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 well–targeted 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.
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:
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:
- 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:
- Widening participation and spreading excellence: aims to enhance research and innovation capabilities in countries that are currently falling behind according to the European Research Area policy goals.
- Reforming and enhancing the European R&I system: focuses on training researchers for successful R&I participation while prioritising networking, gender equality, ethics and integrity.
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 CDR–related 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.
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:
- Sustainable economic models that incorporate ways to measure and incentivise the co-benefits of carbon removal;
- Addressing challenges in soil, water, nutrient and biodiversity through e.g, carbon removal;
- 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.
Regulation (EU) 2021/695 of the European Parliament and of the Council establishing Horizon Europe
Deadline for the Feedback Period – Horizon Europe – Interim Evaluation
Deadline for the Public Consultation period
Publication of factual summary reports from the public consultation
Horizon 2020 ex-post evaluation report (staff working document)
High Level Expert Group work
High Level Expert Group Report publication
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.
Regulation (Eu) 2021/695 of the European Parliament and of the Council of 28 April 2021 establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013
Key Institutional Stakeholders
European CommissionDG – Research and Innovation, Commissioner Carlos Moedas
European ParliamentCommittee on Industry, Research and Energy Rapporteur: Dan Nica - S&D, RO Shadow Rapporteur: Christian Ehler - EPP CD, DE Shadow Rapporteur: Martina Dlabajová - Renew, CZ Shadow Rapporteur: Ville Niinistö - Greens/EFA, FI Shadow Rapporteur: Elena Lizzi - ID, IT Shadow Rapporteur: Evžen Tošenovský - ECR, CZ Shadow Rapporteur: Giorgos Georgiou - GUE/NGL, CY
Council of the European UnionCOMPET
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:
- The European Agricultural Guarantee Fund, which totals EUR 291.1 billion, provides direct support to farmers and funds market measures.
- The European Agricultural Fund for Rural Development, with a total allocation of EUR 95.5 billion dedicated to rural development.
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?
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.
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.
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.
Launched in 1962.
First big reform of the CAP to bring production closer to what the market needs.
Shift from market support to producer support through direct payments to farmers. Farmers are incentivised to endorse more environmentally friendly practices.
The CAP introduces income support tied to environmental, food safety and animal health and welfare requirements
The CAP is once again reformed to increase the competitiveness of the sector, promote sustainable farming and support rural areas.
The EU Parliament, the Council and the Commission agree on the need to reform the CAP again and shift implementation responsibilities.
A transitional agreement is put in place while the reform is negotiated.
Adoption of the CAP 2023-2027.
The CAP 2023-2027 and the CAP strategic plans enter into force.
The EU Commission will submit a report to assess the joint CAP strategic plans in reaching Green Deal targets.
Each country will present an annual performance report.
The Commission will conduct its first performance review of the CAP strategic plans.
The Commission will conduct an interim evaluation of the CAP 2023-2027.
The Commission will conduct a second performance review of the CAP strategic plans.
- Regulation (EU) 2021/2116 of the European Parliament and of the Council of 2 December 2021 on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013
- Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by member states under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013
- Regulation (EU) 2021/2117 of the European Parliament and of the Council of 2 December 2021 amending Regulations (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products, (EU) No 1151/2012 on quality schemes for agricultural products and foodstuffs, (EU) No 251/2014 on the definition, description, presentation, labelling and the protection of geographical indications of aromatised wine products and (EU) No 228/2013 laying down specific measures for agriculture in the outermost regions of the Union
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 low–emissions 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 IV 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 IV. 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 favor of the revision. Now, EU member states need to give the final green light before the law enters into force.
- The energy policy framework for the post-2030 period is under discussion.
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.
Energy for the future: renewable sources of energy, indicative EU target of 12% renewables by 2010.
Directive on electricity production from renewables: national indicative targets
Directive on biofuels and renewable fuels for transport: national targets for biofuels
RED I: EU target of 20% renewables by 2020 and national binding targets
RED II: 32% renewables target for 2030 – This is the piece of legislation that is currently in force
RED III: EU Green Deal: EC proposal to raise target for 2030 to 40%
Council and Parliament reach provisional agreement on the revision
A last-minute objection postponed the adoption of RED IV
The Council reached an agreement on RED IV
The EU Parliament voted to in favor of the revision
Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive (EU) 2018/2001 of the European Parliament and of the Council, Regulation (EU) 2018/1999 of the European Parliament and of the Council and Directive 98/70/EC of the European Parliament and of the Council as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652
In a Nutshell
The National Energy and Climate Plans (NECPs) outline the EU member states’ 2021-2030 strategy to meet the 2030 energy and climate targets. The Regulation on the governance of the energy union and climate action (EU) 2018/1999, adopted in 2018, requires member states to regularly submit NECPs and update them. It also sets the EU Commission review process of the plans.
Member states outline how they will address energy efficiency, renewables, greenhouse gas emissions reductions, interconnections, and research and innovation in their NECP. A common template is used to facilitate transborder collaboration and efficiency gains.
So far, the 2030 climate and energy targets aim for at least 55% of greenhouse gas emissions reductions, 32% of renewable energy within the total energy production mix and 32.5% improvement in energy efficiency. The Fit-for-55 package called for more ambitious targets, some of which are still under review, including a 42.5% share of renewable energy within the Renewable Energy Directive.
The current versions of the NECPs, submitted at the end of 2019, massively overlook the role of carbon dioxide removal (CDR) in their ability to achieve their 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 not properly addressed in the majority of NECPs.
This is concerning. To reach the scale of removals needed to reach net zero emissions by 2050, CDR capacities must be scaled up now. Member states should seize the opportunity to include CDR in their NECPs. In parallel, the inclusion of CDR in the 2040 targets would set the course until 2050.
What's on the Horizon?
- As set 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 unless they can justify that the current plan remains valid.
- On 1 January 2029 and every ten years thereafter, member states will need to submit a new final NECP covering each ten-year period, and a draft one year prior.
- On 3 July, only eight countries submitted their draft updated NECPs: Spain, Croatia, Slovenia, Finland, Denmark, Italy, Portugal and the Netherlands. We will keep monitoring this space as member states submit their NECPs and a more detailed analysis will follow accordingly.
The Regulation on the Governance of the Energy Union and Climate Action entered into force
Deadline for member states to submit their draft NECPs for the period 2021-2030
EU Commission communicated an overall assessment and country-specific recommendations
Deadline for member states to submit their final NECPs
Deadline for member states to submit draft updated versions of their NECPs
Deadline for member states to submit final updated versions of the NECPs
Deadline for member states to submit draft NECPs covering the period 2031-2040
Deadline for member states to submit final NECPs covering the period 2031-2040
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 fulfil 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 is preparing recommendations on methodologies and removals, the rules for transitioning the Clean Development Mechanism into the Article 6.4 mechanism, the accreditation standard, and the project activity cycle for adoption by CMA5 (during COP28).
- 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.
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.
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.
The Paris Agreement is adopted
The Paris Agreement enters into force
CMA3/COP26 Glasgow – Adoption of the rules, modalities and procedures for Article 6.4 mechanism
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
Request for submissions by Parties and admitted observer organisations to submit their views on activities involving removals via the submission portal
Article 6.4 Supervisory Body stakeholder webinar
Public consultation on the three SBSTA working areas on Article 6.4 (inclusion of emission avoidance and conservation enhancement, registries, authorisation of credits)
Technical expert dialogue on the three SBSTA working areas on Article 6.4 (inclusion of emission avoidance and conservation enhancement, registries, authorisation of credits)
CMA5/COP28 in Dubai. The Article 6.4 Supervisory Body will prepare recommendations on removals and methodologies for approval to CMA5.
Article 6.4 Mechanism
- Achieving Overall Mitigation of Global Emissions under the Paris Article 6.4 Mechanism (2019), by Wuppertal Institute
- Designing the Article 6.4 mechanism: assessing selected baseline approaches and their implications (2019), by OECD and IEA
- Best available technology and benchmark baseline setting under the Article 6.4 mechanism (2021), by Perspective Climate Group
- Private sector engagement in Article 6- A post-COP27 analysis (December 2022) by Philip Lee LLP
- Cooperative approaches or Article 6.4 mechanism: which of the Article 6 market mechanism will win the race to engage the private sector? (February 2023) by Holman Fenwick Willan LLP
- UN standard-setters turn their attention to carbon removal (Oct 2022), by Eve Tamme and Paul Zakkour
- COP27: Paving the way for the “removals COP” (Nov 2022), by Eve Tamme and Paul Zakkour
- EU and UN Kickstart Their Work on Carbon Removal for 2023 (March 2023), by Eve Tamme
- Challenges for Carbon Removal under the UN Standard (May 2023), by Eve Tamme
Mechanism established by Article 6, paragraph 4, of the Paris Agreement
Key Institutional Stakeholders
Additional StakeholdersThe Article 6.4 Supervisory Body Parties to the Paris Agreement The UNFCCC Secretariat, Mitigation Division Observer organisations in the UNFCCC
In a Nutshell
As part of the European Green Deal, the EU has set out legally binding climate objectives to (1) cut domestic net greenhouse gas (GHG) emissions by at least 55% compared to 1990 levels by 2030 and to (2) reach climate neutrality by 2050. The European Climate Law provides the legal framework to support these objectives. The law also requires the European Commission to propose a 2040 climate target for the EU in the first half of 2024, accompanied by an indicative EU GHG budget for the period 2030-2050.
The Commission is at the early stages of this process and has opened a public consultation to guide its assessment of a suitable 2040 climate target, inform the analysis of the sectoral transformations needed to meet this target, and provide input on the possible evolution of climate policy instruments beyond 2030. It will also lay out preferences between establishing separate or joint targets for emissions reductions and carbon removal – the two central components of net zero.
Carbon Gap advocates for the EU to set an explicit 2040 net emission reduction target of 95% compared to 1990, in line with advice by the European Scientific Advisory Board on Climate Change. This target will be the key milestone that the Union commits to reaching on the path to climate neutrality by or before 2050.
Deadline to submit feedback to the call for evidence for an impact assessment, which will inform the new Communication on the EU climate target for 2040
Planned Commission adoption of the Communication, which will lay the foundation for a draft law setting the 2040 target
- Call for evidence for an impact assessment on the new EU climate target for 2040
- Letter from academics and climate experts urging European legislators to adopt separate targets for carbon removals
- 2023 — the Year of Shaping EU’s 2040 Climate Target, by Eve Tamme
- Scientific advice for the determination of an EU-wide 2040 climate target and a greenhouse gas budget for 2030–2050
- Carbon removal: the key to getting the 2040 climate target right
Key Institutional Stakeholders
European CommissionDG Climate Action (CLIMA), Unit A.2: Foresight, Economic Analysis & Modelling DG Climate Action (CLIMA), Unit A.1: Strategic Coordination, Legal & Institutional DG Energy (ENER), Unit A.4: Chief Economist Team DG Energy (ENER), Unit A.1: Interinstitutional, policy coordination and planning
Additional StakeholdersThe European Scientific Advisory Board on Climate Change will inform the Commission’s assessment of a suitable 2040 climate target
In a Nutshell
The European Commission has proposed a voluntary regulatory framework for the certification of carbon removals (CRCF), which will be the first of its kind in width of covered CDR methods, pending adoption by co-legislators. The stated goal is to foster and accelerate the scale-up of sustainable carbon removals, which includes a wide variety of CDR methods to be applied by land managers, industries, and others to capture and store atmospheric or biogenic CO2, as well as fight greenwashing, and harmonise carbon removal market conditions.
The proposal includes and distinguishes 3 types of carbon removal categories: carbon farming (such as reforestation and soil carbon management), permanent carbon storage (such as BECCS and DACCS), and carbon storage in products (such as wood-based construction materials). 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 have the obligation of listing certified removals in interoperable public registries, while certification bodies, supervised by Member States, will carry out certification audits and the issuing of certificates.
In its current state, the proposal does not align with scientifically widely accepted definitions of carbon removal as the definition also covers emissions reductions. It also does not outline any rules for how the carbon removal certificates generated under the framework could or should be used. The certificates could be used in corporate reporting, in contracts in supply chains, in voluntary markets, or to receive public support for carbon removal activities.
What's on the Horizon?
2023: In the next steps, the European Parliament rapporteur on the file (MEP Lidia Pereira, EPP, PT) will prepare her initial report, and discussions in the Parliament and Council will continue.
- The draft report is expected to be voted on in the Parliament’s Environment committee in September 2023 and then in its October plenary session.
- In the Council, a general approach on the text among EU Member States is expected in Autumn 2023.
2023: The expert group on carbon removals kicked off their work in March 2023. Among other tasks, the group will be providing technical advice to the Commission on the development of the methodologies under the CRCF.
2023: In parallel to the legislative process, work will be ongoing on detailed methodologies for different carbon removal activities that will be set out in Commission delegated acts.
Within one year of the implementation of CRCF, the Commission will have to assess the potential inclusion of carbon storage in products in scope of the LULUCF Regulation.
By 2026, the Commission will have to assess the potential inclusion of carbon removals with permanent storage in the EU ETS.
Aim of the file
The CRCF will be the EU’s first certification framework that focuses exclusively on carbon removals. The stated goal of the file is a certification framework which creates trust in the quality and reliability of certified carbon removals among carbon removal providers, certificate buyers, and the public. The proposed framework also aims to increase transparency in the field of carbon removal certification, by creating public registries and methodologies for a wide variety of carbon removal methods, while also outlining requirements for monitoring, reporting and verification. As a result, interest and willingness to fund carbon removal activities and purchase certificates are expected to increase, leading to an expansion of carbon removal activities by current and potential operators. If adopted by co-legislators, the framework will form the basis of recognising and rewarding land managers, industry, and other carbon removal activity operators for high-quality carbon removals and their contribution to reaching the EU’s climate change mitigation goals.
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 removals, it also contains a definition of which, in the current proposal, also includes emissions reductions. Furthermore, the proposal does not provide any rules around the potential uses of certificates. Potential uses envisioned by the Commission range from the use of certificates to access funding from policies, such as the CAP, to the use on voluntary carbon markets.
Room for improvement
- Eliminate ambiguity as to what is and is not a removal
The current definition of carbon removals in the proposal also includes emissions reductions from biogenic carbon pools, and is not aligned with broad scientific consensus (see e.g., IPCC definition). In order to avoid conflation of emissions reductions and removals, and to allow the CRCF to become a global model for carbon removal certification, emissions reductions need to be excluded from the definition.
- Ensure a strict separation between higher-durability and lower-durability removals
The currently proposed storage categories do not clearly differentiate CDR methods based on their carbon storage durability nor separate biological from geochemical storage media. Separation of these storage media is essential as the need and difficulty of MRV vary significantly between CDR methods based on their storage media.
- Equip the framework to track how carbon removal is used so inappropriate claims can be policed
The CRCF requires provisions determining permitted uses of carbon removal certificates and certified units, to prevent mitigation deterrence, greenwashing and the erosion of public trust, especially regarding compensation claims for fossil fuel emissions based on lower-durability removal certificates. The current proposal lacks guardrails as to which claims can be made based on the characteristics of generated certificates and the CDR methods used to generate them.
Communication on Sustainable Carbon Cycles by the European Commission announcing the development of the framework
Proposal for the certification framework adopted by the European Commission
First meeting of European Commission expert group on carbon removals
The AGRI Committee (committee for opinion) adopted its opinion on the file
ENVI Committee vote on the adoption of the ENVI report
General approach expected to be reached by Member States in the Council
Development of methodologies for certification of different carbon removal activities
Trilogues between EU institutions and provisional agreement expected
Expected entry into force of the CRCF
Commission report expected on the potential inclusion of carbon storage in products in scope of the LULUCF Regulation
Commission will have to assess the potential inclusion of carbon removals with permanent storage in the EU ETS
- Communication on Sustainable Carbon Cycles, European Commission
- Impact assessment accompanying the CRCF proposal, European Commission
- A Union certification framework for carbon removals, European Parliament briefing, 2023
- Carbon Gap White Paper: A Guide to Certifying Carbon Removal, 2022
- Carbon Gap reaction to the European Commission proposal on carbon removal certification, 2022
Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a Union certification framework for carbon removals
Key Institutional Stakeholders
European CommissionDG Climate Action (CLIMA), Unit CLIMA C.3: Low Carbon Solutions (III): Land economy and carbon removals
European ParliamentCommittee responsible: ENVI Rapporteur: Lídia Pereira (EPP, PT) Shadow rapporteur: Tiemo Wölken (S&D, DE) Shadow rapporteur: Emma Wiesner (Renew, SE) Shadow rapporteur: Ville Niinistö (Greens/EFA, FI) Shadow rapporteur: Anna Zalewska (ECR, PL) Shadow rapporteur: Mick Wallace (GUE/NGL, IE)
Council of the European UnionCouncil configuration: ENV
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.
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 to evaluate where more specific requirements are needed and to implement delegated acts accordingly.
Climate-related claims such as net zero or carbon neutrality claims based on offsetting or 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 will now enter ordinary legislative procedure with the goal of reaching a formal adoption by the European Parliament and the Council.
2023-2024: The European Parliament and the Council will develop their positions separately.
- The Council adopted its negotiating mandate regarding the Directive on Empowering Consumers for the Green Transition 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 11 May adopted its position which sets stricter conditions than the Commission proposal and adds a definition of carbon offsetting.
- Negotiations between the Parliament and member states to find a middle ground are expected to start shortly. Complementing the Directive on Empowering Consumers, the Green Claims Directive will provide further guidance on the conditions to make substantiated environmental claims.
2024: Following trilogues between EU institutions, the Directive is expected to pass into EU law.
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 respectively set requirements to substantiate environmental claims made to consumers and 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.
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 emission 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.
The EU Circular Economy Action Plan sets out the plan to support the EU’s transition to a circular economy, including by protecting consumers
Impact assessment and public consultation on substantiating green claims
European Parliament resolution ‘Towards a more sustainable single market for business and consumers’
European Commission proposal for a Directive on Empowering Consumers for the Green Transition
European Commission proposal for Green Claims Directive
European Parliament adopts its position on the Directive on Empowering Consumers for the Green Transition
Deadline to provide feedback to the Commission on the Green Claims legislative proposal
- The EU Circular Economy Action Plan, European Commission
- Annual ‘sweep’: Screening of websites for ‘greenwashing’, European Commission
- Impact Assessment Report on Empowering Consumers, European Commission
- Recommendation on the use of the Environmental Footprint method, European Commission
- Strengthening climate-related claims: Carbon Gap response to the Green Claims proposal
- Corporate Climate Responsibility Monitor 2022, NewClimate Institute and Carbon Market Watch
- Greenwashing Factsheet, BEUC
- Sustainable consumption briefing, EPRS
Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on substantiation and communication of explicit environmental claims (Green Claims Directive)
Key Institutional Stakeholders
European CommissionDG Environment (ENV), Unit B.1: Circular Economy, Sustainable Production & Consumption
European ParliamentCommittee co-responsible: IMCO Co-Rapporteur: Andrus Ansip (Renew, EE) Shadow Rapporteur: Arba Kokalari (EPP, SE) Shadow Rapporteur: Laura Ballarín Cereza (S&D, ES) Shadow Rapporteur: Kim van Sparrentak (Greens, NL) Shadow Rapporteur: Carlo Fidanza (ECR, IT) Shadow Rapporteur: Anne-Sophie Pelletier (GUE/NGL, FR) Committee co-responsible: ENVI Co-Rapporteur: Cyrus Engerer (S&D, Malta) Shadow Rapporteur: Pernille Weiss (EPP, Denmark) Shadow Rapporteur: Emma Wiesner (Renew, SE) Shadow Rapporteur: Annalisa Tardino (ID, Italy Shadow Rapporteur: Petros Kokkalis (GUE/NGL, GR)
Council of the European UnionCouncil formation: ENV
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 is facing political opposition from the EPP and the Conservatives and was almost withdrawn.
The EU Council recently adopted its general approach and the EU Parliament needs to adopt its position. On 27 June, the ENVI Committee rejected the Commission’s proposal on the Nature Restoration Law.
The Parliament as a whole will need to take a position, probably during the July plenary. 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.
Now, interinstitutional negotiations will start. The Spanish Presidency has signaled that the Nature Restoration Law will be one of its priorities.
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. According to the Commission, restoring degraded ecosystems such as forests through management and afforestation has the capability to remove approximately 500 Mt CO2e annually by 2050.
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, policymakers 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. Policymakers should also not overlook the potential for new green jobs to be created as a result of the regulation.
European Commission Biodiversity strategy for 2030 setting out the long-term plan to protect nature and reverse the degradation of ecosystems
European Commission adopts the proposal for a Nature Restoration Law
The EU Council agreed on a general approach on the proposal for a Nature Restoration Law.
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)
The EU Parliament adopted a common approach to the Law and rejected the EPP’s call to reject the Law.
- Inception impact assessment on protecting biodiversity: nature restoration targets under EU biodiversity strategy, European Commission, 2020
- Biodiversity strategy for 2030, European Commission, 2020
- Regulation on nature restoration, European Parliament briefing, 2022
Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on nature restoration
Key Institutional Stakeholders
European CommissionDG Environment (ENV) Unit D.2: Biodiversity
European ParliamentCommitee responsible: ENVI Rapporteur: César Luena (S&D, ES) Shadow rapporteur: Christine Schneider (EPP, DE) Shadow rapporteur: María Soraya Rodrígues Ramos (Renew, ES) Shadow rapporteur: Jutta Paulus (Greens/EFA, DE) Shadow rapporteur: Alexandr Vondra (ECR, CZ) Shadow rapporteur: Mick Wallace (GUE/NGL, IE)
Council of the European UnionCouncil configuration: ENV
In a Nutshell
The LULUCF Regulation is designed to ensure that emissions and removals from land use, land use change and forestry (LULUCF) activities are accurately accounted for in the EU’s climate targets. The LULUCF sector covers the use of soils, trees, plants, biomass and timber and is responsible for both emitting and absorbing CO2 from the atmosphere. The Regulation’s objective is to progressively increase removals and reduce emissions in the sector.
Following its latest amendment, the Regulation aligns with the legally binding target to reduce greenhouse gas (GHG) emissions by 55% below 1990 levels by 2030 and strengthen the sector’s role in climate action.
The amended Regulation sets out an overall EU-level objective of 310 Mt CO2e of net removals in the LULUCF sector by 2030. Member states are be responsible for caring for and expanding their carbon sinks to meet the new EU target. To that end, the Regulation introduces rules enhancing the quality of monitoring, reporting and verification of emissions and removals, using more accurate and precise data monitoring.
The amended Regulation maintains the “no debit rule” that emissions (debits) from LULUCF sectors should not exceed removals (credits) until 2025. Should emissions exceed removals, the member state is obliged to increase sink capacity through afforestation or reforestation, or by making use of flexibility mechanisms (e.g., trading emissions credits). In 2026, removals should start exceeding emissions. Each member state will be assigned a binding national target for 2030 and a commitment to achieve a sum of net GHG emissions and removals for the whole period of 2026-2029, the budget for which will be set in the future.
The amended Regulation keeps the possibility to trade removals between member states and use surplus annual emission allocations under the Effort Sharing Regulation to reach LULUCF targets. There is also a mechanism to account for natural disturbances affecting a member states’ ability to deliver on the national target (e.g., wildfires or pests), provided that the EU as a whole meets its 2030 target.
What's on the Horizon?
The European Parliament and the Council have adopted the amended directive, which has now entered into force:
- 14/03/2023: Formal adoption by the European Parliament
- 28/03/2023: Formal adoption by the Council of the European Union
- 21/04/2023: Publication in the Official Journal of the European Union
- 11/05/2023: Entry into force
Looking further ahead, the Commission will submit a report within six months of the first global stocktake under the Paris Agreement (to be carried out in 2023), on including non-CO2 GHG emissions from agriculture in the scope of the Regulation and the setting of post-2030 targets for the LULUCF sector.
Within one year of the implementation of the proposed certification framework for carbon removals, the Commission will have to assess the potential inclusion of carbon storage in products in scope of the LULUCF Regulation.
A more ambitious regulation
The LULUCF Regulation was amended to include the EU’s revised 2030 climate target to reduce GHG emissions by 55% below 1990 levels, which acknowledged the need to enhance the EU’s carbon sink. The revision was proposed as part of the ‘Fit for 55 package’ (together with the EU emissions Trading System and the Effort Sharing Regulation).
The key objectives for the revision were:
- reversing the current trend of declining removals in the land sector and delivering, by 2030, 310 Mt CO2e removals from the LULUCF sector;
- a climate-neutral land sector by 2035, combining emissions from agriculture with net removals from LULUCF;
- simplification of reporting requirements for Member States.
The agreement tightens the criteria to assess whether the EU-wide target is being met and consequently if the flexibility mechanism can be used. Member states will be allowed to use the flexibility mechanism up to a fixed limit, provided, among other conditions, that they submit evidence to the Commission following a well-defined methodology.
To ensure delivery, the revised LULUCF includes stricter reporting requirements, improved transparency and a review by 2025. During the period 2026-2029, Member States can be penalised by an additional 8% on their national 2030 target, if the reporting shows insufficient progress towards their national targets.
…that risks not delivering
In 2020, the EU LULUCF sector removed 230 Mt CO2e from the atmosphere. However, carbon sinks have been declining in almost every Member State. Based on projections, current measures will not be sufficient to reverse this trend. By implementing the additional measures planned by Member States, the EU’s carbon sink would increase between 2021 and 2040, but by only by 3%. This would mean 209 Mt CO2e by 2030, missing the proposed target of 310 Mt CO2e. If the EU is to achieve the LULUCF goal, more ambitious removal measures are needed from Member States, along with further emissions reductions.
The Regulation is comprehensive in scope – it covers all land use, land use change, and forestry activities, ensuring that emissions and removals from these sectors are accurately accounted for in the EU’s overall emissions reduction target. Overall, however, the scope for emissions reductions is limited– LULUCF activities account for a relatively small share of the EU’s total greenhouse gas emissions (equal to 7% of the EU’s annual GHG emissions).
The proposed revision also extends the scope to cover emissions from biomass used in energy production and ensures these will be recorded and counted towards each Member State’s 2030 climate commitments. This is particularly relevant for bioenergy with carbon capture and storage (BECCS), which extracts bioenergy from biomass, and captures and stores the carbon. As forest management is the main source of biomass for energy and wood production, the more robust accounting rules and governance for forest management will affect the availability and sustainability of the biomass feedstock for BECCS.
Entry into force of the original LULUCF Regulation
European Commission proposal for a revision of the LULUCF Regulation released as a part of the Fit for 55 package
Provisional political agreement on the LULUCF legislative proposal between co-legislators
Entry into force of the revised regulation
Commission to report on including non-CO2 GHG emissions from agriculture in the scope of the regulation and the setting of post-2030 targets for the land-use sector
Commission to report on the potential inclusion of carbon storage in products in scope of the LULUCF Regulation
Regulation (EU) 2023/839 of the European Parliament and of the Council of 19 April 2023 amending Regulation (EU) 2018/841 as regards the scope, simplifying the reporting and compliance rules, and setting out the targets of the Member States for 2030, and Regulation (EU) 2018/1999 as regards improvement in monitoring, reporting, tracking of progress and review (Text with EEA relevance)