In a Nutshell

The Environmental Liability Directive (ELD) establishes an EU-wide liability framework for environmental damages.  

It places obligations on operators that undertake certain industrial and agricultural activities, as well as those that are at fault for damage or have been negligent, making them liable for preventing and remedying any environmental damage caused by their activities. The Directive enshrines the ‘polluter pays’ principle in an effort to deter the occurrence of damage. It works in concert with other laws including the Wild Birds Directive, Habitats Directive, Water Framework Directive, Marine Strategy Framework, Industrial Emissions Directive, and CCS Directive.

Under the ELD, obligated operators must undertake preventive action where there is an imminent threat of environmental damage and remedial action where damage has already occurred, as well as bear the costs of such action.

The Directive is concerned with damage to protected species and natural habitats (which are those outlined in the Wild Birds Directive and Habitats Directive), to water and land, as well as with adverse changes in natural resources or impairment of a natural service.  

The Directive is relevant to carbon dioxide removal (CDR) as it sets obligations on operators of geological CO2 storage sites. These obligations are operationalised through the CCS Directive, which amends the scope of the ELD to cover the operation of CO2 storage sites. Operators are obliged to prevent the occurrence of, and take remedial action to address, environmental damage associated with the operation of such sites. This liability applies during the operational phase, but also during the closure and post-closure period. 

What's on the Horizon?

Under Article 18(2) of the ELD, the Commission must collect information from member states about their experience in applying the Directive, and in turn, undertake an evaluation that must be published before 30 April, 2023 and every five years subsequently. The evaluation is expected to consider the weaknesses in the ELD’s liability regime, as highlighted by the Parliament’s 2021 resolution, and may lead to revision of the rules for operators.

Deep Dive

How does the Environmental Liability Directive (ELD) work? 

The ELD establishes two categories of operator, subject to different liabilities: 

  • Strict liability: Occupational activities considered to be dangerous are outlined in Annex III of the Directive, as regulated under the Integrated Pollution Prevention and Control Directive. These operators face ’strict liability’, meaning a causal link does not need to be proven to make them liable for damage. In 2009, the entry into force of the CCS Directive amended the list in Annex III to include operators of geological CO2 storage sites.
  • Fault-based liability: Operators of activities not listed in Annex III must undertake measures when it can be proven that they are at fault.

In terms of the measures to be used by operators, Annex II of the Directive outlines a framework for remedying environmental damage, including primary, complementary, and compensatory remediation. Whilst primary remediation measures seek to return resources towards their baseline condition, complementary remediation seeks to provide the same level of resources elsewhere. Compensatory remediation addresses interim losses, and is undertaken during recovery, to fill the gap before primary and complementary measures have taken full effect.  

Regulating damages from CO2 storage

In the context of the CDR value chain, the Directive works in concert with the CCS Directive and ETS Directive to regulate damages related to CO2 leakage from storage sites, which could include BECCS and DACCS activities. While liability for environmental damage (i.e. damage to protected species and natural habitats) is regulated under the ELD, damage to the climate is regulated through the EU Emissions Trading System (ETS), whereby operators must surrender ETS allowances to address any leakage. Meanwhile, the CCS Directive, introduced in 2009, amended the Environmental Liability Directive to include operators of CO2 storage sites under Annex III.  

The CCS Directive outlines the obligations of storage site operators and competent authorities. These are outlined below.  

During operation:  
  • Where CO2 leakage has occurred, operators have an obligation to undertake ’corrective measures’.
  • Operators have a legal obligation to report leakages or irregularities, under the conditions of the storage permit as well as under the ETS Directive.
  • The CCS Directive does not outline what these ’corrective measures’ may be specifically, or how they differ from the ‘remedial measures’ of the ELD. It may be interpreted that, while corrective measures are measures to rectify direct and immediate harm, remedial measures under the ELD may refer to the wider environmental damage associated with leakage.
  • In addition to the corrective, preventive and remedial measures taken, ETS allowances must be surrendered by the operator per the ETS Directive. 
  • Where an operator’s storage permit is withdrawn, for example due to permit expiry or permit conditions not being met, the competent authority temporarily takes on the operator’s legal obligations such as those under the ELD but can recover any associated costs from the previous
During closure and post-closure:  
  • After a storage site has been closed, operators continue to be liable for the ‘preventive and remedial’ actions under the ELD (alongside their monitoring, reporting, and corrective measures obligations under the CCS Directive).  
  • After certain conditions are met to adequately close the site, the legal obligations and liabilities of the operator can be transferred to the competent authority. These conditions include a need for clear evidence that the CO2 is permanently contained and that the site has been sealed, and a minimum period of time (no less than 20 years) has elapsed.

Both the Environmental Liability Directive and CCS Directive provide that competent authorities can recover costs from the operator, where they have undertaken remedial or corrective measures.  

Scope of the ELD and applicability to CDR 

In the context of CDR, the Environmental Liability Directive and CCS Directive work together to manage the risk of environmental damage associated with CO2 storage operations, such as those in the BECCS and DACCS value chain. The scope of the ELD includes damage relating to: 

  • Protected species and natural habitats, defined under EU conservation legislation broadly as naturally occurring wild species in the European territory and their habitats;
  • Waters, defined under the Water Framework Directive as “’inland surface waters, transitional waters, coastal waters and groundwater’;
  • Land, not explicitly defined in the Directive.

Meanwhile the scope of CCS Directive includes geological storage in: 

  • Member state territories, exclusive economic zones (EEZs), and continental shelves under the UNCLOS definition.

Thus, the scope of the ELD is such that it applies strict liability to operators of geological storage activities in member state territories, EEZs, and continental shelves where damage to protected species and natural habitats, land, or water occurs.  

The ELD has been criticised for introducing ‘potentially uninsurable liabilities which dis-incentivise private sector investment in CCS technology […] in contrast with legislation in competing states including the United States, Norway, Canada and Australia’.  

 Due to its limited scope, the ELD does not directly contribute to more durable and secure storage of CO2. Instead, CO2 storage is overseen primarily through the CCS and ETS Directives. Thus, while it plays an important role as a deterrent for environmental damage, especially regarding the liability of storage site operators, the ELD cannot specifically penalise CO2 reversal events and their repercussions.  

Timeline

April 2004
23 April, 2009
March 2021
20 May, 2021
22 November, 2022
Upcoming
April 2004

Environmental Liability Directive signed into law

23 April, 2009

CCS Directive signed into law, amending the Environmental Liability Directive to include operators of CO2 storage sites. Revision of the ETS Directive to include carbon capture and storage, linking the ETS with the CCS Directive

March 2021

Publication of Commission Notice Guidelines clarifying the scope of ‘environmental damage’ in the Directive

20 May, 2021

Adoption of Parliament resolution highlighting limitations of the Environmental Liability Directive and calling for revision  

22 November, 2022

Study workshops on the 2023 Evaluation of the Environmental Liability Directive

Upcoming

Report on the Evaluation of the Environmental Liability Directive 

Official Document

Unofficial Title

Environmental Liability Directive 

Year

2004

Status

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?

 

  • 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
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 III (updated): 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

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 Net Zero Industry Act (NZIA) is a legislative proposal from the European Commission from March 2023 that aims to provide a stable and simplified regulatory environment to support the scale-up of net zero technologies. The NZIA aims to reach a goal of at least 40% manufacturing capacity of strategic net zero technologies in the EU according to annual deployment needs.

The Act sets out enabling conditions, streamlined permitting processes, and one-stop shops for net zero technology manufacturing projects. It differentiates between ‘net zero technologies’ (at least TRL 8) and ‘innovative net zero technologies’ (lower TRL, and can benefit from regulatory sandboxes to foster innovation). It proposes a list of eight strategic net zero technologies that would benefit from even faster permitting process within what are defined as “net zero strategic projects”:

  • Solar photovoltaic and solar thermal technologies,
  • Onshore wind and offshore renewables,
  • Battery/storage,
  • Heat pumps and geothermal energy,
  • Electrolysers and fuel cells,
  • Sustainable biogas/biomethane technologies,
  • Carbon capture and storage (CCS),
  • Grid technologies.

The Act establishes an annual EU CO2 injection capacity goal of 50 million tonnes. This goal will be adjusted when the regulation is incorporated into the EEA Agreement to account for additional capacity in Norway and Iceland and is expected to grow post-2030; according to the Commission’s estimates, the EU could need to capture up to 550 million tonnes of CO2 annually by 2050 to meet the net zero objective, including for carbon removals.

In one of the world’s firsts, oil and gas producers are subject to an individual contribution to this target, making them directly responsible for building and operating the newly mandated CO2 injection capacity. The contributions will be calculated based on a “pro-rata” basis, accounting for their share of oil and gas production within the EU during 2020-2023.

The Act also aims to facilitate access to markets through public procurement, auctions, and support for private demand. It focuses on ensuring the availability of skilled workforce and foresees net zero industrial partnerships with third countries.

What's on the Horizon?

 To provide dedicated funding support to scale up clean technologies, the Commission was set to propose a European Sovereignty Fund by Summer 2023 within the context of the multi-annual financial framework (MFF). On 20 June, the Commission proposed, instead, to establish a ‘Strategic Technologies for Europe Platform’ (STEP), to provide an immediately available tool to member states. The STEP Regulation entered into force on 29 February 2024.

By the end of 2028, the Commission must assess the balance between CO2 capture, transport and storage capacity. Member states may be able to ask for adjustments in their contributions in case of an imbalance. The Commission must also propose a potential CO2 injection capacity by 31 December 2028.

A market assessment for captured CO2 will be conducted after three years of entry into force, potentially leading to legislative proposals to address shortcomings, especially for hard-to-abate emissions.

Four years after the entry into force, the Commission also needs to assess the possibility of including other technologies in the list of net-zero technologies, opening a window of opportunity for CDR. The evaluation will take into account: (1) updates to the National Energy and Climate Plans, (2) the Strategic Energy Technology (SET) Plan and (3) the State of the Energy Union Report.

Deep Dive

As one pillar of a larger Green Deal Industrial Plan, the NZIA is meant to strengthen and support the EU’s capacity to reach its climate goals. It ensures Europe seizes the potential to be a world leader in the global net zero industry in the context of strong support for net zero technologies coming from different parts of the world, such as the United States’ IRA.

(Strategic) net zero technologies

The NZIA proposes key developments for net zero technologies. Two main aspects of the definition are particularly relevant: (1) the definition is not technology-neutral, it identifies key areas to be addressed, and further lists a family of eight strategic net-zero technologies, which benefit from even faster permitting, priority status, and in some circumstance of overriding public interest, and (2) net zero technologies must be at least Technology Readiness Level (TRL)  8. CDR is not explicitly listed as a strategic net zero technology, and the TRL 8 requirement would exclude most CDR methods. However, if based on TRL only, some could fall under the definition of ‘innovative net zero technologies’, e.g., some forms of direct air capture are considered TRL 7. This flaw of the proposal could be addressed by co-legislators by adding carbon removal in the definition of net zero technologies and in the related annex.

CO2 injection capacity target to incentivise CO2 storage infrastructure

The NZIA proposes a 50 million tonnes per year of CO2 injection capacity in the EU by 2030. The act rightly identifies the lack of storage capacity as one of the largest bottlenecks for CO2 capture investments. One of the key aspects of the act is the transparency of CO2 storage capacity, including the obligation for member states to make publicly available data on sites that can be permitted on their territory, as well as reporting on CO2 capture projects in progress, and their needs for injection and storage capacity. The NZIA clarifies that CO2 injection capacity will also be available to accommodate CDR, but provisions are not proposed to ensure the shared CO2 infrastructure can efficiently be used to accommodate both CCS and CDR methods. A comprehensive and coordinated approach to carbon management that considers both CCS and CDR is needed to ensure that limited CO2 storage capacity is used effectively to reach the EU’s climate neutrality targets. The target will need to be continuously reassessed to meet the storage needs in the EU, especially beyond 2030. Furthermore, separate provisions to ensure adequate transport infrastructure should be foreseen. The European Commission estimates that about 550 million tonnes of CO2 may need to be captured annually by 2050 to meet the net zero objective.

Oil and gas producers’ responsibility to develop the EU CO2 injection capacity has the potential to be a world-leading initiative

The NZIA Article 18 introduces an innovative obligation on oil and gas producers to take responsibility for building EU CO2 storage infrastructure subject to the EU’s injection capacity target. This obligation could introduce an element of producer responsibility for fossil fuel producers in a similar way as producers of packaging, car tires, and other products are required by law to take responsibility for the environmental footprint of end-of-life disposal. If confirmed, this provision would also allow the development of open carbon storage sources by mapping and hosting transparent, open data on carbon storage resources, much of which is held today by private companies. Critical details of this obligation, such as how different sources of CO2 for storage are prioritised or barred, which entities, beyond oil and gas producers, are required to build the CO2 infrastructure, and the procedures to determine their location remain open and need further attention.

Fresh funding is needed

The proposal establishes new initiatives, such as the “Net Zero Europe Platform”, that will discuss the financial needs of the net zero strategic projects and could be key in advising how the financing of these projects can be achieved. Beyond this, the NZIA is anchored in already existing funding mechanisms such as Innovation Fund, InvestEU, Horizon Europe, Important Projects of Common European Interest (IPCEI), the Recovery and Resilience Facility, and Cohesion Policy programmes. Clarity on new and additional funding will be key, as bigger goals will require bigger means that can support the variety of CDR methods at different TRL stages.

Timeline

1 February 2023
16 March 2023
26 May 2023
21 November 2023
7 December 2023
6 February 2024
25 April 2024
27 May 2024
29 June 2024
31 December 2028
1 February 2023

The Green Deal Industrial Plan Communication

16 March 2023
26 May 2023

Publication of Draft Report by MEP Christian Ehler

21 November 2023

EU Parliament plenary adopted the parliament’s report

7 December 2023

The Council adopted its general approach

6 February 2024

The EU Parliament and the Council reached a provisional agreement.

25 April 2024

The EU Parliament plenary adopted the provisional agreement

27 May 2024
29 June 2024

The NZIA was published in the Official Journal of the EU on 28 June 2024 and entered into force on 29 June 2024.

31 December 2028

Deadline for the Commission to potentially propose a CO2 injection capacity target for 2040

Status

Unofficial Title

NZIA

Year

2023

Official Document

Last Updated

24/04/2023

In a Nutshell

The proposal for a Soil Monitoring Law introduces a monitoring framework for all soils across the European Union. The proposed directive establishes a definition of what constitutes healthy soil. The law aims to present the information necessary to monitor European soils’ health and provide incentives for sustainable soil management.

In the proposal, soil health is defined as ‘the physical, chemical and biological condition of the soil determining its capacity to function as a vital living system and to provide ecosystem services’. Healthy soils have the potential to draw significant amounts of CO2 from the atmosphere. However, EU soils are losing their ability to retain carbon and are actually emitting CO2, exacerbating climate change. Peatland drainage and soil erosion linked to agriculture and human settlements are just some of the reasons behind this carbon loss and associated emissions. In turn, the declining quality of EU soils might impact future food production.

The proposal’s most important feature is the introduction of a harmonised methodology and rules for soil health monitoring across the EU. Although some room is left for member states to decide how to implement the directive, it establishes common Union-wide criteria to assess whether a soil body is ‘healthy’ or ‘unhealthy’. The framework would create a common database integrating data from EU-level, member state and private sources. Member states will be required to regularly and accurately measure soil health using the framework. 

The law significantly lacks a legally binding objective to achieve soil health across EU territory by 2050. If monitoring shows that EU soils are unhealthy, there is no obligation for member states to restore soil health. Thus, this law does nothing to ensure that soil health is achieved.  

What's on the Horizon?

The EU Commission published its legislative proposal on 5 July 2023.

The proposal will be subject to interinstitutional negotiations in the European Parliament and Council. 

A public feedback period on the European Commission’s proposal was open until 27 November 2023. 

The ENVI Committee adopted its report on 11 March 2024. The EU Parliament plenary agreed on its negotiating position on 10 April 2024, which waters down the Commission’s proposal.

The Council adopted its general approach on 17 June 2024.

Interinstitutional negotiations are expected to start in late 2024.

Deep Dive

Context of the law

In 2021, the European Parliament requested that the Commission develop an EU-wide common legal framework for the protection and sustainable use of soil. The 2023 Framework proposal followed up on this request. Soil health also plays a key role in delivering existing EU strategies and targets, including the EU Biodiversity Strategy for 2030, the EU Soil Strategy for 2030 and the 8th Environment Action Programme 

Reaching the new climate objectives set under the European Green Deal, as well as ensuring a stable food supply, relies on healthy soils. In the proposal, the Commission reports that an estimated 61% to 73% of agricultural soils in the EU are affected by erosion, loss of organic carbon, nutrient exceedances, compaction or secondary salinisation, or a combination of these threats, which not only impacts soil carbon sequestration but also food production capacities. For example, crop yields can be reduced by 2.5-15% by soil compaction. It is estimated that around 75 billion tonnes of organic carbon are stored in EU soil. As a point of reference, the EU’s total CO2 emissions were about 4.5 billion tonnes in 2017.  

What does it look like in practice?

The proposal for a directive applies to all soils in the territory of member states. Under the Framework, member states are required to delineate their territories in ‘soil districts’, which is a newly defined governable unit introduced in the directive. Some loosely defined parameters to determine soil districts are laid out in the proposal. A competent authority designated by each member state will be assigned for each soil district. Member states are then required to establish a monitoring framework based on a set of criteria laid out in the directive, ensuring comparability of measurement across soil districts and member states. Most importantly, the European Union now has a measurable definition of soil health. Using this framework, member states are required to accurately and regularly measure soil health. The Directive lays out methodologies to do so and an obligation to measure soils at least every five years.   

Under this proposed directive, member states would also be required to set up a mechanism for voluntary soil health certification, viewed as a way to incentivise the uptake of sustainable soil management practices by land owners. As per the current proposal, this certification would be complementary to the Carbon Removal Certification Framework (CRCF). This linkage is still unclear and needs to be further clarified by the Commission.

Room for improvement

The Commission’s plan to create a strong soil health monitoring framework is a positive move for Europe. It will help foster healthier soils, potentially leading to greater quantities of carbon being absorbed. Carbon Gap especially welcomes the establishment of measurable common thresholds for soil health across a wide range of variables, minimum criteria for determining sampling points, an EU-wide soil health assessment and reporting system, and a digital portal to make soil data publicly accessible as important steps towards boosting Europe’s soils through a harmonised framework.  

However, it is important to recognise that monitoring soil health does not necessarily mean that soil health will be improved. The proposed directive would better serve its purpose if it included a legally-binding target for soil health by 2050 holding member states accountable for their stated goal. Another concern is that the proposed frequency of measurement and the timelines for reporting cycles is insufficient. Effectively, if the law enters into force as it stands today, the first soil measurements would only be required within four years. New soil measurements would then be required every five years, meaning that it would take close to a decade before a clear view is established of whether EU soils are recovering, protected or enhanced.  

While the Commission’s desire to incentivise sustainable soil management principles is welcome, its proposed mechanism of soil health certification for land owners and managers raises concerns. The suggested link to the CRCF warrants scrutiny as soil health and soil carbon are not interchangeable, soil carbon fluxes are difficult to measure accurately at scale, and the durability of soil carbon storage is low. Therefore, soil health certificates should not be sold as carbon credits or used to contribute toward net-zero targets. Rather, these certificates might be supported by entities wanting to make contribution claims or do good for the environment and society.

Timeline

17 November 2021
24 October 2022
5 July 2023
24 October 2023
3 November 2023
13 November 2023
27 November 2023
18 December 2023
13 February 2024
11 March 2024
10 April 2024
17 June 2024
17 November 2021

EU soil strategy for 2030

24 October 2022

Public consultation on new soil health legislation

5 July 2023

The EU Commission published its legislative proposal

24 October 2023

The ENVI Comittee published its draft report on the file

3 November 2023

Public feedback period deadline on the European Commission’s proposal 

13 November 2023

The AGRI Committee (committee for opinion) published its draft opinion

27 November 2023

Deadline to submit amendments to ENVI Committee draft report

18 December 2023

First policy debate on the file for the European Council

13 February 2024

AGRI Committee adopted its opinion report

11 March 2024

ENVI Committee adopted its report on the file

10 April 2024

EU Parliament plenary adopted its report

17 June 2024

Year

2023

Official Document

Unofficial Title

Soil Monitoring Law

Last Updated

22/08/2023

In a Nutshell

On 19 February 2024, 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 (expected in early autumn) 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 on 21-23 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. A draft methodology for biochar is expected to be ready by early 2025.

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.

By 2028, a union-wide registry will be set up.

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
17 June 2024
30 June 2024
9 July 2024
21-23 October 2024
End 2024
2025
July 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
17 June 2024

Online Workshop on biochar CRCF methodology development

30 June 2024

Deadline to provide feedback on the first recommendations on carbon farming from the “Credible” project

9 July 2024

Online workshop on peatland rewetting CRCF methodology development

21-23 October 2024
End 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

July 2026

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

Further reading

Status

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 adopted its 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
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

Unofficial Title

Green Claims

Year

2023

Official Document

Last Updated

24/04/2023

In a Nutshell

The Nature Restoration Law sets 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. The regulation is the first continent-wide, comprehensive law of its kind.

By 2030, the targets would ensure the restoration of at least 20% of degraded EU land and sea areas. The 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 will be required to develop Nature Restoration Plans to be assessed by the Commission and to periodically report on their progress toward meeting domestic targets.

Carbon removal is promoted in several aspects of the law, particularly in the way it prioritises the restoration of damaged terrestrial and aquatic ecosystems crucial for storing carbon dioxide, such as peatlands, forests, grasslands, marshlands, heathland and scrub, and coastal wetlands. The Commission considers focusing on damaged and carbon-rich ecosystems to be cost-efficient and critical for climate change mitigation. Indeed, 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 regulation, agricultural ecosystems across member states must achieve an increasing trend in at least two of three indicators: the “grassland butterfly index”, the share of agricultural land with high-diversity landscape features, and organic carbon stocks in cropland mineral soils.

What's on the Horizon?

The Council adopted the provisional agreement on 17 June 2024.  The Nature Restoration Law will now be translated in all 24 EU languages and then published in the Official Journal of the EU before it enters into force.

The next important process will be the drafting of Nature Restoration Plans by member states, which will be essential to implement this EU regulation. The first restoration plans will be due two years after the law enters into force and will cover the period until June 2032. By then, member states will need to submit a plan for the period until 2042, and by June 2042 a plan for the remaining period to 2050.

The Commission has also been tasked with submitting a report within one year of the regulation’s entry into force to assess financing measures for its achievement. This report will need to provide an overview of the financial resources available at EU level, based on an assessment of the current funding allocation and an analysis to identify funding gaps.

The regulation also tasks the Commission with reviewing and assessing the implications of the regulation on nature restauration by 2033. Alongside the review, the regulation sets up a process to suspend the implementation of measures related to agricultural ecosystems for up to a year in the event of unforeseeable and exceptional events outside of EU control and with severe consequences for EU-wide food security.

Deep Dive

Giving teeth to EU environmental rules

The Nature Restoration Law sits at the intersection between European climate and biodiversity policies, demonstrating the interconnected nature of these crises.  The Law is a key contributor toward the EU’s delivery of its 2050 climate neutrality target, especially given the range of ecosystems included in its scope. 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 could remove approximately 500 Mt CO2e annually by 2050.

This law adds rigour to the EU’s existing environmental law regime. To date, the efficacy of these schemes has suffered from a lack of targets, deadlines and procedural clarity. The EU has so far failed to meet its voluntary goals as illustrated by the missed voluntary target set by the Convention on Biological Diversity to restore at least 15% of its degraded ecosystems by 2020.

The law will also support gathering data through national Restoration Plans and reports, which will include mapping any agricultural and forest areas that need restoration and highlighting areas of carbon depletion to help fill data gaps on terrestrial carbon flows.

Additionality and the CRCF

It is still unclear how the Nature Restoration Law will intersect with the EU Carbon Removal Certification Framework (CRCF). The Commission has proposed that carbon farming via the 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.

What are the targets set?

Alongside the EU-wide target of restoring at least 20% of the EU’s land and sea areas by 2030, the Nature Restoration Law sets a suite of other targets and obligations, including the following:

  • Member states must put measures in place to restore at least 30% of the habitat types listed in Annexes I and II of the regulation that are in poor condition, which include a range of terrestrial, coastal and marine ecosystems.
  • Member states must establish measures to restore at least 60% of habitats in poor condition by 2040 and at least 90% by 2050.
  • Member states need to set out measures to reverse the decline of pollinator populations by 2030 at the latest, as well as monitor progress every six years after 2030.
  • For agriculture ecosystems, some flexibility has been given to member states when rewetting wetlands. For drained peatlands under agricultural use, restoration targets of 30% by 2030, 40% by 2040 and 50% by 2050 have been set, although some member states have a lower target. Co-legislators agreed that success in rewetting peatlands does not imply an obligation for farmers and private landowners.
  • For forest ecosystems, member states are required to put measures in place to enhance biodiversity and contribute to the planting of at least three billion additional trees by 2030 at the EU level.

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
17 June 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

17 June 2024

The Council adopted the Nature Restoration Law

Status

Year

2022

Official Document

Last Updated

24/04/2023

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?

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.

As part of the first evaluation of the LULUCF Regulation, a call for evidence is open until 11 July 2024.

Deep Dive

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.

Coverage

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.

Timeline

9 July 2018
14 July 2021
11 November 2022
11 May 2023
Q1-Q2 2024
11 July 2024
2025 (tbd)
9 July 2018

Entry into force of the original LULUCF Regulation

14 July 2021

European Commission proposal for a revision of the LULUCF Regulation released as a part of the Fit for 55 package

11 November 2022

Provisional political agreement on the LULUCF legislative proposal between co-legislators

11 May 2023

Entry into force of the revised regulation

Q1-Q2 2024

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

11 July 2024

Deadline for call for evidence as part of first evaluation of the LULUCF Regulation

2025 (tbd)

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

Status

Unofficial Title

LULUCF

Year

2022

Official Document

Last Updated

24/04/2023

In a Nutshell

The Effort Sharing Regulation (ESR) is one of the three central pillars of EU climate policy, together with the LULUCF Regulation and the EU ETS. The ESR primarily governs greenhouse gas emissions (GHG) from sectors currently not covered by the EU ETS, including transport, buildings, agriculture, and non-ETS industry and waste, which generate nearly 60% of total EU GHG emissions. It spans all EU Member States, as well as Iceland and Norway.

The original ESR, adopted in 2018, foresaw overall emissions reductions across all EU member states in the covered sectors by 30% in 2030 below 2005 levels. The 2021 proposed revision is part of the ‘Fit for 55′ package, which aims to reduce EU-wide net GHG emissions by 55% in 2030 below 1990 levels and to decrease GHG emissions in the sectors covered by ESR to 40% by 2030 below 2005 levels (compared with the existing target of a 29% emission reduction).

The Regulation establishes binding emissions reduction targets for member states, which differ from country to country, primarily depending on the countries’ GDP per capita (spanning from 10% to 50%). The new proposal aims to establish more ambitious national targets for 2023-2030. Together with the LULUCF Regulation and the ETS, the ESR allows for flexibilities in net emissions reductions among the three policies to achieve climate change mitigation goals more efficiently.

While the ESR is not primarily concerned with carbon removals, it allows countries to make use of excess carbon removals achieved in the LULUCF sector to reach their ESR targets. The EU-wide maximum for carbon removals, which may be used to reach the 55% emissions reduction goal, is limited to net 225 million tons of CO2e until 2030.

What's on the Horizon?

The provisional political agreement reached between the European Parliament and Council in December 2022 needs to be formally adopted before the Regulation can enter into force: 

Agreed changes compared to the Commission proposal include eliminating an initially proposed additional voluntary reserve of unused LULUCF removal credits that would have been allowed to count towards Member States’ 2030 ESR target.

Deep Dive

Together with the ETS and LULUCF, the ESR is one of the three central pieces of EU climate legislation, which steer efforts to reduce total greenhouse gas emissions by 55% in 2030 below 1990 levels as outlined in the European Climate Law. All three have been revised to increase ambition and ratchet up the 2030 target through the ‘Fit for 55’ package and negative emissions will potentially be able to play a role in each of them.

A key aspect of the ESR is the flexibilities of countries to reach their targets more efficiently. These flexibilities are intended to decrease a country’s burden, and give the ESR some characteristics of a carbon market:

1.Temporal and international flexibilities:

  • Banking: If a country’s GHG emissions are lower than its annual allocation under the ESR, it may use part of its surplus in the following years and until 2030;
  • Borrowing: If a country’s GHG emissions are higher than its annual allocation under the ESR, it may borrow from the following year’s allocation (up to 7.5% of the annual allocations from 2021 to 2025 and up to 5% from 2026 to 2030);
  • Trading: Countries may buy or sell allocations to meet their annual targets (up to 10% of their annual allocations from 2021 to 2025 and 15% from 2026 to 2030).

2. Sectoral flexibilities:

  • ETS and ESR: Nine member states’ allowances (with national reduction targets above the EU average and their cost-efficient reduction potential) may make use of a limited percentage of ETS emissions to reach their ESR reduction targets;
  • LULUCF and ESR: Countries may use a constrained number of net carbon removals in the LULUCF sector to meet their emission reduction targets under the ETS.

Under the proposed amendment of the ESR, the total net carbon removals which may be considered for reaching ESR targets, may not exceed 225 Mt CO2e across all member states. Previously the maximum was 280 Mt CO2e. The quantity of net carbon removal was also determined and limited for each member state individually. To avoid emissions reduction deterrence, the new proposal also foresees additionally capping the use of carbon removals under the ESR in two time periods, the maximum allowance equally split between 2021-2025 and 2026-2030.

Timeline

30 May 2018
16 December 2018
14 July 2021
8 November 2022
17 May 2023
30 May 2018

Entry into force of the original Effort Sharing Regulation

16 December 2018

Commission Implementing Decision setting out annual emission allocations of the Member States for 2021- 2030

14 July 2021

Proposal to revise the Effort Sharing Regulation as part of the Fit for 55 package

8 November 2022

Provisional political agreement between co-legislators on the revised Effort Sharing Regulation

17 May 2023
Revised regulation enters into force

Status

Year

2021

Official Document

Last Updated

24/04/2023