Forests and agricultural lands currently cover more than three-quarters of the EU's territory and naturally hold large stocks of carbon, preventing its escape into the atmosphere. While the draining of peat land, felling of forest or ploughing up grassland generates emissions, actions such as afforestation or conversion of arable land into grassland can protect carbon stocks or result in carbon sequestration. EU forests, for example, absorb the equivalent of nearly 10% of total EU greenhouse gas emissions each year. Land use and forestry – which include our use of soils, trees, plants, biomass and timber – can thus contribute to a robust climate policy.

In relation to climate change, forestry and agriculture are about removals, emissions and storage. Removals result from the capacity of plants and soils to absorb and retain greenhouses gases from the atmosphere through the process of photosynthesis. Removals take place when trees grow or organic material builds up in soils. Emissions take place for instance when plants die and decay or when soils are disturbed so that their capacity to store is decreased. This would be the case when trees or crops are harvested, if wetlands are drained or if grasslands are ploughed.

Carbon dioxide (CO₂) differs from the other major greenhouse gases relevant to the sector in that the carbon can be stored in large quantities in the various carbon pools in vegetation, soils and living organisms. As an illustration, it is estimated that the release of just 0.1% of the carbon currently stored in European soils would equal the annual emissions from as much as 100 million cars.

For industrialised nations, accounting of emissions and removals from forests and agriculture are governed by the Kyoto Protocol adopted in 1997. The inclusion of forests and agriculture in greenhouse gas accounts of industrialised nations are governed by Protocol rules for the so- called LULUCF sector – land-use, land-use change and forestry.

Emissions and removals from forests and agriculture in non- industrialised countries are for the time being not governed by any internationally agreed legally binding framework. Policy development related to forests in non-industrialised countries is covered in the framework called REDD+, the UN programme for Reducing Emissions from Deforestation and Forest Degradation.

Up to 2020, EU Member States are committed under the Kyoto Protocol to ensure that greenhouse gas emissions from land use are compensated by an equivalent absorption of CO₂ made possible by additional action in the sector.

On 14 July 2021, the European Commission adopted a series of legislative proposals setting out how it intends to achieve climate neutrality in the EU by 2050, including the intermediate target of an at least 55% net reduction in greenhouse gas emissions by 2030. The package proposes to revise several pieces of EU climate legislation, including the EU ETS, Effort Sharing Regulation, transport and land use legislation, setting out in real terms the ways in which the Commission intends to reach EU climate targets under the European Green Deal.

Though emissions from deforestation and forest degradation account for 11% of greenhouse gas (GHG) emissions. At the same time nearly 1.6 billion people depend on these forests for food, water, shelter and energy. If designed properly, REDD+ could contribute to conserving national biodiversity and to the global fight against climate change. In addition to the environmental benefits, REDD+ also offers social and economic benefits.. REDD+ therefore has the potential for a triple dividend - gains for the climate, for biodiversity and for sustainable development. How far this potential can be materialized depends on providing a sound legal framework, predictable incentives, and proportionate resources that are used in a cost-effective manner.