Land use sector

The land use sector encompasses the management of cropland, grassland, wetlands, forests, settlements and includes land use change such as afforestation (planting trees), deforestation, or draining of peatlands.Agricultural and forest lands alone cover more than three-quarters of the EU’s territory, providing ample opportunity to remove CO₂ from the atmosphere and combat climate change.

Land can serve as a carbon sink (absorbing more carbon from the atmosphere than it emits, for example with plants and soil) or carbon source (releasing CO₂ into the atmosphere, for instance through deforestation).

Additionally, the use of durable harvested wood products from sustainably managed forests can provide long-term carbon storage.

The extent to which land, and the land use sector in particular, can contribute to climate mitigation depends largely on how these land areas are used and managed:

• Actions such as draining peatlands, deforestation or ploughing grassland to create cropland generate greenhouse gas emissions and decrease the carbon sink.
• Actions such as planting trees or converting arable land into grassland have significant potential to remove CO₂ from the atmosphere and enhance the carbon sink.
• Protecting existing carbon stocks (elements in which carbon is stored, such as trees), for example by rewetting peatlands, is also important in preventing the release of CO₂ into the atmosphere.
• Producing more durable harvested wood products like timber as construction materials for buildings.

Currently, the EU land use sector absorbs more greenhouse gases than it emits, making it a net carbon removal or carbon sink. Nevertheless, carbon removals have significantly decreased in recent years, and the land sink function is in decline.

To reach climate neutrality by 2050, which is our obligation under the European Climate Law, we first and foremost need deep and drastic cuts in greenhouse gas emissions. However, since we cannot eliminate all our emissions, we need carbon removals to help reverse the trend of decreasing carbon sinks.

In 2023, we upgraded EU legislation to boost carbon removals and promote sustainable agricultural and forest land management as well as the use of durable harvested wood products that help increase carbon sequestration in biomass and soils.

Derived from the European Environment Agency, 2022

The Regulation on land, land use change and forestry (LULUCF) sets out how the land use sector contributes to the EU’s climate goals. The LULUCF Regulation was revised in 2023 for the period up to 2030.

To help reach climate neutrality, for the first time, the revised LULUCF regulation has a separate land-based net carbon removals target of 310 million tonnes of CO₂ equivalent by 2030.

This EU-wide target is to be implemented through ambitious, fair and binding net removal national targets for the LULUCF sector.

The national targets set out are the sum of the average greenhouse gas inventory data for the years 2016, 2017 and 2018 and the national share of the greenhouse gas net removals (kilotonne of CO2 equivalent), subject to change in future revision under the regulation.

The revised Regulation consists of two phases:

• Phase 1 from 2021 to 2025: Stays close to the  LULUCF Regulation (EU) 2018/841. The revision does not affect the current “no debit” rule according to which each Member State shall ensure that accounted emissions from land use are compensated by at least an equivalent amount of accounted removals. The revision also includes mechanisms addressing impact from and adaptation to natural disturbances.
• Phase 2 from 2026 to 2030: This phase enlarges the territorial scope to cover all managed land and introduces the EU-wide target of -310 Mt CO₂ equivalent of net removals by 2030. This represents an increase of about 15% in the EU’s net removals compared to current levels and reverses the declining trend in net removals seen in recent years. This phase significantly simplifies compliance rules, moving from accounting benchmarks to reported emissions and removals, and building on more accurate and more precise data monitoring, such as through the increased use of geographical data and remote sensing.

The revised LULUCF Regulation will improve governance to ensure more cohesive policymaking and implementation at national and EU levels by:

• Enhancing the quality of monitoring, reporting and verification (MRV) of emissions and removals, thanks to new land monitoring technologies, techniques, and equipment, such as digital mapping and Earth observation, and datasets generated by the EU’s Common Agriculture Policy (CAP). Better information will help Member States adopt more effective policies and measures, and land managers take up new carbon farming schemes (ways of farming that sequestrate carbon in the soil) and land management practices.
• Simplifying the current accounting rules to increase the transparency of reporting of removals and emissions against targets.

• Promoting strong synergies between climate mitigation and environmental protection measures in areas under agricultural and forest lands, as well as natural and semi-natural areas, that will contribute to addressing the climate and biodiversity crisis.

Member States will need to reflect on the role of the land use sector when updating their National Energy and Climate Plans (NECPs) for the 2021-2030 period. The draft plans will be submitted to the Commission for scrutiny in the summer of 2023.

Member States must also assess whether their CAP Strategic Plans are in line with the new targets as set out in the revised LULUCF Regulation and the Effort Sharing Regulation (ESR) and amend them as necessary.  

A Land Study published in May 2023 supports and guides Member States in both processes, including comprehensive overviews on how to implement and finance mitigation measures in land use, agriculture, forestry, and the bioeconomy.

To deliver action in the land use sector, it is crucial to involve its actors. This can be done by rewarding land managers for adopting improved land management practices that increase carbon removals and protect the current carbon stocks while respecting ecological principles and enhancing biodiversity (e.g. through carbon farming).

Furthermore, the use of sustainably sourced long-lived harvested wood and biobased carbon storage products can contribute to the development of a circular bioeconomy.

Carbon farming can be financed through incentives from public or private sources:

• The EU offers funding under the new Common Agricultural Policy (CAP), other EU programmes (LIFE, Horizon Europe in particular through the Soil Mission, and the Cohesion Fund).
• The revised and simplified State aid rules can support the uptake of sustainable management practices.
• Private initiatives linked to carbon markets or a combination of different funding options can supplement and further promote large-scale deployment of carbon farming.

To ensure high-quality EU-certified carbon removals, the EU has established a regulatory framework for the Certification of Carbon Removals. A transparent and credible governance framework will encourage further investments in carbon removal activities and increase their deployment. Scaling up new business models leading up to 2030 and beyond is critical in achieving sustainable land management.

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