EU

Critically Insufficient4°C+
World
NDCs with this rating fall well outside of a country’s “fair share” range and are not at all consistent with holding warming to below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government NDCs were in this range, warming would exceed 4°C. For sectors, the rating indicates that the target is consistent with warming of greater than 4°C if all other sectors were to follow the same approach.
Highly insufficient< 4°C
World
NDCs with this rating fall outside of a country’s “fair share” range and are not at all consistent with holding warming to below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government NDCs were in this range, warming would reach between 3°C and 4°C. For sectors, the rating indicates that the target is consistent with warming between 3°C and 4°C if all other sectors were to follow the same approach.
Insufficient< 3°C
World
NDCs with this rating are in the least stringent part of a country’s “fair share” range and not consistent with holding warming below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government NDCs were in this range, warming would reach over 2°C and up to 3°C. For sectors, the rating indicates that the target is consistent with warming over 2°C and up to 3°C if all other sectors were to follow the same approach.
2°C Compatible< 2°C
World
NDCs with this rating are consistent with the 2009 Copenhagen 2°C goal and therefore fall within a country’s “fair share” range, but are not fully consistent with the Paris Agreement long term temperature goal. If all government NDCs were in this range, warming could be held below, but not well below, 2°C and still be too high to be consistent with the Paris Agreement 1.5°C limit. For sectors, the rating indicates that the target is consistent with holding warming below, but not well below, 2°C if all other sectors were to follow the same approach.
1.5°C Paris Agreement Compatible< 1.5°C
World
This rating indicates that a government’s NDCs in the most stringent part of its “fair share” range: it is consistent with the Paris Agreement’s 1.5°C limit. For sectors, the rating indicates that the target is consistent with the Paris Agreement’s 1.5°C limit.
Role model<< 1.5°C
World
This rating indicates that a government’s NDC is more ambitious than what is considered a “fair” contribution: it is more than consistent with the Paris Agreement’s 1.5°C limit. No “role model” rating has been developed for the sectors.

Overview

After a slight increase in 2017, according to preliminary data EU’s emissions in 2018 decreased by 2.1% (excl. LULUCF and international aviation). These numbers include proxy data for Romania, Bulgaria and Cyprus. The biggest decrease took place in the power sector – by 5.3%. Transport was the only sector in which emissions increased in 2018: by 0.5%. This is a continuation of a long-term trend, which resulted in overall emissions decreasing between 1990 and 2018 by 25.1%, driven mainly by a decrease in emissions from the electricity sector (-33.3%), Industry (-27.6%), Waste (-43.4%), and agriculture (-19.8%). This decrease was slowed by an increase of emissions in the transport sector by almost 20% over the same period.

In its NDC, the EU committed to emissions reductions of “at least 40%” by 2030. Internally this goal was divided into emissions reductions in the EU ETS (43% below 2005 levels) and non-EU ETS sectors (mainly transport and buildings) (30% below 2005 levels). Whereas emissions in the EU ETS sector are covered by a cap that decreases annually by 1.74% (2.2% after 2020), the non-EU ETS emissions reduction goal is further divided between EU member states depending on their level of economic development (European Parliament and the Council of the European Union, 2018f). The national goals range between keeping emissions at their 2005 level for Bulgaria -- to a reduction of 40% for Sweden and Luxembourg.

The achievement of the emissions reduction goal in the EU ETS sector is dependent on the reform of the mechanism, described in more detail in the November 2018 CAT update. This reform resulted in a significant increase in the price of emissions allowances – from an average of €5.84 in 2017 to the highest level of €29.78 in July 2019, before falling to around €25 in the following months (EEX, 2019). Further increases can be expected as, every year until 2023, 24% of the oversupply of allowances will be taken off the market and transferred to the Market Stability Reserve (MSR). After 2023, this rate will decrease to 12%. The first such transfer will take place between September 2019 and August 2020 when a total of 397 million allowances will flow into the MSR instead of being auctioned (European Commission, 2019c).

Emissions reduction in the non-EU ETS sector depend on how the policies adopted at the European level are implemented at national level and whether they are complemented by additional measures. These policies will be described in more detail in the subsequent subsections. However, three legislative measures will have an overarching impact on emissions reduction in all sectors.

The Renewable Energy Directive (RED II) adopted in December 2018 sets a binding EU 2030 goal of generating 32% of the EU’s gross final energy consumption from renewable sources. In 2023, the Commission must assess if this goal should be revised upwards based on falling costs of renewables. The main weakness of the directive is that, contrary to its predecessor, the 2009 Renewable Energy Directive with 2020 targets, this one does not include binding national targets.

However, with the adoption of the Governance Regulation, the EU member states agreed on a mechanism to ensure the renewable energy goal is met. In their Integrated National Energy and Climate Plans (NECPs) that member states have to submit by the end of 2019 – and every 10 years thereafter - they have to declare their contributions to the achievement of the European renewable energy and energy efficiency goals. Should the countries not be on the indicative trajectory to meet their 2030 targets, they should implement additional measures to cover the gap. In addition, by 2021 a renewable energy financing mechanism should be established to finance the development of renewable energy projects to cover the gap between the trajectory to meet the EU renewable energy goal and the national trajectories (European Parliament and the Council of the European Union, 2018d).

The contributions expressed in the drafts of the NECPs submitted by June 2019 would result in between 30.4% and 31.9% share of renewables in the primary energy consumption in 2030. In addition, during a meeting of the Energy Council in September 2019 a number of countries agreed to increase their contribution to meeting the EU’s renewable energy goal (European Commission, 2019b).

The EU’s renewable energy goal is complemented with the goal of increasing energy efficiency by 32.5% by 2030. This would result in reducing EU energy consumption in 2030 from 1,641 Mtoe in 2016 to 1,273 Mtoe of primary energy and from 1,108 Mtoe in 2016 to 956 Mtoe of final energy consumption. As with the renewable energy target, the energy efficiency goal has no specific binding goals for individual member states. Instead, member states should take the EU goal into consideration when adopting their indicative efficiency goals. Also, as in the case of renewable energy goal, additional measures can be adopted at the Union level to achieve the energy efficiency goal (European Parliament and the Council of the European Union, 2018c).

The contributions expressed in the drafts of the NECPs submitted by June 2019 would result in a between 26.3% and 30.2% improvement in energy efficiency for primary energy (European Commission, 2019b). Thus, there was still a large gap between the member states’ contributions and the EU energy efficiency goal. During the same Energy Council meeting, only a few member states expressed a willingness to improve their energy efficiency contributions (Transport Telecommunications and Energy Council, 2019).

According to the EU’s EUCO3232.5 Scenario, an updated version of the EU Reference Scenario from 2016, meeting the 32% renewable energy and 32.5% energy efficiency goals, combined with a number of measures introduced by the end of 2018, would result in emissions decreasing by 47.8% in 2030 (European Commission, 2019g). At the same time, the impact of the policies introduced and reported to the Commission in early 2019 would result in emissions reduction by only 32.5% (European Environment Agency, 2019c).

Energy supply

Whereas in 2018 two thirds of emissions in the EU’s power sector still came from coal-fired power plants (Agora Energiewende and Sandbag, 2019), the role of this source of energy has been decreasing: emissions from hard coal fell by 9% and from lignite by 4% from 2017 (Sandbag, 2019a). However, to be compatible with the Paris Agreement’s temperature limit the EU needs to phase out coal completely by 2030 (Climate Action Tracker, 2016b; Climate Analytics, 2017).

With 4.3 GW of wind energy installed in the first half of 2019, this source of energy recorded a small improvement (+1.3%) compared to the same period of 2018. This increase is mostly due to an increase in activity in the offshore wind sector – in the first six months of the year, offshore wind turbines were responsible for almost 45% of all new wind power plants compared to 26%. At the same time new installed capacity in the onshore wind energy market decreased significantly – by 24% - mainly due to a collapse of the newly-installed capacity in Germany which fell by 82% between the first half of 2018 and the same period in 2019.

New orders for wind turbines from Sweden, and the results of new auctions in Spain and Poland, indicate that the onshore wind market is expected to make a slight recovery in 2020 (Skłodowska, 2019; WindEurope, 2019). According to the projections by WindEurope, by 2023, installed wind energy capacity in the Europe will increase by 90 GW and reach 277 GW. Projections by the IEA present offshore and onshore wind as the main sources of energy in the EU combined responsible for the third of the electricity generated (International Energy Agency, 2019).

After a growth from 6 to 8 GW of installed capacity in 2018 in the EU, solar energy is projected to grow even faster in 2019 with installed capacity exceeding 20 GW. According to SolarPower Europe, this growth largely results from countries striving to reach their 2020 renewable energy targets. It estimates that by 2023 the additional annual installed capacity will increase fourfold and reach 32.7 GW (SolarPower Europe, 2019). Combined, renewable energy installations in the EU are projected to increase by 27.5 GW in 2019 in comparison to 22.3 GW in 2018 (International Environment Agency, 2019).

The share of renewables in power generation in the first quarter 2019 was - at 31% - slightly lower than in 2018, but still 3% higher than in the first quarter of 2018. In the second quarter of 2019, the share of renewables was 1.5% lower than in the same period of 2018 mainly due to a significant decline in the output of hydro energy caused by the ongoing drought. The share of energy from wind increased to 12.4% and solar to 6.1% (excluding rooftop solar installations) (European Commission, 2019e, 2019f).

After a decrease from 20.5% in 2017 to 19.2% in 2018, the share of coal continued to decrease even further and reached the lowest level in June 2019 – 13% (European Commission, 2019f). The Portuguese Prime Minister announced preparations to shut down Portugal’s two remaining coal power plants, Pego and Sines, by September 2023 (Rocha, 2019). This means an acceleration of the coal phase-out initially planned by 2030. In September, Greece and Hungary declared coal phase out by 2028 and 2030 respectively. Combined, both countries are responsible for 6 GW of installed capacity.

With these declarations, only seven EU member states currently operating 43% of the installed coal power capacity are not planning to switch them off by 2030. This includes Poland which makes up half of the EU total installed coal capacity, and Germany which plans to still operate 17 GW of coal capacity after 2030.

While the role of coal in the EU is shrinking, its member states must avoid increasing and locking in reliance on natural gas (wnp.pl, 2019). While, in the short-term, replacing coal with natural gas can contribute to emissions reductions (depending on methane leakage), even relying on abated natural gas in the longer term is not compatible with the Paris Agreement’s temperature limit (Climate Action Tracker, 2017).

There are currently 24 LNG terminals in the EU. Seventeen additional LNG terminals are currently being projected or planned, many of them co-financed with EU funds. An example is the almost €380 million expansion of the LNG port in Świnoujście in Poland (Howell, 2019). To avoid carbon lock-in, a complete divestment from fossil fuels, including a commitment to refrain from new investment in natural gas infrastructure, is necessary.

The increasing share of renewables and decreasing role of coal in the electricity sector will resulted in a decrease of emissions intensity of electricity from around 500 gCO2/kWh in 1990 to slightly above 300 gCO2/kWh in 2015. According to some projections, a further decrease will take place in the future.

Electricity emissions intensity

Industry

In 2018, the EU’s industrial emissions contributed to almost 9% of the EU’s emissions, mostly from cement and still power plants. These emissions are covered by the EU emissions trading scheme and thus are affected by the increasing price of emissions allowances, which in 2019 approached €30. Their impact is decreased by the fact that companies producing products on a so-called “leakage list” receive free allowances up to the average emissions of the 10% most efficient installations in the sector or subsector in the years 2007–2008 (European Parliament and the Council of the European Union, 2014a). Even if these free allowances didn’t cover the industry’s full emissions, their low price failed to provide an incentive to invest in improving energy efficiency leading to a lack of significant reductions between 2012 and 2018 (Sandbag, 2019a).

Cement emissions intensity

The EU ETS reform post 2020 adapts the benchmarks for free allocation of allowances to reflect the technological improvements since 2007–2008 (European Commission, 2015b). Reflecting more recent improvements in the energy efficiency of the best 10% of installations will also decrease the number of free allowances received, which, depending on allowance prices, will incentivise investment in energy efficiency.

At the same time, some of the Innovation Fund resources must be spent on “industrial innovation in low-carbon technologies and processes”. This includes deployment of carbon capture and storage (CCS) as well as utilisation (CCU) (Council of the European Union, 2017).

The 2010 Industrial Emissions Directive (IED) also plays a role in reducing emissions from large industrial installations. The IED aims at reducing the emissions of a number of pollutants, including greenhouse gases, by requiring around 50,000 installations undertaking industrial activities to receive a permit showing they operate according to the Best Available Techniques (BAT) (European Parliament and the Council of the European Union, 2010c). This results in higher energy efficiency and lower emissions. While around 11,000 installations covered under the EU ETS are exempt from complying with standards relating to GHG emissions, it does influence emissions from the almost 40,000 remaining installations that—according to the EID—require a permit to operate (European Commission, 2019a).

Transport

Emissions in the transport sector increased in 2018 by 0.5% and were 20% higher than in 1990. As a result, also the share of emissions from this sector increased significantly: from 14% of all emission in 1990 to 22% in 2018. As the transport sector—with the exception of intra-European aviation—is not covered by the EU ETS, the European Union and its member states are trying to reduce emissions from the sector in four ways: (i) adopting sectorial renewable energy targets, (ii) introducing CO2 emissions standards for new vehicles, and (iii) increasing the share of zero and low emissions vehicles, and (iv) encouraging a modal shift, which also has an important role to play, particularly from road and air to rail transport.

Sectoral renewable energy targets

The 2009 Renewable Energy Directive introduced a 10% target for energy from renewable sources in transport by 2020 (European Parliament and the Council of the European Union, 2009b). Due to the impact that the first generation of biofuels may have on emissions from the LULUCF sector in other countries, in 2015 the role of first generation biofuels and bioliquids in achieving this target was limited to 7%, with the rest having to be met by advanced biofuels and greater use of electricity in the transport sector (European Parliament and the Council of the European Union, 2015).

In 2018 the EU member states were far from achieving this goal, with only 8.1% of energy consumed in the sector coming from renewable sources – an increase by 0.5% from the preceding (European Environment Agency, 2019c). The 2018 Renewable Energy Directive (REDII) introduced a new goal of a 14% share of renewables in the transport sector by 2030. This target has been flanked by limiting the share of first-generation biofuels at no higher than 1% above their 2020 share. REDII states that uncertified biofuels that may create the risk of high indirect land-use change emissions cannot be counted toward meeting the 2030 target.

The directive encourages use of energy from second-generation biofuels and electricity. Energy from second-generation biofuels can be counted at twice their energy content and should amount to at least 1% in 2025 and 3.5% in 2030. While there is no specific sub-target for electricity in the transport sector, the contribution of renewable power is to be considered at four times its energy content (European Parliament and the Council of the European Union, 2018b).

CO2 emissions standards for vehicles

After lengthy negotiations, in December 2018 the representatives of the European Parliament and the Council agreed on a regulation with the goal of reducing CO2 emissions from new passenger cars by 37.5% in 2030 below 2021 levels. The emissions standards for new vans are to improve by 31%. For both types of vehicles there should also be an intermediary improvement of 15% by 2025 above 2021 levels. Member states with a low share of electric vehicles will be encouraged to accelerate their uptake by granting such cars a bonus multiplier of 0.7 for clean vehicles. This bonus expires when the share of electric vehicles exceeds 5% of a country’s fleet (European Parliament, 2019a).

These emissions reductions cannot be directly compared to the 95 gCO2/km limit for passenger cars for 2021 and 147 gCO2/km limit for vans in 2020: due to numerous exceptions and different methodology, the real average emissions of new vehicles will very likely be higher. It has recently become clear that the increasing stringency of the emissions standards was accompanied by an increasing gap between test results and real-world performance: according to some estimates in 2015 this gap reached 42% or 31 gCO2/km per vehicle (Transport&Environment, 2018). To limit and possibly remove this gap, the law replaces the current testing regime the Worldwide Harmonised Light Vehicles Test procedure (WLTP) and empowers the Commission to introduce the acts necessary to implement this procedure (European Commission, 2017b).

In February 2019 European Parliament and the Council agreed on emissions standards for heavy duty vehicles. Emissions from new vehicles should decrease by 15% in the period 2025-2029 and by 30% from 2030 onwards, in comparison to emissions of the new vehicles sold between July 1, 2019 and June 30, 2020. The regulation also includes a 2% benchmark for the share of zero and low-emission vehicles (ZLEV). Whereas failing to meet this benchmark doesn’t result in any negative consequences, exceeding it leads to more lenient emissions standards for the remaining vehicles (The ICCT, 2019).

Promoting low-carbon vehicles

One of the options available for car manufacturers to reduce the average emissions of their cars is to increase the availability and sale of zero and low-emissions vehicles (Climate Action Tracker, 2016a). The emissions standards regulation also includes a mandatory quota for the share of zero- and low-emission vehicles (ZLEV) defined as emitting less than 50gCO2/km, for new passenger cars and light commercial vehicles. According to the regulation, in 2025 at least 15% of passenger cars and light vans must be ZLEV. By 2030 this share should increase to 35% for passenger cars and 30% for ZLEVs (European Parliament, 2019a).

Despite a modest increase, the current share of electric vehicles in the EU is significantly below these goals: in the first nine months of 2019 it amounted to 2.6% - from 2% on average in 2018. However, the 3rd quarter of the years has already shown a share of electric vehicles to 3.1%, mainly due to an increase in the Netherlands (by 7.8%-points), Sweden (by 3%-points), and Ireland (by 2.8%-points) (ACEA, 2019a, 2019b).

The share of new electric vehicles in the EU caught up with the global average of around 2.5% in the first half of 2019. The EU exceeded the United States where the share of new electric vehicles in the same period was 1.8% but is still behind China where it was twice as high (EV-Volumes, 2019). The EU would need to take much more decisive action to meet the Paris Agreement-compatible emissions trajectory, that requires the last combustion vehicle to be sold by 2035 (Sterl et al., 2016).

Interestingly, despite lagging behind other countries in the development of e-mobility, the EU is reaping the benefits from electric vehicle exports. In 2018, the EU’s trade surplus from exporting electric and hybrid electric cars amounted to €3 billion, mainly from Germany, Sweden and the UK (Eurostat, 2019a). This shows that decarbonising the transport sector may also result in significant, positive, economic effects.

Some EU member states have already announced plans to ban the sale of combustion cars in the coming decades, e.g. Denmark and the Netherlands by 2030 (Dutch Government, 2017; electrive, 2019), and the United Kingdom and France by 2040 (WEF, 2017). For the UK, the May 2019 report by the Advisory Committee on Climate Change pointed out the need to phase out the sale of combustion cars by 2035 at the latest and, if feasible, by 2030 (UK Committee on Climate Change, 2019).

Underdeveloped charging infrastructure remains a major hindrance to the uptake of electric vehicles. The 2014 Deployment of Alternative Fuels Infrastructure Directive obliged member states to expand publicly-available charging infrastructure by installing at least one charging station for every ten vehicles projected to be on the road by the end of 2020. It also encouraged member states to facilitate installing charging stations for maritime and inland waterways, and at airports, to allow ships and planes to use electricity while stationary instead of running their engines (European Parliament and the Council of the European Union, 2014b).

More recently, the 2018 Energy Performance Buildings Directive (EPBD) introduced the requirement that all new residential buildings and those undergoing major renovations, with more than ten parking spaces, must be equipped with adequate pre-cabling or pre-tubing to enable the installation of an electric vehicle recharging point for every parking space (European Parliament and the Council of the European Union, 2018a).

The European legislation, combined with the additional funding from both national and European sources, has led to a significant increase in the number of charging points, from 59,200 in 2015 to 151,700 in 2019. This includes fast chargers (>22 kW) whose share in all publicly-available chargers increased from 10.5% in 2015 to 15.4% in 2019. In total, the number of EVs per charging point increased from five in 2017 and nine in 2018 to ten in early 2019 (European Alternative Fuels Observatory, 2019). This shows the number of EVs were constantly increasing faster than the number of charging points and their installation is becoming increasingly profitable for electricity utilities.

To stimulate the cleaner vehicle market, in February 2019 the EU Parliament and Council agreed on an amendment to the directive on promoting clean and energy efficient vehicles. The directive requires public authorities procuring vehicles (e.g. for public transport) to take their CO2 emissions and the emissions of other pollutants into account.

It also sets a minimum share of clean heavy-duty vehicles (trucks and buses) in the total number of heavy-duty vehicles contracted by member states. These shares differ depending on the member states and types of vehicles. For example, in the period 2021-2025 between 24% (Romania) and 45% (majority of the EU member states) of buses procured by public communities should be clean or zero emissions. For the period 2026-2030 these shares increase to between 33% and 65% (European Parliament, 2019c).

Modal Shift

European airlines continue to benefit from Valued Added Tax exemptions for flights between EU member states and continued high levels of free EU ETS allocations. As a result of a continued high growth of emissions, a Belgian proposal for further taxes on aviation has drawn support from a number of EU member states (CLEW, 2019). At the same time the EU aims to strengthen the position of railways in comparison to the other modes of transport, including by increasing competition between the operators and investing in rail transport infrastructure. However, these efforts still didn’t have an impact on shifting freight transport from road to railways: between 2012 and 2017 the share of freight transported by rail decreased from 18.5% to 17.3% (Eurostat, 2019b).

Buildings

In 2017 emissions from the residential building sector constituted 9.4% of all EU’s emissions. In comparison to 1990 they decreased by almost 23% - around the same level as EU’s overall emissions (European Environment Agency, 2019b). The worrying trend is an increase in energy consumption in buildings – by 8.3% between 2014 and 2017, but an increasing share of this energy was coming from renewables – 20.3% in 2018 (European Environment Agency, 2019c).

In the EU, the Energy Performance Buildings Directive (EPBD Directive), first adopted in 2010, regulates emissions from the buildings sector and obliges member states to introduce minimum energy performance requirements and ensure that, from 2021, all new buildings are “nearly zero energy buildings” (NZEB). While defining an NZEB as a building with a very high energy performance, whose energy needs are covered largely from renewable sources of energy, the EU left the definition of the exact energy consumption level of such building to its member states (European Parliament and the Council of the European Union, 2010b).

The Commission’s estimates show the EPBD Directive has already contributed to an additional emissions reduction of 63 MtCO2 in 2013 (European Commission, 2016b). To strengthen climate action in this sector in 2018 the EU amended the EPBD Directive. It included obliging each member state to submit a long-term renovation strategy leading to fully decarbonising its building stock by 2050, with specific milestones for 2030, targeting especially the worst-performing building stock (European Parliament and the Council of the European Union, 2018a).

It remains to be seen whether this will help address the issue of the low rate of deep renovation of the existing building stock which currently amounts to between 1–2% of the total stock. With 2% in France, 1.5% in Germany, to 0.12% in Poland and 0.08% in Spain, there is much variety among the EU member states in terms of the deep renovation rate of residential buildings (ZEBRA2020, 2017). An increase of the renovation rate to 5% would be necessary to make emissions from the building sector compatible with the 1.5°C temperature increase limit (CAT, 2016).

Buildings emissions intensity for residential buildings

Since 35% of the EU’s building stock is over 50 years old and much of the overall lifetime reaches beyond 100 years, increasing the renovation rate could significantly reduce energy consumption and emissions (European Parliament, 2016). A report prepared for the European Parliament noted that to increase the rate of renovation it is necessary to raise awareness about efficiency options, raise the ambition of the renovation regulations, and increase the availability of the funding instruments for deep renovation (European Parliament, 2016), measures which have not found widespread use so far.

Much more effective has been European legislation dealing with the energy efficiency of household appliances. The 2009 Eco-design and the 2010 Energy Labelling directives (European Parliament and the Council of the European Union, 2009a, 2010a) are set to reduce emissions by 315 MtCO2eq in 2020 and 515 MtCO2eq in 2030 (European Commission, 2017a). The working plan for 2016–2019 includes measures that, combined, would lead to primary energy savings equivalent of over 100 TWh in 2030 (European Commission, 2016a).

An important part of decarbonising the EU building stock is the phase-out of fossil fuels in heating. Some countries have already introduced such a ban (e.g. Denmark) or are planning to do so (e.g. the Netherlands and the UK) (Cambridge Econometrics, 2019; Energy Saving Trust, 2019; IEA, 2017). The higher cost of the alternatives to natural gas, such as heat pumps or district heating, does require public support, especially in the case of replacing already existing heating installations.

Forestry

LULUCF emissions have not yet been included in either the EU ETS or non-EU ETS sectors. This has changed with the adoption of the EU regulation that aims at including the GHGs emissions and removals from this sector in its 2030 climate and energy framework by allowing the use of net removals from this sector to comply with the targets in the non-EU ETS sectors by up to 280 MtCO2 from 2021–2030 (European Commission, 2016c). The Regulation includes a no-debit rule meaning that emissions from deforestation could be offset by either afforestation or improved management of existing forests (European Commission, 2016c). However, this target is weakened by the possibility of using 2021-2025 LULUCF emissions reductions to offset emissions in the second half of the decade.

The regulation also introduces flexibility on the accounting of emissions reductions from managed forests amounting to up to 360 MtCO2 in the period 2021-2030. Finland will be granted additional compensation of 10 MtCO2 for the 2021–2030 period “in view of the special circumstances of its forestry sector”. However, EU member states will only be activating this ‘managed forest land’ flexibility mechanism if the EU collectively meets the ‘no-debit’ rule (European Parliament, 2018b).

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