Chapter 4 - Land use sector

In the EU, the land use, land-use change, and forestry (LULUCF) sector absorbs more greenhouse gases than it emits, removing significant volumes of carbon from the atmosphere. The sector therefore plays a major role in achieving the EU’s climate policy goals, helping to enhance removals and boosting the resilience of agriculture and forestry sectors.

As a key pillar for the EU’s bioeconomy, the sector plays an equally important role for the transition to a climate-neutral and resilient economy, for instance in providing food and materials that replace fossil or carbon-intensive materials.

Net removals increased by 15 Mt in 2023 compared to 2022, resulting in a total net sink of −198 MtCO₂-eq in 2023. Despite this improvement, however, the carbon removal sink has been declining at a worrying speed over the last decade. This trend is mainly driven by increased harvesting and slower forest growth. This is in turn due to climate change which has had an increasing impact. More frequent and severe forest fires, wind damages, droughts, and insect and fungus outbreaks are reducing forest’s ability to absorb carbon. In some cases, ageing forests are also a factor. The future capacity of EU forests to remove carbon is therefore uncertain, and the EU may be at risk of losing its ability to balance carbon emissions from other sources.

Currently, land used for settlements, cropland, wetlands and grassland are the main sources of LULUCF emissions (See Figure 19).

LULUCF target

The LULUCF target is to increase land-based net removals in the EU by an additional −42 MtCO₂-eq by 2030 compared to reference period 2016-2018 [40].

For the period 2021-2025, specific accounting rules apply for different land accounting categories, which consider historical benchmarks (such as the forest reference level). Member States are to follow the ‘no-debit’ rule, meaning that ‘accounted’ emissions must not exceed ‘accounted’ removals.

For the period 2026-2030, reporting is simplified, with the accounting rules and corresponding benchmarks abolished. The additional −42 MtCO₂-eq target covers all LULUCF reporting categories and is distributed among Member States through individual targets, based on their share of total managed land area. The national 2030 targets require each Member State to increase its climate ambition and implement additional agriculture and forestry policies. For more details, see Chapter 10 of the accompanying staff working document.

Assessment of the progress

The negative trend of shrinking net removals observed in recent years persists. Both the preliminary numbers for the compliance period 2021-2025 as well as Member States’ projections for the compliance period 2026-2030 indicate a gap to target.

Based on the 2025 GHG inventory submissions, the provisional ‘accounted’ balance for the period 2021 to 2023 shows an EU total debit of 52 MtCO₂-eq. The ‘no-debit’ commitment is therefore projected not to be met at the EU level, according to currently available figures. These, however, are subject to changes in the next years due to expected methodological improvements of the greenhouse gas inventories. These changes, and any flexibilities available to Member States, will then be taken into account before the compliance check for 2021-2025 that will be carried out in 2027 [41].

Based upon data for three years within the compliance period (2021-2023) and excluding flexibilities, 11 Member States showed accounting debits. They may therefore face challenges meeting the commitment in 2025, with Germany, Finland and Portugal showing the biggest net debit [42]. On the other hand, 16 Member States are in line with the ‘no-debit’ commitment, as accounted removals are higher than accounted emissions. Italy, Romania and Spain show the largest net credit [43]. Again, it is important to note that these figures are subject to change due to expected methodological improvements.

The latest projections provided by Member States show that the EU as a whole is not on track to meet its target of generating additional 42 MtCO₂-eq net removals by 2030, leaving a gap of around 40-55 MtCO₂-eq. Sweden, Finland and Spain project the biggest gap to their national 2030 targets, while France, Slovenia and Portugal project to have the biggest surplus compared to their respective 2030 targets (Figure 20).

It is paramount that Member States swiftly design and implement adequate policies to put them firmly on track to reaching their climate targets. This should include measures to assist farmers, foresters and other groups concerned in building sustainable business models in line with these targets.

Action to step up land monitoring

The LULUCF Regulation requires that all Member States set up systems to monitor soil and biomass carbon stocks, among other things.

Member States’ GHG inventories underpin climate action and are subject to continuous development. More accurate and timely data on land, soil and forests will help identify measures that unlock the highest climate benefits. Comprehensive and comparable monitoring systems for land, reaping the benefits of advanced technologies such as modelling and satellites, are key for cost-efficient decision-making and investment into the land sector, both in the Member States and along the bioeconomy value chains. The Commission is assisting Member States in these efforts, such as through Horizon Europe programme and the Copernicus satellite programme.

Related initiatives relevant for agriculture and forestry

The EU Carbon Removals and Carbon Farming Regulation adopted in 2024 is designed to facilitate and speed up the deployment of high-quality carbon removals and emission reductions. It includes three distinct types of activities:

• permanent removals;
• carbon farming; and
• carbon storage in long-lasting products.

By certifying carbon storage products, such as wood-based construction, the regulation will also provide land managers with new business opportunities and support the growth of the sustainable circular bioeconomy. This will support Member States in meeting their LULUCF targets.

Incentives for carbon removals and sustainable practices

Many funding mechanisms and incentives are available or are being developed to encourage carbon removals, through public or private sources.

The EU provides funding under the common agricultural policy, cohesion policy funds, and other EU programmes such as LIFE or Horizon Europe (in particular the Soil Mission). In 2023, the Commission adopted guidance on EU funding opportunities for healthy soils.

Member States can also support the uptake of sustainable management practices under State aid rules, which have been revised and allow to support forest ecosystem services such as climate regulation and biodiversity restoration. The Commission guidance on payment schemes for forest ecosystem services provides further information for interested groups. The common agricultural policy and State aid also cover funding for investments and measures such as training, advice or cooperation, which help maximise effects.

Private-sector initiatives linked to voluntary carbon markets, or a combination of different funding options can supplement and further promote the large-scale deployment of carbon farming.