU in 2021–2030. The EU’s climate objectives are based on the European Climate Law, which aims for climate neutrality in the EU by 2050.

At the moment two commitment periods have been agreed for the LULUCF sector, one for 2021–2025 and the other for 2026–2030. The scope of application is the same for both periods but the way the commitments are considered differ. The commitment for the period 2021–2025 that is based on accounting rules is specified in Regulation (EU) 2018/841, while the commitment for 2026–2030 that is based on the reported greenhouse gas inventory data is specified in Regulation (EU) 2023/839.

The Commission has announced that the European Climate Law will be updated in 2024. The aim is to adjust the EU’s climate objective to 2040 and to ensure that the EU as a whole is on a path towards carbon neutrality by 2050. The climate objective of the LULUCF sector will be adjusted in line with the target to 2040.

The scope of the LULUCF Regulations includes emissions and removals of forests, cropland, grassland and afforested land and forest land converted to other land use (deforestation). Emissions and removals of wetlands are reported for the period from 2021 to 2025 and they will be included in the obligations of the LULUCF sector for the period 2026–2030.

Commitment period 2021–2025

The Member State must ensure that no emissions are generated from the land use sector during the period 2021–2025 (no-debit rule). The following chapters describe the accounting rules used for different forms of land use.

Forest reference level

According to the LULUCF Regulation, each Member State sets a reference level for its forests for the period 2021–2025 by using the criteria defined in the Regulation. The calculation of the forest reference level must be based on the actual figures for forest use for the 2000–2009 period and on the assumption that management practices will continue to be similar during the next commitment period. The calculation must also take into account the age class distribution of forests in such a way that the intensity of forest use is not unduly constrained, while also aiming at maintaining and strengthening removals in the long term. The estimates for removals and emissions must be consistent with the methods used in the greenhouse gas inventory.

The reference level is the calculated level against which the actual development of removals between 2021 and 2025 is assessed. If during the commitment period the actual removals are higher than the reference level, countries may benefit from a net removal in the accounts. However, the net carbon removals gained from forests cannot exceed 3.5% of the total emissions of that Member State in its base year. Finland can therefore make use of a forest sink that exceeds the reference level by up to 2.5 Mt CO2 annually.

The Regulation includes flexibilities that can be used if the removals are below the reference level during the commitment period. In this case, the removals become zero in the accounts, up to the level of forest land flexibility. The flexibility is specific to each Member State. For the period from 2021 to 2025, Finland’s forest land flexibility totals 22 million tonnes of carbon dioxide. If the removals are lower than the reference level and the forest land flexibility, this results in emissions in the Member State’s accounts. The use of forest land flexibility requires that forests are accounted for as sinks in the Member State and that the state has drawn up a long-term low-carbon strategy.

Under the Regulation, forest accounting includes removals resulting from harvested wood products and deadwood. They are taken into account in the calculation of the forest reference level. Net removals resulting from harvested wood products and deadwood are not subject to the cap.

The reference levels of Member States have been estimated in accordance with the LULUCF Regulation. Representatives of the Member States and independent experts appointed by the Commission, as well as experts from research institutes and stakeholders participated in the process. The Commission confirmed the final reference levels in 2020.

Accounting for cropland and grassland

According to the LULUCF Regulation, emissions from cropland and grassland are calculated by comparing them to the emissions in 2005–2009. The measures specified in Finland’s Medium-term Climate Policy Plan reduce emissions from agricultural lands in the agricultural and land use sectors.

Deforestation and afforestation

Emissions and removals from deforestation, i.e. clearing of forest land to other land use, and afforestation are calculated in full in 2021–2030. Annually, some 19,000 hectares of forest land is converted to other land use, such as agriculture, urban or transport construction or peat production.

Afforestation is usually carried out on cropland, grassland and peat production areas that are no longer in use. On the coast new forest land is naturally and slowly generated in areas rising from the sea due to land uplift.

Accounting under LULUCF Regulation in 2021–2025

Member States must ensure that there are no net emissions from the LULUCF sector in 2021–2025, i.e. that there is no debit in the sector. If, after compliance with the accounting rules, the LULUCF sector is causing emissions, the Member State must compensate for these either by additional measures in the effort-sharing sector or by purchasing LULUCF units from another Member State.

If, having applied the accounting rules, the LULUCF sector is a carbon sink, i.e. the sector creates a surplus, certain removal units generated by afforestation, cropland and grassland can be used to meet the targets of the effort-sharing sector. This flexibility is limited, and with respect to Finland removal units up to 4.5 million tonnes of carbon dioxide equivalent can be used to meet the targets for the effort-sharing sector between 2021 and 2025.

In the negotiations on Regulation (EU) 2018/841, as a highly forested country Finland received a special flexibility of 10 million tonnes of carbon dioxide for the period 2021–2030. With the amended LULUCF Regulation, the special flexibility will be applicable only in 2021–2025 and the amount is 5 million tonnes of carbon dioxide equivalent.

Commitment period 2026–2030

The European Commission gave a proposal on amending the LULUCF Regulation in July 2021. In this proposal the net removal target was for the first time included as an intermediate target for 2030 alongside emission reductions, in line with the European Climate Law, where the targets are set for 2050.

The amended LULUCF Regulation (EU) 2023/839 guides EU Member States to strengthen carbon sinks and to reduce emissions from the land use sector. The new targets for the EU and the Member States for 2026–2030 are:
1) 2030 Union target
2) targets of the Member States for 2030
3) cumulative target specific to Member States for 2026–2029, i.e. the ‘budget’.

The target for net removals of the European Union as a whole for 2030 is 310 million tonnes of CO2 equivalent. According to the European Climate Law, the maximum share of the LULUCF sector of the target for 2030 can be 225 million tonnes of CO2 equivalent.

A commitment has been set to each Member State to increase the net removals of the land use sector by 2030 from the average in 2016–2018. Finland’s commitment for 2030 is to increase net removals by 2.889 million tonnes of carbon dioxide equivalent from the average level in the reference years 2016–2018.

For each Member State the sum of the annual removals, i.e. the budget, for 2026–2029 is determined on the basis of the average of 2021–2023 and a linear trajectory to be calculated from the target for 2030. The amount of the target budget for Finland for 2026–2029 cannot be estimated exactly before the greenhouse gas balance of the land use sector for 2023 is known. If the budget for a Member State is not reached during the four-year period, the deficit will be carried over to 2030 with a penalty coefficient 1.8. Thus reaching the target for 2030 depends on the achievement of the budget for 2026–2029, which makes it difficult to assess the achievement of the targets in advance.

The most important flexibility available in 2026–2030 is the new land use mechanisms that will replace the flexibilities applicable in 2021–2025 concerning e.g. managed forest land and natural disturbances.

Compliance checks

The compliance checks are based on the greenhouse gas inventory of the land use sector. In Finland the greenhouse gas inventory of the land use sector is carried out by the Natural Resources Institute Finland, while Statistics Finland is responsible for official reporting with respect to all greenhouse gases. The compliance checks are carried out at the level of the states and will not apply to individual operators.

Compliance checks under the Regulation will be carried out in 2027 for the 2021–2025 period and in 2032 for the 2026–2030 period. Besides the reporting and calculations based on greenhouse gas inventories, the Member States can use flexibilities under the Regulation, the flexibility from the effort-sharing sector and the possibility to transfer surplus units of the LULUCF sector or purchase these from other Member States

Finland follows the fulfilment of the commitment for 2021–2025 very closely on the basis of the greenhouse gas inventory. A technical adjustment was made to the forest reference level in 2023 because of the change in the method used for the greenhouse gas inventory. This update enables to follow the developments during the commitment period even better. In recent years Finland has made significant efforts to improve the greenhouse gas inventory of the land use sector, which means that very likely another technical adjustment to the forest reference level will be made before 2027. The final technical adjustments will be presented to the Commission in 2027.

In Finland, the Climate Plan for the Land Use Sector will have significant impacts on meeting the commitments under the LULUCF Regulations. The implementation of the Climate Plan for the Land Use Sector is supported by the National Forest Strategy, the measures concerning agriculture in the Medium-term Climate Policy Plan and the CAP Strategic Plan.