In a Nutshell

In February 2024, the European Commission presented a Communication entitled “Securing our future: Europe’s 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society”, recommending a net reduction of 90% greenhouse gas (GHG) emissions by 2040 compared to 1990 levels.

As part of the European Green Deal, the EU has set out legally binding climate objectives to (1) cut domestic GHG emissions by at least 55% by 2030 and to (2) reach climate neutrality by 2050. The European Climate Law provides the legal framework to support these objectives and requires the European Commission to propose an intermediary 2040 climate target for the EU in the first half of 2024, accompanied by an indicative EU GHG budget for the period 2030-2050.

In its 2040 target communication, the Commission breaks down the 90% emission reduction target into twin targets, suggesting that by 2040, the EU should have less than 850 MtCO2 remaining emissions (so-called “residual emissions”) with a maximum of 400 MtCO2 removed through industrial and land-based solutions. However, it does not go as far as proposing a percentage target for removed carbon at this stage, nor does it clearly specify how much different types of removals should contribute to the overarching amount of removals. The Communication also considers the role of carbon capture and storage (CCS) and carbon capture and utilisation (CCU) in decarbonising the economy towards 2040.

Whilst the Communication does not impose any legally binding obligations on the EU, it will serve as the basis for a forthcoming Commission proposal to amend the European Climate Law as part of the post-2030 climate policy agenda. The Communication outlines eight building blocks necessary to achieve the 2040 target, which represent the recommended focus areas for the next Commission’s legislative mandate.

The 2040 climate target is closely linked to the Industrial Carbon Management Strategy, which elaborates on the Communication’s vision for how so-called ‘industrial carbon removal’ (iCDR, defined as BECCS, DACCS and biogenic carbon), CCS and CCU can help deliver climate neutrality in the EU by 2050, and net negative emissions thereafter.

What's on the Horizon?

The publication of the Communication is the first step towards coming to an agreement on the climate targets for 2040, which will result in the adoption of an amended European Climate Law with a new binding 2040 target and an accompanying package of proposals for sectoral policies from the European Commission.

  • Following the publication of the Communication, the Commission’s services (at Directorate General level) will kick off the work on the legislative proposal to revise the European Climate Law and enshrine the 2040 target, with DG CLIMA leading this file. The proposal is expected to be adopted by the Commission in the first quarter of 2025.
  • Member states in the Council will have a first exchange of views during the Environment Council on 25 March 2024, followed by a policy debate on 17 June 2024.
  • The European Parliament will form a lead committee responsible for the file and appoint a rapporteur, with the Committee on Environment, Public Health and Food Safety (ENVI) likely to be named in charge.
  • Following the June 2024 elections, the new European Parliament and the Council will both propose amendments to the Commission’s proposal and negotiate the final text.
  • Once approved, the 2040 target will serve as the basis for the EU’s updated Nationally Determined Contributions (NDC) under the Paris Agreement. The NDC will need to be submitted ahead of COP30, in November 2025. Therefore, the EU will strive to find an agreement by that date, although the revised Climate Law will likely be finalised in early 2026.
  • The adoption of the revised European Climate Law serves as the foundation for a new package of legislative proposals, aimed at realising the EU’s 2040 climate target.

Deep Dive

Understanding the targets

The proposed target does not yet have any binding effect on the EU or its member states. It serves to initiate a political debate that will inform the revision of the European Climate Law during the next legislative term. The preparatory process is expected to be challenging, as the 2040 target will need to strike a balance between climate ambition and pragmatism, given a changing political landscape with less focus on climate policy combined with a growing focus on industrial competitiveness and cost of living.

In the Communication and the accompanying Impact Assessment, the Commission considered three scenarios varying in ambition, taking the input from the public consultation and the advice of the European Scientific Advisory Board on Climate Change (ESABCC) into consideration:

  • Scenario 1: GHG reduction up to 80%
  • Scenario 2: GHG reduction between 85-90%
  • Scenario 3: GHG reduction between 90-95%.

The recommended -90% target, thus, falls between scenarios 2 and 3 and sets a floor for remaining emissions (850 MtCO2e) and a ceiling for removals (400 MtCO2) by 2040. The ESABCC recommendation was to adopt a target in keeping with scenario 3 of 90-95% emission reductions by 2040. The Communication’s focus on carbon management aligns more with Scenario 3, which requires early deployment of CDR, CCS and CCU technologies. The maximum target of 400 MtCO2 to be removed through industrial and land-based solutions effectively limits the extent to which the EU can rely on carbon removals to reach the 2040 target. Depending on its final level and design, the target could also potentially affect the ability of different CDR methods to scale and effectively contribute to reaching climate neutrality and net negative emissions thereafter.

Apart from those estimations, no other quantified CDR-related projections were included in the Communication. The Commission Impact Assessment does provide projections for removals under all three scenarios. Scenario 3, the most ambitious of all three, projects 391 MtCO2 to be removed from the atmosphere by 2040, amounting to -75 and -317 MtCO2 of industrial and land removals respectively. This falls short of the 400 MtCO2 to be removed according to the Commission Communication. The fact that the total amount of removals is not broken down into separate sub targets for industrial and land removals is incompatible with the like-for-like principle, according to which fossil emissions can only be compensated by permanent CDR.

Delivering on the 2040 targets: the role of carbon removal

  1. Asserting that the path towards climate neutrality ought to be complemented with a sustainable and competitive economy able to withstand geopolitical risks, the Commission outlines eight building blocks of the future policy agenda. These building blocks could incorporate CDR in various ways.
    1. A resilient and decarbonised energy system aims at phasing out fossil fuels and building clean supply chains and will require a broad portfolio of zero-/low-carbon technologies Here, iCDR can help balance residual emissions from hard-to-abate sectors like heavy industry and transport, as well as compensate for the last tons of fossil emissions in the power sector, enabling the transition to net-zero.
    2. An industrial revolution with competitiveness seeks to make Europe an attractive destination for investments, which could mean increased capital flows and efforts to de-risk investments in early-stage CDR projects.
    3. Infrastructure to deliver, transport and store CO2 will be essential for industrial decarbonisation and will also help scale up certain industrial carbon removal technologies like Direct Air Carbon Capture and Storage (DACCS) and Bioenergy with Carbon Capture and Storage (BECCS). Such a scale up of CO2 infrastructure will require significant investments accompanied by a non-discriminatory regulatory framework that is favourable to iCDR.
    4. Enhanced emissions reduction in agriculture could promote sustainable agricultural practices and carbon farming activities.
    5. Climate policy as investment policy is expected to create a stronger business case for zero- and low-carbon technologies and direct public investments towards sectors where high investment risks jeopardise commercial viability, which could help scale up and decrease the costs of DACCS/BECCS.
    6. Fairness, solidarity and social policies could ease the burden and costs of the clean transition with a growing CDR sector offering job opportunities for those previously employed by fossil fuels companies, whilst carbon farming practices provide an additional income stream for forest and land managers.

    EU climate diplomacy and partnerships should help the EU continue pushing for global climate ambition, promote successful EU policies and accelerate the work being done under Article 6 of the Paris Agreement.

  2. Risk management and resilience will see the EU develop a comprehensive climate adaptation strategy. In this context, land-based CDR can provide additional benefits for biodiversity and ecosystem restoration.

Room for improvement: integrating CDR in the 2040 climate framework

The publication of the 2040 Communication is a positive development for CDR in the EU, as it recognises the role of CDR in delivering climate neutrality and calls for their early deployment. In order for CDR to truly be a part of the solution to climate change, several improvements should be made.

  • The 90% net GHG emissions target for 2040 should be split into quantified “twin” targets for gross emissions reduction and CDR, both expressed as minimum contributions. This will provide clarity regarding each component’s contribution while safeguarding against over-reliance on removals.
  • The 2040 removal targets should be further split into sub targets for permanent and land-based removals, thereby ensuring clarity and visibility and providing the necessary investment incentives. Importantly, it will also recognise the difference between their contributions in line with the like-for-like principle and reduce the risks of mitigation deterrence.
  • The European Climate Law should adopt the notion of “permanent” rather than “industrial” removals in line with the Carbon Removal Certification Framework. Currently, the 2040 communication and the Impact Assessment differentiate between land removals and “iCDR”, defined as DACCS, BECCS and biogenic carbon. Such distinction fails to consider other promising methods, such as enhanced rock weathering. Only developing a future-proof diverse portfolio of CDR methods can ensure the EU meets its climate targets.

To address these points, the European Commission should produce a strategy solely dedicated to CDR.

 

Read more about Carbon Gap’s position on CDR under the 2040 climate framework here.

Timeline

29 July 2021
6 February 2024
Q1 2025
November 2025
29 July 2021

Enforcement of the European Climate Law

6 February 2024

Publication of the 2040 Communication

Q1 2025

Commission proposal to revise the European Climate Law

November 2025

Deadline to submit updated NDCs

Official Document

Year

2024

Unofficial Title

2040 targets

In a Nutshell

The Just Transition Mechanism is the European Union’s main tool to ensure that the transition to a climate-neutral economy happens in a fair and just way. Through its three pillars, it aims to mobilise an estimated EUR 55 billion over 2021-2027 to support the European regions, sectors and workers most affected by the transition.

The EU regions identified as most at risk or overburdened by the transition, and thus most in need of justice-oriented policies, are those whose economies rely heavily on fossil fuel extraction and production, particularly coal. Poland, Germany, Romania, Bulgaria, the Czech Republic and Spain face the greatest potential job losses in this sector.

The policy establishes three financial mechanisms to work towards a Europe-wide just transition: the Just Transition Fund (JTF), a dedicated transition scheme under InvestEU, and a loan facility provided by the European Investment Bank. Respectively, they offer grants, mobilise private investments and leverage public finance. Whereas the eligibility criteria for the JTF promote the diversification and modernisation of economies and the reskilling of workers, the other mechanisms are broader in scope and include a wide range of sectors.

As a nascent sector set to grow in scale and importance in the coming decades, carbon dioxide removal falls under the scope of the Just Transition Mechanism. To function, the EU CDR industry will need a large workforce, making it a natural candidate for reskilling programmes across multiple sectors, including academic research, engineering and technical jobs.

What's on the Horizon?

The eighth edition of the Just Transition Platform Conference will take place between 23 and 25 October in Brussels.

By June 2025, the Commission will need to review the implementation of the Joint Transition Fund.

Each member state has a national share reserved under the Public Sector Loan Facility until 31 December 2025. There are regular deadlines to apply for grants under the facility, with the next one on 17 January 2024.

The territorial Just Transition plans cover the period up to 2030.

Deep Dive

The Just Transition Fund

The JTF is the first pillar of the Just Transition Mechanism. The fund primarily supports the economic diversification and reconversion of the most affected regions through grants. EUR 17.5 billion was attributed to the fund through a regulation, with EUR 7.5 billion coming from the Multiannual Financial Framework for the period 2021-2027 (MFF) and EUR 10 billion from the NextGenerationEU for the period 2021-2023.

To access allocated funds, member states must prepare territorial just transition plans covering territories “most negatively affected based on the economic and social impacts resulting from the transition”. Special consideration should be given to islands and outermost regions.

The InvestEU “Just Transition” scheme

The second pillar of the JTM provides budgetary guarantees to ‘implementing partners’ that the EU Commission will provide direct or indirect financing. It can support investments detailed in national territorial just transition plans spanning a wide range of projects, including energy and transport infrastructure decarbonisation, economic diversification and social infrastructure. This scheme is expected to mobilise EUR 10-15 billion, coming mostly from the private sector, with some support from InvestEU implementing partners such as the European Investment Bank.

The public sector loan facility with the European Investment Bank

The third pillar of the JTM and its accompanying regulation provides a mix of EUR 1.5 billion in grants from the EU budget and approximately EUR 10 billion of loans from the European Investment Bank. A further EUR 18-25 billion of public investments is expected to be mobilised. The loan facility mainly targets energy and transport infrastructure, district heating networks, energy efficiency measures and social infrastructure. Applications must be linked to the relevant territorial just transition plan to demonstrate how the project supports specific national ‘green transitions’. Each member state is reserved a part of the budget under the facility until 2025, after which any unused amount will be made available to projects across the entire EU.

While the two other pillars of the JTM provide rather broad requirements, the Just Transition Fund outlines a specific list of actions and sectors that can be supported. CDR in its broadest sense could directly or indirectly fall under multiple categories. For example, it could help funnel productive investments in SMEs and investments in the creation of new firms. On the research side, CDR can be a destination for investments in research and innovation activities. On the social side, it could accompany the upskilling and reskilling of workers and job seekers. Finally, on the infrastructure side, it could be applied to upgrade district heating networks, especially combined heat and power plants, to unlock investments in the deployment of climate technology and systems, and for investments in renewable energy.

Evaluating the Just Transition Mechanism

Being the EU’s flagship mechanism to ensure no one is left behind in the green transition, the JTM’s main lever consists of requiring the development of territorial just transition plans. These are intended to ensure a high level of ambition whilst allowing civil society and the affected publics to have visibility over the just transition plan. There is also a certain degree of technical assistance provided for local public authorities, mostly through the Just Transition Platform, a one-stop shop platform providing information on all aspects of the JTM.

However, the JTM has several potential drawbacks. Firstly, the JTM might inadvertently reward countries that have delayed climate action by providing funds to member states with carbon-intensive industries that would not have decarbonisation plans otherwise. Secondly, the initial budget of the JTF was set at about EUR 44 billion, whereas it has now been downsized to EUR 17.5 billion, which will inevitably mean that fewer projects will be supported. Thirdly, the vision of fairness set out in the JTM and the European Green Deal in general has been criticised as a short-term, dirigiste solution to systemic challenges. Only specific sectors and regions are included, whereas other meaningful activities involving other types of actors and regions are left out of the JTM. Finally, the JTM’s operationalisation of climate justice is focused on those who are adversely affected by the transition, rather than on those who are adversely affected by climate change at large.

Timeline

11 December 2019
14 January 2020
28 May 2020
29 June - 3 July 2020
9 March 2021
July 2021
August 2021
11 December 2019

European Green Deal communication and announcement of the Just Transition Mechanism

14 January 2020

Commission adopts the Just Transition Fund Proposal

28 May 2020

Commission adopts the Public Sector Loan Facility Proposal

29 June - 3 July 2020

Launch of the Just Transition Platform

9 March 2021

Adoption of the InvestEU Guidelines, including guidelines for the Just Transition Special Scheme

July 2021

Entry into force of the Just Transition Fund Regulation

August 2021

Entry into force of the Public Sector Loan Facility Regulation

Unofficial Title

Just Transition Mechanism

Year

2021

In a Nutshell

Horizon Europe is the European Union’s key funding programme for research and innovation. It follows and builds upon Horizon 2020. Totalling a budget of €95.5 billion for the period spanning from 2021 to 2027, it is a key instrument in tackling climate change, helping achieve the UN Sustainable Development Goals and incentivising the competitiveness and growth of the EU.  

Beyond EU members, the programme is a strong strategic tool for international cooperation in research and innovation. It opens the window for researchers across the world to team up with the EU through different forms of cooperation, including the association of three non-EU countries. 18 countries have association agreements, including New Zealand and the UK as the newest addition with reached political agreements (still pending formal adoption).

Substantive and welltargeted research and innovation support is key to fostering the maturation of nascent removal methods and to underpinning the progression towards the scale-up needed to reach climate neutrality goals in the EU. Carbon removal projects have received funding from Horizon Europe, especially within Pillar II (see Deep Dive section below). The support has been predominantly indirect and provided through calls with potential spillovers into removals, with a lower share of funding support for CDR directly. Broadening the understanding of removal methods and providing more targeted and sufficient support that strengthens the diverse family of removal methods will form a crucial part of Horizon’s approach to CDR in forthcoming work programmes.  

What's on the Horizon?

  • More countries are likely to finalise association agreements with Horizon Europe in the future. Negotiations with Morocco, Canada, the Republic of Korea, and Japan are at various stages of advancement. The UK and the EU have reached a political agreement on the UK’s association to the programme starting 1 January 2024. However, it is still pending for Council approval before it is formally adopted by the EU-UK Specialised Committee on Participation in Union Programmes. The same is true for New Zealand which is still pending Parliamentary consent 
  • Building on the public consultation launched back in November 2022, the Commission will publish the Horizon Europe interim evaluation and consultation to inform the Horizon Europe Strategic Plan 2025-2027.  
  • In parallel, the expert group formed by the Commission’s latest call in May 2023 will meet between Q4 2023 – Q4 2024 and is expected to provide input on the programme’s evaluation. They will subsequently publish a report on how to amplify the impact of EU research and innovation programs and build on the conclusions of Horizon 2020. 
  • Further details on calls that are still open or yet-to-be-opened within the work programme 2023-2024 should be expected, as well as information on specific projects taken forward under each call. The work programmes for the following period should also be forthcoming.  

Deep Dive

A look at the various funding programmes of Horizon Europe

The program consists of four main pillars, each having dedicated funding and established working programmes that guide priorities for research and funding support:  

A table showing the main programs and total budgets for individual pillars of Horizon Europe
Adapted from Horizon Europe: Investing to shape our future (2021)

  • Pillar I – Excellent Science: aimed at strengthening the excellence and competitiveness of the EU’s scientific base. Three initiatives take the work forward:  
    • European Research Council: provides funding to researchers and their teams working on frontier science topics, with an emphasis on early-stage researchers.  
    • Marie Skłodowska-Curie Actions: focuses on enhancing the knowledge and skills of researchers through mobility and training.  
    • Research infrastructures: ensures world-class research infrastructure in Europe that is integrated, interconnected, and available to the top researchers in Europe and across the world.  
  • Pilar II – Global Challenges and European Industrial Competitiveness: centred around 6 clusters that tackle key global challenges underpinning EU policies and the Sustainable Development Goals, with a total of €53.5 billion. The launch of “Missions”- specified in the main work programme – is also part of the strategic planning process. Each cluster publishes a number of projects and calls within the main work programme for the relevant year, following priorities in R&I for the EU. Horizon Europe sets out its own Technology Readiness Level (TRL) scale, and projects are set to support the path towards different stages of maturity through a diverse range of actions including Research & Innovation Actions (RIA), Innovation Actions (IA) and Coordination and Support Actions (CSA).  
  • Pilar III – Innovative Europe:  
    • European Innovation Council (EIC): promotes breakthroughs, deep tech and disruptive innovation with scale-up potential at the global level through all stages of innovation.  It has two operating modes, an “Open” fund, holding no thematic preferences, and a “Challenge” fund, with specific thematic areas. Different technology readiness levels (TRL) are covered throughout its programmes:  A table of the total funding for programs in pillar three of Horizon Europe
    • European Innovation Ecosystems (EIE): supports the creation of better-connected innovation ecosystems across Europe, at both national and regional levels.  
    • European Institute of Innovation & Technology (EIT): brings together business, education and research organisations. 
  • Widening Participation & Strengthening the European Research Area (ERA): composed of two initiatives:

A look at carbon removal in Horizon Europe

Horizon Europe’s work programmes benefit a wide range of topics and technologies, especially in the six clusters of Pillar II. A close look at these programmes shows Horizon Europe has committed funding to CDRrelated topics (directly and indirectly, including calls with a high potential for spillovers), with the majority being clustered in three areas ( 8 Climate, Energy and Mobility; 9 Food, Bioeconomy, Natural Resources, Agriculture and Environment; and 12 Missions) in both the 2021-2022 and 2023-2024 work programmes.  

A table showing the various budgets available for CDR both directly and indirectly in Horizon Europe

The number of calls indirectly related to carbon removals found in both periods, – ranging from CCS and CO2 infrastructure projects to digital solutions and Monitoring, Reporting and Verification (MRV) – is higher than those with a direct link to CDR, such as blue carbon, carbon sequestration and BECCS projects.  For context, the funding allocated directly to CDR projects amounted to about 1.1% of the total budget for 2021-2022 and 0.9% of the 2023-2024 total budget. Direct and indirect funding for CDR reached 2.6% of the total 2023-2024 budget, instead of the 1.78% for 2021-2022.  

Research & Innovation actions (RIA) are dominant for the first period, while both RIA and Innovation Actions (IA) lead within the latest work programme, although RIA are slightly more present (65.73% of all projects) in direct CDR funding. RIA projects have 100% of costs covered by the EU and are directed to new knowledge and exploration of technologies. IA projects are covered until 70% of costs and focus more on prototyping, testing, piloting, and large-scale product validation, and marker replication.  

Knowledge and targeted funding

A number of projects in Horizon Europe can provide simultaneous benefits to Carbon Capture and Storage (CCS), Carbon Capture and Utilisation (CCU), and Carbon Removal (CDR). While there are sometimes overlaps between these families of methods – for example, shared CO2 transport and storage infrastructure – CDR is a much broader field and a set of methods on its own. The main work programme for 2023-2024, especially in Cluster 6, features more explicit mentions of carbon removals in the expected outcomes or scopes of the topics. However, the calls do not solely focus on CDR in most cases and are more likely to produce spillover effects that benefit CDR, such as providing CO2 transport infrastructure.  

It is a positive step that the Commission has progressively included mentions of CDR within Horizon’s work programmes. To ensure that Horizon Europe delivers the appropriate support for CDR solutions going forward, a more sophisticated approach must be introduced that differentiates between CCUS and CDR methods, providing dedicated funding for different types of CDR as part of a portfolio approach. 

Means in line with targets

There is substantial support for different types of removals given CDR’s status as a nascent field. Despite this support, the amount currently allocated to research into carbon removals is not nearly enough to meet the needs for accelerated development and deployment of CDR in light of the EU climate goals and the ambition for the EU to take the lead in this space globally. To deliver on these goals, the EU must commit to a significantly expanded budget for carbon removal, in line with the goals set out for the Green Deal, such as 310 MtCO2e of removals from the LULUCF sector, 55% emissions reductions by 2030, and climate neutrality by 2050.  

Diverse and precise support

Horizon Europe strategic plans guide the direction of the investments in research and innovation. Ahead of the next iteration, the Strategic Plan 2025-2027 analysis looks at changes in EU policy and how the global context has changed since the first Plan (2021-2024), to determine if adjustments in terms of priority, directions and actions need to be made for this period. The analysis states that significant research is needed to bring down the cost of nature-based and industrial removals and further identifies areas where the current efforts need to be reinforced, for example:  

  1. Sustainable economic models that incorporate ways to measure and incentivise the co-benefits of carbon removal; 
  2. Addressing challenges in soil, water, nutrient and biodiversity through e.g, carbon removal; 
  3. The removal potential of bio-based economies and bio-based value chains; 

Beyond these suggestions, directing calls for projects based on a diverse portfolio of CDR methods will be necessary to help the industry bridge the research and innovation gap and ensure the maturity of all removal technologies. This approach requires that Horizon Europe ensure there are sufficient calls for all levels of maturity (TRL levels) and types of actions (Research & Innovation, Innovation and Coordination & Support Actions), since carbon removal requires both early-stage research capacity and support for deployment. 

Timeline

7 June 2018
April 2019
11 December 2020
28 April 2021
29 July 2022
23 February 2023
15 May - 7 June 2023
Q2 2023
9 July 2023
7 September 2023
December 2023
Q4 2023
Q4 2023 - Q4 2024
Q4 2024
28 April 2021

Regulation (EU) 2021/695 of the European Parliament and of the Council establishing Horizon Europe

29 July 2022

Deadline for the Feedback Period – Horizon Europe – Interim Evaluation

23 February 2023

Deadline for the Public Consultation period

Q2 2023

Publication of factual summary reports from the public consultation

December 2023

Horizon 2020 ex-post evaluation report (staff working document)

Q4 2023 - Q4 2024

High Level Expert Group work

Q4 2024

High Level Expert Group Report publication

Further reading

A new horizon for Europe – Impact Assessment for Horizon Europe 2021-2027  

Horizon Europe budget breakdown  

Evidence Framework on monitoring and evaluation of Horizon Europe – focusing on the measurement of impact for Horizon, including the introduction of Key Impact Pathways.  

Funding and Tenders Portal 

Horizon Europe Strategic Plan 2021-2024 

Horizon Europe Strategic Plan 2025-2027 Analysis   

Horizon Work Programmes  

Countries

Since 1 August 2022, the following countries have association agreements in place: Albania, Armenia, Bosnia and Herzegovina, the Faroe Islands, Georgia, Iceland, Israel, Kosovo, Moldova, Montenegro, North Macedonia, Norway, Serbia, Tunisia, Turkey, Ukraine.  

Status

Policy Type

Unofficial Title

Horizon Europe

Year

2021

Official Document

Last Updated

31/07/2023

In a Nutshell

The Common Agricultural Policy (CAP) aims to support farmers and ensure Europe’s food security. It sets out the EU legal framework and funds the support member states can provide to agriculture, forestry, and rural development. It has a double objective of ensuring Europe’s food security and incentivising environmentally friendly agriculture. 

The CAP has greatly evolved since its creation in 1962. In its latest iteration, the CAP 2023-2027 pursues 10 overreaching objectives aimed at ensuring agricultural productivity and farmers’ income while encouraging environmentally friendly practices.  

The total budget of the CAP 2023-2027 amounts to EUR 386.6 billion. The budget is divided into two funds, which are often referred to as the two pillars of the CAP:  

Each country implements the CAP 2023-2027 at their national level through a CAP Strategic Plan. These plans operationalise the numerous targeted interventions each country undertakes while contributing to the ambitions set by the European Green Deal 

Direct payments to support farmers are granted on the condition that they implement “good agricultural and environmental conditions” (GAEC). Around 90% of the total European utilised agricultural area (UAA) is covered by this conditionality. Furthermore, 25% of direct payments are optional and require farmers to implement eco-schemes (specific to each country) rewarding environmentally friendly farming. 

Carbon dioxide removal (CDR) and the CAP interact closely in several important ways. Practices that improve carbon sequestration in soils and ecosystems have many overlaps with soil health and agriculture and thus the CAP. The CAP provides an array of measures aiming to incentivise agroforestry practices, as well as the maintenance and restoration of land ecosystems. Finally, enhanced weathering and biochar are two novel CDR methods that also intersect with farming and may thus interact with the CAP in the future. 

There is, however, a dual dynamic within the CAP. On the one hand, some measures within the CAP still indirectly promote intensive farming practices depleting soil carbon stocks. On the other hand, more and more measures are targeted towards improving soil carbon stocks. The significant leeway provided to member states in their implementation of national measures means that the contribution of CAP to carbon removals varies across the EU.

What's on the Horizon?

As a response to the farmers’ protests across the EU, the Commission proposed a targeted review of the good agricultural and environmental conditions (GAEC) of the CAP. This review would reduce administrative burdens for farmers and but also waters down some of the CAP’s environmental criteria. The EU Parliament plenary will vote on the targeted review on 24 April.

The CAP 2023-2027 and the national CAP Strategic Plans entered into force on 1 January 2023. In 2024, countries will have to report to the EU Commission on their performances. In 2025, the national CAP Strategic Plans will be reviewed by the EU Commission.  

A new obligation to protect wetlands and peatlands will be included in the CAP by 2025 at the latest; wetlands and peatlands are part of the conventional CDR methods.  

The Commission will propose an improved methodology to ensure that the contribution of the CAP to climate action is correctly measured and accounted for by 2026 at the latest. 

Deep Dive

National Strategic Plans and support mechanisms  

Within the CAP 2023-2027, CAP National strategic plans operationalise the CAP’s policy objectives at the national level.  

The CAP amounts to 20% of the total EU budget and plays an enormous role in the EU’s intervention in the land sector. It provides different support mechanisms:  

  • income support through direct payments, among others, to incentivise environmentally friendly practices; 
  • market measures to deal with difficult market situations; 
  • rural development measures (national and regional programmes to address specific needs and challenges). 

Each member state has relative freedom to distribute funding across these three types of support mechanisms and can freely allocate up to 25% of its budget between income support and rural development. The CAP Strategic Plans outline this allocation and describe which measures will be supported within each member state. The CAP 2023-2027 puts higher emphasis on tracking outcomes by setting an annual performance report and a biannual review process for national plans, assessing progress towards their goals and the 10 CAP overarching objectives. 

Direct payments use the biggest share of the CAP funding and are conditional to Good Agricultural and Environmental Practices (GAEC), which include measures on maintaining a minimum soil cover, limiting erosion and maintaining soil organic matter, and requiring farmers to save at least 3% of their arable farmland for non-productive areas/features with the possibility to get support to extend it to 7% of the arable land. The new CAP introduces a requirement prohibiting drainage, burning or extraction of peat from peatlands. This prohibition could have a favourable impact on peatlands, allowing them to serve as carbon sinks rather than as sources of carbon emissions.  

While a large share of utilised agricultural area (UAA) is set to be farmed under GAECs, only a limited share is set to be under commitments to reduce emissions or to maintain or enhance carbon storage, which includes permanent grassland, permanent crops with a permanent green cover, agricultural land in wetland and peatland. Moreover, this share varies dramatically between countries, from 0% to 85%. The metrics used in the strategic plans are also not the same; some mention the peak coverage year (note: peak year also varies between countries) while others use the average over the 2023-2027 period. It is quite concerning to see that several states currently have no measures to increase soil carbon storage. Experts have also raised the question of whether the measures proposed are enough to reach the objectives set in the strategic plans. 

Eco-schemes 

Additional subsidies in the form of eco-schemes can be made available to states as a reward for more environmentally friendly practices. Eco-schemes support various types of voluntary actions that go beyond the CAP’s obligation of conditionality. These include practices related to agro-forestry and carbon farming among others. The Commission has published an extensive list of examples. However, it includes only a handful of practices linked to CDR. Member states are not exploiting this opportunity to the fullest, as only a minority of them plan to use eco-schemes in relation to CDR. Some environmental NGOs raised concerns questioning the eco-schemes’ true environmental benefits. 

Carbon farming and related debates 

The recent communication by the EU Commission on “Sustainable Carbon Cycles” has highlighted that the CAP should be one of the primary mechanisms to promote carbon farming at the European level, together with LIFE and Horizon Europe’s “Soil Deal for Europe”. The Commission encouraged states to include measures to incentivise carbon farming in their strategic plans. The current efforts on the Carbon Removal Certification Framework (CRC-F), among others, aim to clarify what good carbon farming practices mean. 

There are, however, several issues related to carbon farming that need to be discussed and tackled with high priority.  

Firstly, carbon farming is a very loaded term. The EU defines it vaguely as “a green business model to reward farmers for adopting practices leading to carbon sequestration”. Therefore, carbon farming as an economic concept and the underlying practices it encompasses should be separated in order to differentiate the business model from the underlying practices.  

Secondly, there is a strong opportunity in the CRCF to make clear that the durability of carbon sequestration in soil is lower than for other CDR methods. Any market-facing claims need to be strictly regulated to ensure that fossil emissions are not compensated for through such practices.  

Thirdly, soil carbon sequestration comes along with many co-benefits besides carbon removal. These include improved soil quality, positive biodiversity impacts and better water retention. These practices should thus be incentivised. However, key questions remain, such as who should pay, and be paid, to implement these practices and what the basis for payment should be. 

Finally, the measuring, reporting and verification (MRV) of soil carbon fluxes is still very much a work in progress. There is currently a trade-off between the accuracy of results and the costs/scalability of methodologies. The EU has yet to determine how best to deploy MRV and at which geographical scale and granularity. The purpose of MRV deployment should be better defined. Furthermore, the commodification of sequestered soil carbon requires more strenuous MRV. 

Timeline

1962
1984
1992
2003
2014-2020
2021
2021-2022
2 December 2021
January 2023
December 2023
2024
15 March 2024
15 April 2024
24 April 2024
2025
2026
2027
1962

Launched in 1962. 

1984

First big reform of the CAP to bring production closer to what the market needs. 

1992

Shift from market support to producer support through direct payments to farmers. Farmers are incentivised to endorse more environmentally friendly practices. 

2003

The CAP introduces income support tied to environmental, food safety and animal health and welfare requirements

2014-2020

The CAP is once again reformed to increase the competitiveness of the sector, promote sustainable farming and support rural areas. 

2021

The EU Parliament, the Council and the Commission agree on the need to reform the CAP again and shift implementation responsibilities.

2021-2022

A transitional agreement is put in place while the reform is negotiated. 

2 December 2021

Adoption of the CAP 2023-2027.  

January 2023

The CAP 2023-2027 and the CAP strategic plans enter into force. 

December 2023

The EU Commission will submit a report to assess the joint CAP strategic plans in reaching Green Deal targets.

2024

Each country will present an annual performance report. 

15 March 2024

The EU Commission proposed a targeted review of the CAP

15 April 2024

Adoption of the targeted review by the AGRI Committee (Committee responsible)

24 April 2024

EU Parliament plenary vote on the targeted review

2025

The Commission will conduct its first performance review of the CAP strategic plans. 

2026

The Commission will conduct an interim evaluation of the CAP 2023-2027.

2027

The Commission will conduct a second performance review of the CAP strategic plans.

Status

Unofficial Title

CAP

Year

1962

Official Document

Last Updated

24/07/2023

In a Nutshell

The Renewable Energy Directive (RED) aims to increase the share of renewable energy sources (RES) within the European Union’s final energy consumption. It establishes a common framework for the development of renewable energy capacity in the European Union and sets a binding target for the share that renewable energy represents within the EU’s final energy consumption.

In its 2021 revision, the Commission proposed increasing the target minimum share of RES in the EU’s final energy consumption to 40% in 2030 (RED III), an increase of 8 percentage points compared to its 2018 recast (RED II), which had established a minimum RES share of 32% of final energy consumption in 2030. Since the 2021 proposal, the binding renewable target has been raised to a 42.5% RES share in 2030 as part of the RePower EU Package (RED IV). RePower EU follows the Russian invasion of Ukraine and an increasing need to reduce dependency on Russian gas.

The Directive is particularly relevant for bioenergy with carbon capture and storage (BECCS), as it regulates the use of biomass and biofuels for energy generation, affecting the feasibility of introducing BECCS in the EU, and its potential scale. RED is also highly relevant to carbon dioxide removal (CDR) methods that rely on a stable supply of renewable and lowemissions energy, such as direct air carbon capture and storage (DACCS).

The RED also impacts biomass-based CDR methods beyond BECCS. Due to the high expected demand and relatively limited supply of eligible types of biomass, competition may arise between actors proposing different potential uses for biomass. Biomass use also affects carbon storage in biogenic carbon sinks. For example, forests can be a biogenic carbon sink, provide timber, and provide residual harvest biomass for bioenergy production.

What's on the Horizon?

  • A tentative political agreement on RED III was reached between the EU Parliament and the EU Council on 30 March 2023. This agreement was due to be formally approved on 17 May, but a last-minute disagreement over the role of low-carbon hydrogen produced using nuclear energy in the EU’s decarbonisation targets led to the process being postponed.
  • On 19 June, the EU Council reached an agreement on RED III. The European Parliament Committee responsible for the file approved the text on 28 June. A plenary vote in the European Parliament took place on 12 September, during which the EP voted in favour of the revision. The Council adopted the final text on 9 October 2023. The text was published in the Official Journal of the EU on 31 October 2023 and entered into force on 20 November 2023.
  • The energy policy framework for the post-2030 period is under discussion.

Deep Dive

Making sense of the Renewable Energy Directive

To help deliver on the EU’s increasing climate ambitions, including the EU-wide 55% emissions reduction target by 2030 and the target to achieve net neutrality by 2050, the targets set by the RED have been repeatedly increased. As a result, the RED has evolved from RED I to its latest version, RED IV. Starting from a target of 20% RES as a share of total final energy consumption by 2020 set in 2009, RED I was revised as part of the “Clean energy for all Europeans” package in 2018 to include a target of a 32% RES share by 2030, thereby becoming RED II.

In July 2021, as part of the “Fit-for-55” package, RED III was proposed and the target was raised to 40% by 2030. Following the Russian aggression against Ukraine, the Commission proposed a first amendment (RED IV) with a target of 45% as part of its “REPowerEU” plan. In November 2022, the Commission proposed a second amendment for a Council regulation to accelerate RES deployment.

In March 2023, the EU Parliament and the Council reached a tentative agreement to raise the target to a 42.5% RES share by 2030. Member states will need to increase their national contributions in their integrated National Energy and Climate Plans (NECP), which are due to be updated in 2023 and 2024, to collectively achieve the target. Achieving the target would bring EU member states’ total renewable energy generation capacity to 1236 GW by 2030.

RES considered within the RED’s scope include wind, solar, hydro, tidal, geothermal, and biomass. The binding target is supported by differentiated targets for a variety of sectors, such as heating and cooling, industry, and transport. The provisional agreement under RePowerEU also aims to remove barriers to the scale-up of renewable energy generation by making permitting processes for renewable energy installations quicker and easier. To this end, member states will define regions (so-called ‘go-to areas’) with limited environmental risks and high renewable energy generation capability, in which the permitting procedure shall be simplified. 

The RED and its impacts on biomass use

Biomass is considered a RES within the provisional agreement, provided that its use meets several sustainability criteria. These include requirements that woody biomass used in energy generation follows the cascading principle – ensuring that biomass of higher quality should serve purposes demanding higher-quality biomass first – and that forest biomass may not be harvested from areas with particular significance with regard to carbon stocks or biodiversity. Furthermore, no financial support shall be granted when energy facilities use stumps and roots for energy generation (as they are considered important, for example, to protect soil carbon stocks) or when they use high-quality biomass that should be reserved for other use cases under the cascading principle, such as industrial-grade roundwood, veneer logs, and saw logs.

The provisional agreement sets out a new binding combined target of 5.5% for advanced biofuels, generally derived from non-food-based feedstocks, and renewable fuels of non-biological origin, mostly renewable hydrogen and hydrogen-based synthetic fuels, in the share of renewable energy supplied to the transport sector. The increasing need for advanced biofuels that use biomass as a feedstock may conflict with the demand for the lower-quality biomass upon which several CDR methods rely, such as BECCS and biochar.

Where does BECCS fit in?

The recognition of biomass as a renewable energy source affects the feasibility and potential scale of BECCS. BECCS can both provide renewable energy and remove carbon dioxide from the atmosphere. The 2021 proposal states that member states should not support electricity production from installations producing only electricity, as opposed to, for example, installations producing both heat and power), unless these installations are located in regions included in the Just Transition Plan, or if the installations used CCS technologies to capture and store the associated (biogenic) CO2 emissions.

Currently, negative emissions stemming from BECCS cannot contribute towards targets set under any of the three main legislative pillars of EU climate action, namely the EU Emissions Trading System (EU ETS), the Effort Sharing Regulation (ESR), and the LULUCF Regulation.

The RED: Are sustainability criteria enough to ensure the sustainable use of biomass?

The role of biomass within the RED is important. While sustainability criteria exist to prevent the misuse of biomass for energy generation, the demand for biomass may increasingly exceed supply. Some communities might be adversely impacted, especially in terms of resource use and food security. It is therefore critical that future revisions of the RED take these concerns into consideration.

Timeline

1997
2001
2003
2009
2018
2021
2022
30 March 2023
17 May 2023
19 June 2023
12 September 2023
9 October 2023
31 October 2023
20 November 2023
1997

Energy for the future: renewable sources of energy, indicative EU target of 12% renewables by 2010.

2001
2003
2009

RED I: EU target of 20% renewables by 2020 and national binding targets

2018

RED II: 32% renewables target for 2030 – This is the piece of legislation that is currently in force

2021

RED III: EU Green Deal: EC proposal to raise target for 2030 to 40%

2022

RED IV: REPowerEU Plan: EC proposal to raise target for 2030 to 45% (voted as part of RED III)

  • Parliamentary position agreed & endorsed 14/09/2022 
  • Council general approach agreed on 29/06/2022. 
30 March 2023

Council and Parliament reach provisional agreement on the revision

17 May 2023

A last-minute objection postponed the adoption of the revision of the Directive

19 June 2023

The Council reached an agreement on its position

12 September 2023

The EU Parliament voted in favour of the revision

9 October 2023

The Council adopted the final text

31 October 2023

The Directive was published in the Official Journal of the EU

20 November 2023

Entry into force of RED III

Status

Year

1997

Unofficial Title

RED

Official Document

Last Updated

19/06/2023

In a Nutshell

The National Energy and Climate Plans (NECPs) outline the EU member states’ 2021-2030 strategy to meet the EU 2030 energy and climate targets. The Regulation on the governance of the energy union and climate action (EU) 2018/1999, requires member states to regularly submit NECPs and update them. It also outlines how the European Commission should review the plans.

In their NECPs, member states outline their plans for delivering on 2030 targets across five dimensions: decarbonisation, energy efficiency, energy security, internal energy market and research, development and innovation (RD&I). Member states use a template when outlining their plans to facilitate transborder collaboration and efficiency gains. So far, the 2030 climate and energy targets aim for at least 55% greenhouse gas emissions reductions, 32% of the total energy production coming from renewable energy, and a 32.5% improvement in energy efficiency. The Fit-for-55 package called for more ambitious targets, some of which are still under review, including raising the share of renewable energy within the Renewable Energy Directive to 42.5% by 2030.

Out of the 26 draft updated NECPs that have been submitted by member states – noting that Austria’s draft was submitted but later withdrawn -, only seven submissions include some sort of target for removals. These are either legally enshrined, such as in Portugal, or indicative targets based on the modelling of residual emissions, such as in the Netherlands. Furthermore, only ten NECPs mention novel CDR methods, such as Direct Air Capture and Carbon Storage (DACCS) and biochar. These technologies are predominantly mentioned as part of countries’ RD&I needs.

Several countries have also signalled that their submitted drafts are incomplete and are expected to change substantially as part of the final updated NECPs.

What's on the Horizon?

As required by the  Regulation on the Governance of the Energy Union and Climate Action, member states must have submitted an updated draft of their NECPs by 30 June 2023, and the final version by 30 June 2024.

The Regulation also requires that by 1 January 2029 and every ten years thereafter, member states will need to submit a new final NECP covering ten years, with draft NECPs due one year prior.

Deep Dive

Assessment of the drafts by the Commission

Most of the draft updated NECPs were submitted late. By 3 July 2023, only six countries had submitted their draft updated NECPs: Spain, Croatia, Slovenia, Finland, Denmark and Italy. On 18 December 2023, the European Commission published its general assessment of the 20 out of 27 drafts submitted thus far, as well as a detailed assessment of each draft plan. It found that the measures presented in the drafts would only result in a net 51% emissions reductions by 2030, falling short of the 55% net emissions reductions target. The measures foreseen in the submitted NECPs would also fail to deliver the 40% emissions reductions target in the sectors covered by the Effort Sharing Regulation, resulting only in emissions reductions of 33.8%.

The assessment also showed that the LULUCF net removals target of 310MtCO2e set in the LULUCF Regulation would be missed by 40 to 50Mt with the current measures, showing a significant gap between the target and the actual measures in place to deliver on the target. The 8th Environment Action Programme Mid-Term Review further underscored the presence of such a gap, stressing that maintaining and enhancing the capacity of Europe’s natural sinks should be a top priority in the final updated NECPs, alongside increasing the sinks’ resilience to climate change.

 

Current versions versus draft updated versions

The current versions of the NECPs in force, which were submitted at the end of 2019, fail to consider the role of carbon dioxide removal (CDR) in reaching national and EU climate targets. None of the 27 plans include targets for CDR, nor do they take into consideration novel carbon removal methods. Even conventional CDR methods such as afforestation or soil carbon sequestration are insufficiently addressed in the majority of NECPs.

Compared to the current versions, the draft updated NECPs submitted by member states show improvements on several fronts when it comes to CDR. Over half of current NECPs discuss the role of CCS and CCU in achieving national 2030 climate targets; yet almost all new draft NECPs now consider these technologies. Yet, despite some overlaps, CCS, CCU and CDR vary in terms of their climate benefit and CDR must be distinguished as a separate suite of methods. Specific to CDR, more than half of member states included at least one measure that would be relevant specifically to its research, development and innovation. Moreover, more than a third of member states now include some sort of removal target, compared to zero in the current versions, and several other NECPs mention novel CDR methods. Finally, close to half of the NECPs include some considerations around the need to develop CO2 transport and storage infrastructure.

 

 

Rating of all draft updated NECPs

We have rated all draft NECPs based on a previous report from the Ecologic Institute.

Denmark has produced the strongest submission when it comes to CDR, including provisions such as:

  • It includes indicative targets for CCUS and bio-CCS for 2030;
  • It provides details about national deployment incentives for CDR (through its NECCS and CCUS funds);
  • It explores the role that several novel CDR methods could play, such as bio-CCS and biochar;
  • It gives a clear overview of potential CO2 storage capacities, as well as the projects currently being developed.

 

However, the Danish submission leaves room for improvement. The Danish draft lacks measures to increase net LULUCF removals, which is especially concerning since the LULUCF sector is currently a net emitter in Denmark. The NECP also lacks a clear RD&I plan to develop CDR technologies. By addressing these missing elements in its final NECP, Denmark would stand out as a champion of CDR in the EU.

Other countries are on the right path to producing a coherent NECP when it comes to CDR. For example, Sweden and Germany score well in some of the seven criteria. In general, deployment incentives and CDR targets are the least addressed criteria.

 

Why all types of CDR should be considered as part of the NECPs

As highlighted by the European Commission in the Sustainable Carbon Cycles communication, the EU should aim for a minimum annual capacity of 5MtCO2 of permanent removals by 2030. Following the publication of the European Commission 2040 Target and ICMS communications, it is clear that the EU will need to develop large permanent CDR capacities to reach its 2040 climate goals and a state of climate neutrality by 2050. Reaching these ambitious goals in time requires urgent action to develop and start to deploy permanent CDR already today.

 

Recommendations for the final updated NECPs

To align their updated NECP to the 2030 climate targets and the EU-wide objective of climate neutrality by 2050, member states should consider the following aspects in their final updated versions:

  1. National (binding) twin targets for emissions reductions and CDR, and separate CDR targets for LULUCF and permanent removals;
  2. A plan for restoring and maintaining LULUCF sinks;
  3. Dedicated research, development and innovation funding for CDR;
  4. The needs and the potential to transport and store CO2.

Timeline

24 December 2018
31 December 2018
June 2019
31 December 2019
17 September 2020
30 June 2023
18 December 2023
30 June 2024
1 January 2028
1 January 2029
31 December 2018

Deadline for member states to submit their draft NECPs for the period 2021-2030

June 2019

EU Commission communicated an overall assessment and country-specific recommendations

31 December 2019

Deadline for member states to submit their final NECPs

17 September 2020

EU Commission published a detailed EU-wide assessment of the final NECPs. Later on, it also published individual assessments.

30 June 2023

Deadline for member states to submit draft updated versions of their NECPs

18 December 2023

The EU Commission published its assessment of EU member states’ draft updated NECP

30 June 2024

Deadline for member states to submit final updated versions of the NECPs

1 January 2028

Deadline for member states to submit draft NECPs covering the period 2031-2040

1 January 2029

Deadline for member states to submit final NECPs covering the period 2031-2040

Status

Policy Type

Year

2018

Unofficial Title

NECPs

Last Updated

23/06/2023

In a Nutshell

Article 6.4 of the Paris Agreement establishes the Article 6.4 mechanism, a market-based instrument that countries can voluntarily use to trade credits from emission reduction and removal projects. Under the mechanism, reducing emission levels in one country can be used by another country to fulfill its climate target, Nationally Determined Contribution (NDC).

Often seen as a tool to help countries achieve their climate targets cost-effectively, its real goal is to bring about higher ambition – enabling countries to do more than they could without using it. It’s built to incentivise and facilitate the participation of authorised public and private entities by crediting their emission reduction and removal activities. The projects need to deliver an overall mitigation in global emissions.

It’s a centralised UN crediting mechanism governed by Article 6.4 Supervisory Body. Being a successor of the Clean Development Mechanism (CDM) under the Kyoto Protocol, it will operate under the Paris Agreement, where all countries have climate targets. This means that the host countries need to know that they can still meet their climate targets when selling credits via the Article 6.4 mechanism, and double counting of the same emission reductions or removals must be avoided through the double-entry bookkeeping for emissions accounting (“corresponding adjustments”).

Among its other work in setting up the instrument, the Supervisory Body is preparing the foundation for how the Article 6.4 mechanism will apply to removals. There is a growing ecosystem of novel removal methods, and many of these are poised to be used by countries in their climate targets. Given the lack of broadly accepted international accounting rules for a range of removal methods, the decisions taken under Article 6.4, and the methodologies approved under it, are bound to have an outsized impact on carbon markets globally.

What's on the Horizon?

  • The Article 6.4 Supervisory Body has prepared recommendations on methodologies and removals. These recommendations have been sent for approval and were reviewed at the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA5 – during COP28). If the recommendations are approved, Article 6.4 will become operational in principle. More recommendations from the SB will be needed to make Article 6.4 fully operational.
  • The Subsidiary Body for Scientific and Technological Advice (SBSTA) is preparing recommendations on including emission avoidance and conservation enhancement activities in the scope of Article 6.4 mechanism, authorisation of credits, and connection between registries for adoption at CMA5 (during COP28).

 Getting the Article 6.4 mechanism up and running will take a few years. 

Deep Dive

How will it work? 

The Article 6.4 Supervisory Body is responsible for establishing guidance and procedures, approving methodologies, registering projects, issuing credits, and more.

Methodologies may be developed by project participants, host countries, stakeholders, or the Supervisory Body.

The credits are called the Article 6.4 Emission Reductions (A6.4ERs). These are used for both emission reductions and carbon removal. The host country will have to authorise A6.4ERs and account for these by applying corresponding adjustments unless the A6.4 ERs contribute to the national target in the host country (mitigation contribution A6.4ERs). 

Removal activities get a maximum of 15-year crediting periods, renewable twice. The mechanism credits emission reductions and removals by public and private sector actors.

2% of Article 6.4 credits are subject to cancellation (“Overall Mitigation in Global Emissions” clause), 5% of credits are dedicated to the Adaptation Fund (“Share of Proceeds for Adaptation”) and other fees for registration, inclusion, issuance, renewal, and post-registration apply as well (“Share of Proceeds for Administrative Expenses”).  

Many other details are yet to be ironed out, listed in the “Open elements” section below. 

How will removals be covered? 

Whilst the mechanism covers emission reductions and removals, it will likely focus on emission reductions in the coming decade, with interest in removals growing as climate targets get closer to net zero and beyond. 

The Supervisory Body has been tasked with preparing a general framework for including the full spectrum of carbon removal methods under Article 6.4, called “recommendations”, to be approved at CMA5 during COP28.  

For the first time, novel carbon removal methods will be tackled under the Paris Agreement, and the recommendations will set a precedent by establishing broad removals-specific rules under the UN crediting mechanism. 

Open elements 

Two separate ongoing work streams are ironing out the details of the mechanism – (1) the Supervisory Body and (2) the Subsidiary Body for Scientific and Technological Advice (SBSTA) where international climate negotiations under the Paris Agreement are ongoing on the technical elements. 

The Supervisory Body has a busy work program for 2023 and has been tasked to prepare several deliverables for adoption for CMA5 (during COP28). This includes recommendations on methodologies (baseline, monitoring methodologies, methodology development process, review), recommendations on activities involving removals (monitoring, reporting, accounting for removals and crediting periods, addressing reversals, avoidance of leakage), transitioning the Clean Development Mechanism into the Article 6.4 mechanism, developing accreditation standard, and designing project activity cycle.

SBSTA is negotiating recommendations on including emission avoidance1 and conservation enhancement activities in the scope of Article 6.4 mechanism, authorisation of credits by host countries, and work on the registry. These discussions are very technical, have continued throughout the Bonn Climate Conference in June 2023, and will be submitted for adoption at CMA5 during COP28.

1 Emission avoidance in this context mainly refers narrowly to reducing emissions from deforestation and forest degradation (REDD+ projects), not to be confused with how the term “emission avoidance” is used in the voluntary carbon markets where some stakeholders use it as a blanket term for emission reductions and avoidance. 

How can stakeholders engage with the Article 6.4 process?   

Documents for stakeholder input will be published at least a week before each Supervisory Body meeting. Any organisation can provide written input before meetings, but only UNFCCC-accredited observer organisations can attend the Supervisory Body meetings. Everyone can follow the live stream and watch recordings of past sessions.

 

Meeting number  Meeting dates  Deadline for registering as an observer  Deadline for submitting public comments on the meeting agenda 
SB 006  10-13 July 2023  19 June  3 July 
SB 007  11-14 September 2023  21 August  4 September 
SB 008  10 October to 2 November 2023  9 October  23 October 

In June 2023, the UNFCCC launched a dedicated Article 6.4 newsletter covering the latest news, calls for inputs and other announcements from the Supervisory Body. 

The negotiations under SBSTA take place in 2-week sessions twice a year during the Bonn Climate Conference and COP. 

 

Timeline

12 December 2015
4 November 2016
November 2021
November 2022
19 November 2022 - 15 March 2023
7-10 March 2023
16 March - 11 April 2023
18-25 May 2023
31 May - 3 June 2023
5-15 June 2023
5-19 June 2023
23 June 2023
10-13 July 2023
11-14 September 2023
Until 19 September 2023
30 October - 2 November 2023
Before SBSTA29/COP28
18 November 2023
30 November - 12 December 2023
12 December 2015

The Paris Agreement is adopted

4 November 2016

The Paris Agreement enters into force 

November 2021

CMA3/COP26 Glasgow – Adoption of the rules, modalities and procedures for Article 6.4 mechanism 

November 2022

Adoption of guidance on Article 6.4, elaborating on key processes and principles, providing SBSTA to work on remaining elements, and mandating the Supervisory Body to operationalise the mechanism 

19 November 2022 - 15 March 2023

Request for submissions by Parties and admitted observer organisations to submit their views on activities involving removals via the submission portal

23 June 2023

Article 6.4 Supervisory Body stakeholder webinar

Until 19 September 2023

Public consultation on the three SBSTA working areas on Article 6.4 (inclusion of emission avoidance and conservation enhancement, registries, authorisation of credits) 

Before SBSTA29/COP28

Technical expert dialogue on the three SBSTA working areas on Article 6.4 (inclusion of emission avoidance and conservation enhancement, registries, authorisation of credits) 

18 November 2023

The SB has approved the long-awaited recommendations on activities involving carbon dioxide removal and Article 6.4 mechanism methodologies.

30 November - 12 December 2023

CMA5/COP28 in Dubai.The Article 6.4 Supervisory Body’s recommendations on removals and methodologies have been sent for approval to CMA5. 

Unofficial Title

Article 6.4

Year

2015

Last Updated

23/06/2023

In a Nutshell

On 19 February 20204, the European Commission reached a provisional political agreement on the Carbon Removal Certification Framework (CRCF), a voluntary regulatory framework for the certification of permanent carbon removals, carbon farming and carbon storage in products. The Framework has been developed to  facilitate and speed up the deployment of  permanent carbon removal, carbon farming and carbon storage in products activities, as a complement to sustained emission reductions, fight greenwashing and harmonise carbon removal market conditions.

The provisional agreement distinguishes four types of certified activities: (1) carbon farming (which includes (a) temporary carbon storage activities and (b) soil emission reduction activities), (2) temporary carbon storage in long-lasting products, and (3) permanent carbon removal. In order to ensure the quality of carbon removals certified under the framework, removals need to meet several quality criteria (so-called “QU.A.L.ITY” criteria), covering the aspects of quantification, additionality, long-term storage, and sustainability.

Under the framework, the European Commission, assisted by an Expert Group, will develop methodologies for the certification of a range of carbon removal methods and recognise certification schemes. The certification schemes will be responsible for setting up and maintaining interoperable public registries to track and control the carbon removal units certified under the Framework. Within four years, these will be replaced by a common, Union-wide registry. Meanwhile, certification bodies, supervised by member states, will carry out certification audits and the issuing of certificates.

The provisional agreement has made important strides compared with the Commission’s first proposal, namely by aligning the definition of carbon removal with that of the IPCC; clarifying the distinction between carbon removal and emissions reductions; and defining certified activities (e.g., permanent carbon removal, carbon storage in long-lasting products) in a more inclusive and future-proof way. Other areas of progress include improved liability requirements in the event of reversal, and improved transparency and accountability through a comprehensive Union-wide registry requiring disclosure of essential information (e.g., expected duration of carbon storage, quantity and status of certified units, etc.). However, the agreed text provides only limited guardrails for how the carbon removal units generated under the framework could or should be used, indicating that other EU legislation should fill in this gap.

What's on the Horizon?

2024: In the next steps, the provisional agreement will be submitted for endorsement to member state representatives at Council level and to the European Parliament.

  • Following the last trilogue, a provisional agreement on the file was found on 19 February 2024.
  • The preliminary agreement was approved by the Council’s COREPER on 6 March and by the European Parliament’s ENVI Committee on 11 March.
  • The European Parliament plenary adopted the final text of the CRCF on 10 April 2024. The Council will need to adopt the agreement before the CRCF is published in the Official Journal of the EU.

Expert Group: The Expert Group on carbon removal kicked off their work in March 2023. Among other tasks, the group will provide technical advice to the Commission on the development of the methodologies under the CRCF. The next meeting will take in October.

Methodologies: In parallel to the legislative process, work has started on detailed methodologies for different carbon removal activities that will be set out in separate Commission delegated acts. The first methodologies are expected to be ready in 2026, while certification of the first units under the CRCF is expected in 2026/2027.

Within one year of the implementation of CRCF, the Commission will have to assess the potential inclusion of carbon storage in products in the scope of the LULUCF Regulation.

Deep Dive

Aim of the file

The stated goal of the CRCF is to facilitate the uptake of high-quality carbon removals to support the achievement of EU climate commitments, such as those under the Paris Agreement and the Climate Law. The Framework aims to create trust in carbon removals, by setting strong requirements on aspects such as monitoring and liability, and ensuring key ‘quality’ criteria are met – namely ensuring accurate quantification, additionality, long-term storage, and sustainability of certified activities. The Framework also aims to increase transparency by creating a public registry to document the generation, trading, and use of certified carbon removal units.

Meaning for climate goals

By establishing this Framework, the European Union works towards reaching its goal of climate neutrality in 2050 and net negative emissions thereafter, both of which will rely heavily on significantly upscaling carbon removal. As the first legislative file focusing primarily on carbon removal, it also enshrines at a definition for carbon removal that is aligned with scientific consensus (i.e. with IPCC) at the policy level.

By setting strong criteria around quantification, additionality, long-term storage, and sustainability, the Framework further supports a robust approach to governing carbon removal activities, which will be further supported by activity-level methodologies.

Despite these strong criteria on the supply side, the Framework does not provide a comprehensive set of guardrails around the use of units. The way carbon removal activities and units are adopted by public and private actors in their climate change mitigation strategies will strongly inform their . The Framework only states that certified units can solely be used for the EU’s climate objectives and nationally determined contribution (NDC) and should not contribute to third countries’ NDCs and international compliance schemes (e.g., CORSIA). These rules, including on the corresponding adjustments, will be reviewed in 2026. While the CRCF requirement that the four different types of units remain distinct from each other is an important step in ensuring that the greenwashing practices in the voluntary carbon market do not continue, it still leaves room for ambiguity. Strong guardrails on use are needed to simultaneously limit greenwashing and mitigation deterrence, while promoting the adoption of carbon removal by a range of actors in different sectors and activities, channelling a range of revenue streams to scaling up CDR activities.

Interaction with other legislative files

The Framework is expected to work hand-in-hand with other EU instruments to support the sustainable integration of carbon removal into climate change mitigation activities in the Union. The Framework has emerged in tandem with significant EU climate policies, namely communications on . The CRCF preamble references the CDR-supporting actions foreseen in the ICMS, and additionally highlights that ‘it is appropriate for the Commission to assess options for Union targets for carbon removals, including clearly distinguishing a separate target for permanent carbon removals’ – going further than the 2040 targets communication in terms of laying out the need to define the role of permanent CDR.

With respect to corporate claims, the CRCF will interact with the Corporate Sustainability Reporting Directive and the upcoming Green Claims Directive, which respectively set rules on how corporates report their climate action and regulate public environmental claims. The Green Claims Directive has not yet reached a provisional agreement, with only the European Parliament having adopted a mandate for the trilogues that are expected in the next legislative cycle. The Parliament is driving towards strong principles for corporate compensation claims, namely ensuring that any compensation only takes place for residual emissions, and any fossil-derived emissions must be compensated with permanent removal credits (‘like-for-like’). Any carbon removal credits used for compensation are expected to be required to be CRCF-compliant. The Parliament’s direction on the Directive also enshrines the possibility of using carbon credits (namely those certified under CRCF) towards corporate ‘contribution’ claims where, instead of compensating specific emissions, companies make a financial contribution towards an outcome, but may not claim any specific improvement in climate impact resulting from this contribution. The Council has not yet reached a position on Green Claims. The trilogue negotiations on this file are expected to commence during the next legislative cycle, after the new Parliament is in place.

Supporting strong corporate claims is only one application for the CRCF. The Framework has the potential to underpin diverse applications of CDR that broaden its uptake and contribute to the scaling-up of removals in service of EU climate goals. CRCF will certainly form the basis for recognising and rewarding land managers for carbon removal (and soil emission reduction) activities, contributing to the delivery of emission removal (and reduction) targets under the LULUCF Regulation. But, as the EU moves towards enshrining specific 2040 targets for nature-based as well as for permanent removals, the CRCF should enable the development of policies aiming to develop all types of removals (e.g. by enabling the inclusion of CDR activities in public procurement programmes, or by accounting for CDR in sectoral policies, such as building codes).

Timeline

15 December 2021
30 November 2022
7 March 2023
11 May 2023
21-22 June 2023
30 August 2023
24 October 2023
25-26 Oct 2023
17 November 2023
21 November 2023
2023
28 November 2023
23 January 2024
19 February 2024
10 April 2024
15-17 April 2024
2024
2025
2026
15 December 2021

Communication on Sustainable Carbon Cycles by the European Commission announcing the development of the framework

30 November 2022

Proposal for the certification framework adopted by the European Commission 

7 March 2023

First meeting of European Commission expert group on carbon removals

11 May 2023
Draft report from the rapporteur in the European Parliament

 

21-22 June 2023
30 August 2023

The AGRI Committee (committee for opinion) adopted its opinion on the file

24 October 2023

ENVI Committee vote on the adoption of the ENVI report

25-26 Oct 2023
Expert group meeting on industrial carbon removal methodologies
17 November 2023

Negotiating mandate adopted by Member States in the Council

21 November 2023

EU Parliament plenary adopted the ENVI Committee report

2023

Development of methodologies for certification of different carbon removal activities

28 November 2023

Kickstart of trilogues between EU institutions

23 January 2024

Second trilogue between EU institutions

19 February 2024

Third trilogue between EU institutions. A provisional agreement was reached

10 April 2024

The EU Parliament Plenary adopted the final text of the CRCF

15-17 April 2024
4th expert group meeting (online only) which covered a wide range of topics, see agenda here
2024

Expected entry into force of the CRCF

2025

Commission report expected on the potential inclusion of carbon storage in products in scope of the LULUCF Regulation

2026

Commission will have to assess the potential inclusion of carbon removals with permanent storage in the EU ETS

Further reading

Unofficial Title

CRCF

Year

2022

Official Document

Last Updated

24/04/2023

In a Nutshell

The Directive for the Substantiation of Explicit Environmental Claims (Green Claims Directive) is a legislative proposal that aims to address and reduce greenwashing in consumer-facing commercial practices. It establishes minimum requirements on the substantiation and communication of voluntary environmental claims and labels that are not otherwise banned under the Directive on Empowering Consumers for the Green Transition.

To make green claims (including climate-related claims) about the environmental footprint of their products, services, and operations, companies will need to comprehensively demonstrate environmental impact and performance by submitting recognised scientific evidence and the latest technical knowledge. The Directive establishes specific requirements for distinguishing claims on environmental performance from common practice, legal obligations, and from other traders or products.

Environmental claims and labelling schemes will be verified by independent accredited bodies before being put on the market. Member states will nominate a competent national authority to supervise this process, monitor and verify the claims and substantiations on a regular basis. This monitoring will help the Commission evaluate where more specific requirements are needed and implement delegated acts accordingly.

Climate-related claims such as net zero or carbon neutrality claims based on carbon credits use, including carbon removal, fall under the remit of this Directive. To substantiate such claims companies must report offsetting and emissions data separately, specify whether offsetting relates to emissions reductions or carbon removals, and explain accurately the accounting methodology applied. Once approved and when communicating to consumers, climate-related claims must be accompanied by additional information detailing the extent of reliance on offsetting and whether it is based on emissions reductions or removals.

What's on the Horizon?

The Green Claims proposal by the European Commission is currently being discussed within the European Parliament and the Council, with the aim to come to an agreement on their positions as part of the ordinary legislative procedure, before entering interinstitutional negotiations.

2023-2024: The European Parliament and the Council will develop their positions separately.

Directive on Empowering Consumers for the Green Transition (ECGT):
  • The Council adopted its negotiating mandate regarding the ECGT Directive on 3 May. The mandate outlines the Council’s position on this directive which would lay the foundation for the Green Claims Directive.
  • The European Parliament on adopted its position on 11 May 2023, setting stricter conditions than the Commission proposal.
  • On 19 September 2023, the Council and the Parliament reached a provisional agreement on the ECGT Directive, banning carbon neutrality claims for products and services based on carbon offsetting, and setting stricter requirements for organisations to make claims based on future environmental performance. Complementing the Directive on Empowering Consumers, the Green Claims Directive will provide further guidance on the conditions to make substantiated environmental claims.
  • On 17 January 2024, the European Parliament adopted the provisional agreement on the ECGT Directive. After the Council adopts the final text, the directive will be published in the Official Journal of the EU, and member states will have 24 months to transpose it into national law.

Green Claims Directive (GCD):

  • The ENVI and IMCO Committee (joint committees responsible) adopted their report on 14 February 2024, which was adopted by the Parliament plenary on 12 March 2024.
  • The Council aims to adopt this file’s general approach on 17 June 2024.
  • 2024- 2025: Following trilogues between EU institutions, the Directive is expected to be formally adopted and transposed by member states.

Deep Dive

Policy Landscape

The Green Claims Directive complements the Empowering Consumers Directive published by the European Commission on 30 March 2022 within the EU. Together, they aim to improve the circularity of the EU’s economy and achieve climate neutrality. They set requirements to substantiate environmental claims made to consumers and other commercial practices.

Apart from the French ministerial decree n°2022-538, the Green Claims Directive is a first of its kind in the specificity with which it regulates environmental claims and addresses climate-neutrality claims. The French decree regulates advertising claims based on emission compensation projects. It has different requirements surrounding emissions reporting, compensation data, and net zero plans.

Aim

The Green Claims Directive proposal addresses the issue of greenwashing, increasingly prevalent in recent years. It seeks to standardise environmental claims and labels to improve transparency and credibility for consumers. The proposal aims to use delegated and implementing acts in the future to address substantiation methodologies for specific product groups and evolving commercial practices.

The preamble of the proposal states that climate-related claims are prone to being unclear and misleading, as they are often based on offsetting greenhouse gas (GHG) emissions through carbon credits of low environmental integrity and credibility, generated outside the company’s value chain and calculated based on methodologies that vary widely in transparency, accuracy, and consistency. Offsetting can also deter traders from reducing emissions in their own operations and value chains.

However, credible net zero claims have the potential to incentivise and drive the development of safe, just and sustainable carbon removals to transition towards real climate neutrality. Claims based on offsetting must be regulated through a robust and science-based system to prevent greenwashing.

Room for improvement

Unfortunately, the Green Claims Directive as it currently stands does not establish the necessary measures to do so:

  • The Directive does not align with scientific consensus as it allows offsetting through emissions reductions and avoidance to substantiate carbon neutrality claims. The IPCC’s definition of net zero is clear: balancing emissions with physical removals. Accordingly, offsetting projects that avoid emissions, but do not physically remove and store carbon, must be barred from use in substantiating claims about net climate impacts.
  • The proposal rightly requires companies to report GHG emissions separately from offsetting data, to disclose the share of their total emissions that are addressed through offsetting and whether these come from emission reductions or removals. This isn’t enough to monitor whether the claimed climate impacts are real. There is a need for more extensive disclosure on the types of carbon credits companies are purchasing (avoidance, reduction, removals), which emissions they are claiming compensation for, and the methodologies used to ensure integrity and correct accounting.
  • The proposal allows all types of offsetting without any clear criteria for which emissions they can compensate for, nor which climate claims they can substantiate. However, not all carbon storage is equal in terms of capacity, duration or reversal risk. This means that long-lived fossil fuel emissions otherwise impossible to abate can only be balanced by removals with high-durability storage in the geosphere where the carbon came from. Lower-durability removal and storage of carbon into the biosphere must be accelerated for its own sake, to halt and reverse the loss of ecosystems and natural carbon stocks but cannot be eligible to compensate for fossil fuel emissions. Failing to enshrine this non-fungibility principle in EU law would allow companies to continue offsetting their long-lived emissions through shorter-term carbon storage with higher risks of reversal.
  • Although the Directive encourages companies to use offsetting only for residual emissions, it provides no robust definition for what constitutes these residual or ‘hard-to-abate’ emissions. Without a sector-specific and measurable definition, companies can weaken emissions cutting efforts by manipulating the boundary between emissions that must be reduced’ and ‘emissions that physical removals can offset’. The EU will need to establish a transparent process for classifying emissions as difficult-to-decarbonise.
  • The proposal excludes from its scope environmental claims and labels substantiated by rules in the Carbon Removal Certification Framework (CRCF). However, the proposal for the CRCF has no rules for claim substantiation. Instead, the Green Claims Directive could establish guardrails for legitimate net zero claims, which could be substantiated through the purchase of high-quality carbon removal credits certified under the CRCF.

Timeline

11 March 2020
20 July 2020
25 November 2020
30 March 2022
22 March 2023
11 May 2023
6 June 2023
19 September 2023
17 January 2024
14 February 2024
12 March 2024
17 June 2024 (TBC)
11 March 2020

The EU Circular Economy Action Plan sets out the plan to support the EU’s transition to a circular economy, including by protecting consumers

20 July 2020

Impact assessment and public consultation on substantiating green claims

25 November 2020
30 March 2022
22 March 2023

European Commission publishes the proposal for Green Claims Directive (GCD)

11 May 2023

European Parliament adopts its position on the ECGT Directive

6 June 2023

Deadline to provide feedback to the Commission on the GCD legislative proposal

19 September 2023

The Council and the Parliament reached a provisional agreement on the ECGT Directive

17 January 2024

The EU Parliament adopted the ECGT Directive

14 February 2024

Joint report of the lead ENVI and IMCO Committees on the GCD adopted

12 March 2024

European Parliament plenary adopted the GCD joint report

17 June 2024 (TBC)

Council to adopt its general approach on GCD

Unofficial Title

Green Claims

Year

2023

Official Document

Last Updated

24/04/2023

In a Nutshell

Nature Restoration Targets is a legislative proposal from the European Commission that would set legally binding targets for nature restoration in Europe. The aim is to mitigate biodiversity loss, ecosystem degradation and climate change, and to boost human and animal health by complementing the EU’s existing framework for protecting ecosystems. If adopted, the regulation would be the first continent-wide, comprehensive law of its kind.

By 2030, the targets would ensure restoration of at least 20% of degraded EU land and sea areas, and the remaining ones by 2050. The proposed legislation covers a broad range of ecosystems with specific targets, from forests and agricultural land to urban areas, rivers and marine habitats, with emphasis on restoring those with the highest potential for carbon removal and storage, and for prevention and reduction of natural disasters. Member States would be required to develop Nature Restoration Plans, to be assessed by the Commission, and to report on their progress toward meeting domestic targets.

Many aspects of the law would promote carbon removal. The draft law prioritises the restoration of damaged terrestrial and aquatic ecosystems that have significant potential for carbon removal. This includes ecosystems such as peatlands, forests, grasslands, marshlands, heathland and scrub and coastal wetlands. Focusing on damaged and carbon-rich ecosystems is thought to be cost-efficient (as well as critical for climate change mitigation) because the monetised benefits from carbon storage could outweigh the cost of restoring ecosystems by a factor of six. It is still unclear how the Commission expects to monetise carbon removals through nature restoration, but it has proposed that Member States fund their restoration efforts through the EU, national and private sources.

Under the proposed regulation, agricultural ecosystems across member states must achieve a trend of increasing organic carbon stocks in cropland and mineral soils. This trend must be evident at the national level, be measured at least every three years and is mandated to increase until satisfactory levels have been attained. Moreover, many ‘high-diversity landscape’ agricultural practices overlap with good soil management protocols for reducing soil loss, such as terracing and buffer strips. Reducing topsoil erosion is fundamental to soil carbon sequestration.

What's on the Horizon?

The draft Law faced political opposition from the EPP and the Conservatives and was almost withdrawn.

On 27 June, the ENVI Committee rejected the Commission’s proposal on the Nature Restoration Law. On 12 July, the Parliament rejected the EPP’s call to reject the law. It voted in favour of a common approach to the file, which had to be watered down to gather support.

Interinstitutional negotiations started in July 2023. The Spanish Presidency has signalled that the Nature Restoration Law will be one of its priorities. A provisional agreement was reached between the European Parliament and the Council. Both parties now need to formally adopt the agreement before the law is published in the Official Journal of the EU. On 29 November 2023, the Parliament’s ENVI Committee voted in favour of the provisional agreement, and on 27 February 2024, the EU Parliament Plenary adopted the agreement.

Initially scheduled for 25 March 2024, the Council vote has been postponed to an unknown date, possibly until after the EU elections. Currently, there is not enough support from member states for the law to be adopted.

 

Deep Dive

Giving teeth to EU environmental rules

The proposed Nature Restoration Law sits at the intersection between European climate and biodiversity policies, demonstrating the interconnected nature of these crises. If passed, the Law would contribute toward the EU’s delivery of its 2050 climate neutrality target, especially if the range of ecosystems in scope remains as broad and numerous as proposed. Many ecosystems constitute natural carbon sinks; restoring them can help draw down more carbon from the atmosphere and the Law’s legally binding targets will prioritise the restoration of those that have the highest potential to capture and store carbon.

In general, this law would add rigor to the EU’s existing environmental law regime. To date, the efficacy of these schemes has suffered from lack of targets, deadlines and procedural clarity. The EU has, so far, failed to meet its voluntary goals (for example, the Convention on Biological Diversity’s voluntary target to restore at least 15% of its degraded ecosystems by 2020 was missed).

Another advantage of the law would be new data sources that will be gathered as part of the national Restoration Plans and reports, such as mapping any agricultural and forest areas that need restoration that would highlight areas of carbon depletion, which may help fill data gaps on terrestrial carbon flows.

Additionality and the CRCF

It is still unclear how the Nature Restoration Law would intersect with the EU Carbon Removal Certification Framework (CRCF). The Commission has proposed that carbon farming through restoration of peatlands and other ecosystems be eligible for certification under CRCF. However, the introduction of the Nature Restoration Law will have implications for the additionality rules in the CRCF, which state that carbon removal activities must exceed standard practices and legal requirements to be certified. By changing legalities and norms governing nature restoration, and by extension terrestrial and aquatic carbon-enhancing practices, the Nature Restoration Law might limit which carbon farming projects can be certified under the CRCF.

Status of the stakeholder debate

There is a strong case for increased ambition for the Nature Restoration Law. Parliament’s rapporteur, MEP César Luena, is advocating for raising the proposed target of restoring 20% of the EU’s land and seas by 2030 to 30% in line with the global decision adopted in December at the COP15 UN Biodiversity Conference in Montreal. Additionally, under the current proposal, the majority of the restoration action is postponed until after 2030; it takes time for the carbon benefits of nature restoration measures to materialise. Hence, policy-makers should bring the timeline forward to ensure these measures contribute to the EU’s net zero and biodiversity goals.

Questions remain as to how much flexibility member states will have in their implementation of the law. Some are particularly concerned about the impact of this regulation on farmers and foresters and, by extension, European food security and sovereignty (although the perceived trade-off between ecological restoration and EU food security has been challenged). For example, farmers and foresters may be obligated to transition to more sustainable practices, which may result in additional costs. Several voices in the Parliament’s Agriculture Committee argue that the proposed law should better integrate the interests of farmers by excluding agriculture from the scope, or ensuring nature restoration is economically attractive to farmers with new non-CAP financing.

There are similar concerns as to whether the new regulation adequately accounts for the socioeconomic role of forests. The proposed law aims to legally protect all remaining primary and old-growth forests. This stipulation is a particularly contentious issue for Nordic and Baltic countries with large forestry sectors. The European Landowners’ Organisation (ELO) decries the lack of new financing or market-based incentives for forest owners to preserve their land under the new law.

Overall, policy-makers should assess the existing EU funding available for nature restoration and what further financial support is needed while also establishing dialogue and coordination with landowners and farmers. For example, the ENVI Committee’s report could require the Commission to reflect on the creation of a dedicated nature restoration fund. Policy-makers should also not overlook the  potential for new green jobs to be created as a result of the regulation.

Timeline

20 May 2020
22 June 2022
20 June 2023
27 June 2023
12 July 2023
19 July 2023
5 October 2023
9 November 2023
29 November 2023
27 February 2024
20 May 2020

European Commission Biodiversity strategy for 2030 setting out the long-term plan to protect nature and reverse the degradation of ecosystems

22 June 2022

European Commission adopts the proposal for a Nature Restoration Law

20 June 2023

The EU Council agreed on a general approach on the proposal for a Nature Restoration Law.

27 June 2023

The ENVI committee (the lead EU Parliament committee for this file) rejected the Commission’s proposal for the EU nature restoration law as amended by the ENVI Rapporteur of the file (44 pro, 44 against)

12 July 2023

The EU Parliament adopted a common approach to the Law and rejected the EPP’s call to reject the Law.

19 July 2023

First trilogue negotation

5 October 2023

Second trilogue negotiation

9 November 2023

Provisional agreement between the EU Parliament and the Council reached after the third trilogue negotiation

29 November 2023

The EU Parliament ENVI Committee voted in favor of the provisional agreement

27 February 2024

EU Parliament plenary adopted the provisional agreement

Status

Year

2022

Official Document

Last Updated

24/04/2023