DRAFT OPINION. EN United in diversity EN. European Parliament 2016/0230(COD) of the Committee on Development

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1 European Parliament Committee on Development 2016/0230(COD) DRAFT OPINION of the Committee on Development for the Committee on the Environment, Public Health and Food Safety on the proposal for a regulation of the European Parliament and of the Council on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry into the 2030 climate and energy framework and amending Regulation No 525/2013 of the European Parliament and the Council on a mechanism for monitoring and reporting greenhouse gas emissions and other information relevant to climate change (COM(2016)0479 C8-0330/ /0230(COD)) Rapporteur: Florent Marcellesi PA\ docx PE v01-00 United in diversity

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3 SHORT JUSTIFICATION From a development perspective, it is crucial that this Regulation be as ambitious as possible. The 1.5 degree target referred to in the Commission s proposal is based on findings by the Intergovernmental Panel on Climate Change (IPCC), which show that climate-vulnerable regions like small-island developing states, coastal South Asia, and drought-prone areas of Africa face dangerous impacts if global temperature rise goes beyond this level. According to IPCC findings, achieving 1.5 degrees and protecting the world s poorest requires generating negative emissions from land use, not simply using them as offsets. If the world needs to generate negative emissions from forests, global equity considerations require the EU to take a leading role in this. To respect the right to develop of poorer countries, the EU should assume as much responsibility as possible for the forest protection that needs to happen globally, especially in a context where this Regulation will be the world s first attempt to define how emissions and removals from land use are integrated into global carbon accounting. As such, it will set an important precedent for the rest of the world, and will almost certainly be used as a template in international negotiations. As noted in the Commission proposal, land has multiple objectives such as food production that must be weighed against their potential as carbon sinks. This is even more vital in developing countries with large rural populations, who depend on the land for their survival. By the same token, the Regulation should also integrate international tenure rights standards, to ensure these protections are enshrined in international land use accounting rules. These standards will be even more important in countries where customary rights are not clearly recognised in statutory law, and where rural indigenous populations have a history of being displaced by conservation projects. The Regulation should finally promote restoration of existing landscapes rather than afforesting new areas of land. This minimises the risk that climate activities in the LULUCF sector will take land away from important uses like food production, which again is even more important in developing countries. For these reasons, the Rapporteur proposes the following amendments to the Commission s proposal: Increasing the climate ambition of the proposal by the following measures: - Increase the internal target of the LULUCF sector; - Tightening accounting rules; - Incentivising restoration of wetlands; - Providing for a review of the ambition of the Regulation. Wherever possible, the Regulation should incentivise activities that increase the carbon sink function of existing land uses (via agroecology or restoration of managed croplands and grazing lands), rather than afforestation of new areas of land. Activities carried out to implement this Regulation should comply with international standards on land rights protection. Activities carried out to implement this Regulation should also comply with the EU s own biodiversity standards, which has important development implications since billions of people on the planet rely on the biodiversity of ecosystems for survival. PA\ docx 3/18 PE v01-00

4 AMDMTS The Committee on Development calls on the Committee on the Environment, Public Health and Food Safety, as the committee responsible, to take into account the following amendments: 1 Recital 4 (4) The Paris Agreement, inter alia, sets out a long-term goal in line with the objective to keep the global temperature increase well below 2 C above preindustrial levels and to pursue efforts to keep it to 1.5 C above pre-industrial levels. In order to achieve this goal, the Parties should prepare, communicate and maintain successive nationally determined contributions. The Paris Agreement replaces the approach taken under the 1997 Kyoto Protocol which will not be continued beyond The Paris Agreement also calls for a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, and invites Parties to take action to conserve and enhance, as appropriate, sinks and reservoirs of greenhouse gases, including forests. (4) The Paris Agreement, inter alia, sets out a long-term goal in line with the objective to keep the global temperature increase well below 2 C above preindustrial levels and to pursue efforts to keep it to 1.5 C above pre-industrial levels which requires the world to enter into a period of negative emissions, where forests will play a central role. In order to achieve this goal, the Parties should prepare, communicate and maintain successive nationally determined contributions. The Paris Agreement replaces the approach taken under the 1997 Kyoto Protocol which will not be continued beyond The Paris Agreement also calls for a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, and invites Parties to take action to conserve and enhance, as appropriate, sinks and reservoirs of greenhouse gases, including forests. To keep warming below 1.5 degrees and, unless radical changes are achieved in emission pathways beyond the announced nationally determined contributions, also to stay below 2 degrees, it will be necessary to find ways of removing carbon dioxide from the atmosphere, referred to as negative emissions. The most straightforward way of doing this in the EU is to increase removals from LULUCF. This Regulation is therefore a crucial pillar for the EU to implement its commitment under the Paris Agreement. PE v /18 PA\ docx

5 2 Recital 4 a (new) (4a) To achieve negative emissions required to meet the Paris Agreement goals, removals of carbon dioxyde from the atmosphere through land use, land use change and forestry (LULUCF) must be ambitious, and should not be used to offset emissions reductions from other sources. As removals through LULUCF are reversible, they should not be used to compensate for emissions. Forests and land use also have multiple benefits beyond carbon storage: they are a source of food, purify air and water, and provide a home for biodiversity and for people. For these reasons, carbon dioxide removal through LULUCF should be treated as a separate pillar in the Union climate policy framework. This Regulation will play a key role in setting the global standard for how to land use removals fit into efforts under the Paris Agreement. In developing countries, the multiple uses of land and forests need particular protection as they include subsistence activities by vulnerable communities; it is very important people are not displaced from these activities in order to offset fossil fuel use. 3 Recital 4 b (new) (4b) Agriculture and land use impact upon Union biodiversity and ecosystems PA\ docx 5/18 PE v01-00

6 services directly and significantly. An important objective of any policy affecting the sector needs to ensure coherence with Union Biodiversity Strategy objectives including halting and reversing the loss of biodiversity and ecosystem services, as well as with the Directive 2009/147/EC of the European Parliament and of the Council 1a and Council Directive 92/43/EEC 1b. 1a Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ L 20, , p. 7). 1b Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ L 206, , p. 7). 4 Recital 4 c (new) (4c) This Regulation sets an important global precedent for integration of landrelated emissions and removals into nationally determined contributions under the Paris Agreement. It is therefore important that the principles of equity, sustainable development and efforts to eradicate poverty are adhered to, and that international human rights commitments and indigenous rights are respected and promoted, as required by the Paris Agreement. PE v /18 PA\ docx

7 This Regulation is the first attempt in the world to set accounting rules for the land use sector, and integrate them into nationally determined contributions. It is likely to be used as a departure point for land use accounting rules outside the EU as well. Consequently, it is important that it include principles such as respect for land rights, and treating land use emissions as a separate pillar, as these are likely to be even more important in countries of the Global South where poverty-affected communities are even more vulnerable to being displaced by carbon sink projects. 5 Recital 11 (11) The internationally agreed IPCC Guidelines state that emissions from the combustion of biomass can be accounted as zero in the energy sector with the condition that these emissions are accounted for in the LULUCF sector. In the EU, emissions from biomass combustion are accounted as zero pursuant to Article 38 of Regulation (EU) No. 601/2012 and the provisions set out in Regulation (EU) No. 525/2013, hence consistency with the IPCC Guidelines would only be ensured if these emissions should be covered accurately under this Regulation. deleted The accounting for energy emissions is covered by other proposals, and i.a. Regulation 525/2013 is repealed by the Energy Union Governance proposal. For policy purposes, from climate perspective the zero carbon assumption should be restricted to bioenergy from waste and residues. 6 Article 1 subparagraph 1 a (new) PA\ docx 7/18 PE v01-00

8 This Regulation contributes to the compliance by the Union with the Paris Agreement commitments and objectives. The LULUCF Regulation is one of the pillars implementing Union commitments under the Paris Agreement. The Union has committed to limiting global temperature rise to well below 2 degrees, and pursuing efforts to stay below 1.5 degrees. Fulfilling the Paris Agreement commitments is vital to avoiding dangerous impacts in regions most vulnerable to climate change, including small-island developing states, coastal regions of South Asia, and droughtprone regions of Africa. 7 Article 2 paragraph 1 point e a (new) (ea) managed wetlands: land use reported as wetland remaining wetland, and settlement, other land converted to wetland and wetland converted to settlement and other land. Peatlands and wetlands represent habitats of high conservation value hosting some of the most important carbon stores in the EU and on earth. However, when degraded, they emit vast amounts of greenhouse gases. In order to ensure that the Regulation provides the right incentives to maintain and restore such carbon stores, the accounting for wetlands and peatlands should be made mandatory. 8 Article 2 paragraph 2 PE v /18 PA\ docx

9 2. A Member State may choose to include managed wetland, defined as land use reported as wetland remaining wetland, and settlement, other land converted to wetland and wetland converted to settlement and other land, in the scope of its commitment pursuant to Article 4. Where a Member State chooses to do so, it shall account for emissions and removals from managed wetland in accordance with this Regulation. deleted Linked to previous amendment making the accounting for wetlands mandatory. 9 Article 3 paragraph 2 2. The Commission shall be empowered to adopt delegated acts in accordance with Article 14 to adapt the definitions in paragraph 1 to scientific developments or technical progress and to ensure consistency between those definitions and any changes to relevant definitions in the 2006 IPCC Guidelines for National Greenhouse Gas Inventories ('IPCC Guidelines'). 2. The Commission shall be empowered to adopt delegated acts in accordance with Article 14 to adapt the definitions in paragraph 1 to scientific developments or technical progress and to ensure consistency between those definitions and any changes to relevant definitions in the 2006 IPCC Guidelines for National Greenhouse Gas Inventories ('IPCC Guidelines') and the 2013 Supplement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories: Wetlands. All of the latest IPCC land use accounting methodologies should be taken into consideration. PA\ docx 9/18 PE v01-00

10 10 Article 4 paragraph 1 a (new) Member States shall endeavour to increase their removals for the periods 2021 to 2025 and from 2026 to For the periods from 2031 the total removals from each Member State as accounted in accordance with this Regulation shall increase, in line with Union long term climate objectives and the commitments under Paris Agreement. To keep warming below 1.5 degrees, and also to well below 2 degrees, according to science we will have to implement means for removing carbon dioxide from the atmosphere, negative emissions. To achieve negative emissions, it is not sufficient for LULUCF removals simply to equal emissions they must exceed them. 11 Article 5 a (new) Article 5a For removals to be included in the accounts of a Member State, the Member State concerned shall ensure that there is no negative impact of mitigation activities on Union biodiversity objectives or provisions of Directive 2009/147/EC and Directive 92/43/EEC, and respect the tenure rights of local residents as prescribed in the International Labour Organization Indigenous Tribal Peoples' PE v /18 PA\ docx

11 Convention (Convention 169) and the United Nations Voluntary Guidelines on the Responsible Governance of Tenure. The Paris Agreement requires parties to, in the course of taking action on climate change, respect international human rights obligations and the rights of indigenous peoples. It also says climate actions must be achieved on the basis of equity and in the context of sustainable development and efforts to eradicate poverty. Activities to increase removals from sinks place increased pressure on land, so it is important to ensure these do not impinge upon local residents' existing tenure rights. 12 Article 6 paragraph 1 1. Member States shall account for emissions and removals resulting from afforested land and deforested land, as the total emissions and removals for each of the years in the periods from 2021 to 2025 and from 2026 to Member States shall account for emissions and removals resulting from afforested land and deforested land, calculated as the total emissions and removals for each of the years in the periods from 2021 to 2025 and from 2026 to 2030 minus the value obtained by multiplying by five the Member State s average annual emissions and removals resulting from managed afforested land and deforested land, in its base period Accounting rules should help to track effectively how the objective of limiting warming to 1.5 degrees is achieved. Hence, net-net accounting should be privileged to gross-net accounting. Given that cropland and grazing land emissions are accounted for 'net net' and afforestation for 'gross-net', it creates more incentives to afforest. As this Regulation could act as a template in global climate policy, it is crucial not to incentivise afforestation at the expense of cropland and grazing land activities, given that it could cause displacement of population in developing countries. PA\ docx 11/18 PE v01-00

12 13 Article 6 paragraph 2 2. By derogation from the requirement to apply the default value established in Article 5(3), a Member State may transition cropland, grassland, wetland, settlements and other land from the category of such land converted to forest land to the category of forest land remaining forest land after 30 years from the date of conversion. deleted This derogates from internationally approved accounting rules (IPCC) that say that land use categories should converted after 20 years from the date of conversion. 14 Article 7 paragraph 3 3. Where a Member State chooses to include managed wetland in the scope of its commitment in accordance with Article 2, it shall notify that choice to the Commission by 31 December 2020 for the period and by 31 December 2025 for the period deleted Linked to make accounting for wetlands mandatory. PE v /18 PA\ docx

13 15 Article 7 paragraph 4 4. Member States that have chosen to include managed wetland in the scope of their commitments in accordance with Article 2 shall account for emissions and removals resulting from managed wetland, calculated as emissions and removals in the periods from 2021 to 2025 and/or from 2026 to 2030 minus the value obtained by multiplying by five the Member State s average annual emissions and removals resulting from managed wetland in its base period Member States shall account for emissions and removals resulting from managed wetland, calculated as emissions and removals in the periods from 2021 to 2025 and/or from 2026 to 2030 minus the value obtained by multiplying by five the Member State s average annual emissions and removals resulting from managed wetland in its base period Linked to make accounting for wetlands mandatory. 16 Article 8 paragraph 1 1. Member States shall account for emissions and removals resulting from managed forest land, calculated as emissions and removals in the periods from 2021 to 2025 and from 2026 to 2030 minus the value obtained by multiplying by five its forest reference level. A forest reference level is an estimate of the average annual net emissions or removals resulting from managed forest land within the territory of the Member State in the periods from 2021 to 2025 and from 2026 to Member States shall account for emissions and removals resulting from managed forest land, calculated as emissions and removals in the periods from 2021 to 2025 and from 2026 to 2030 minus the value obtained by multiplying by five annual average emissions and removals in the forest reference period. A forest reference period is an estimate of the average annual net emissions or removals resulting from managed forest land within the territory of the Member State in the period from 1990 to PA\ docx 13/18 PE v01-00

14 The Commission is rightly concerned about problems with the current system of reference levels and tries to improve it. This system, with countries projecting future emissions and removals, is however intrinsically flawed and associated with over-estimation of emissions and the creation of windfall profits when actual emissions become lower. Comparing emissions in the periods to a reference period is a more transparent, accurate and helpful accounting method. 17 Article 8 paragraph 2 2. Where the result of the calculation referred to in paragraph 1 is negative in relation to its forest reference level, a Member State shall include in its managed forest land accounts total net removals of no more than the equivalent of 3,5 per cent of the Member State s emissions in its base year or period as specified in Annex III, multiplied by five. 2. Where the result of the calculation referred to in paragraph 1 is negative in relation to its forest reference period, a Member State shall include in its managed forest land accounts total net removals of no more than the equivalent of 3,5 per cent of the Member State s emissions in its base year or period as specified in Annex III, multiplied by five. Reference levels are an unreliable way to account greenhouse gas emissions and hide reducing removals due to past policies. In the past, this has led to a major over-estimation of emissions, leading to windfall credits and the creation of hot air. Comparing emissions in the periods to a historical reference period on net-net basis would be more transparent, accurate and consistent. 18 Article 8 paragraph 3 subparagraph 2 The national forestry accounting plan shall The national forestry accounting plan shall PE v /18 PA\ docx

15 contain all the elements listed in Annex IV, section B and include a proposed new forest reference level based on the continuation of current forest management practice and intensity, as documented between per forest type and per age class in national forests, expressed in tonnes of CO2 equivalent per year. contain all the elements listed in Annex IV, section B and include a proposed new forest reference period based on the continuation of current forest management practice and intensity, as documented between per forest type and per age class in national forests, expressed in tonnes of CO2 equivalent per year, as well as maintain the same ratio of biomass used for energetic purposes and solid biomass purposes. Using biomass for solid purposes (long-lived products) is a better use of the resource from a climate perspective than using biomass directly from the forest for energetic purposes (instantaneous oxidation). If harvesting intensity is maintained, but the ratio of wood used for energy increases, this will mean that more co2 is released, and should be counted against the reference level. 19 Article 10 Article 10 Accounting for natural disturbances 1. At the end of the periods from 2021 to 2025 and from 2026 to 2030, Member States may exclude from their accounts for afforested land and managed forest land greenhouse gas emissions resulting from natural disturbances exceeding the average emissions caused by natural disturbances in the period , excluding statistical outliers ('background level') calculated in accordance with this Article and Annex VI. 2. Where a Member State applies paragraph 1, it shall submit to the Commission information on the deleted PA\ docx 15/18 PE v01-00

16 background level for each land accounting category determined in paragraph 1 and on the data and methodologies used in accordance with Annex VI. 3. Where a Member State applies paragraph 1, it shall exclude from accounting until 2030 all subsequent removals on the land affected by natural disturbances. 4. The Commission shall be empowered to adopt delegated acts in accordance with Article 14 to revise the methodology and information requirements in Annex VI in order to reflect changes in the IPCC Guidelines. If countries have decided to account for removals from LULUCF sector then emissions from these sectors should also count, whether they are natural (and therefore non-anthropogenic) or not. For this reason, debits from afforestation should be counted. It is also debateable to what extent natural disturbances are truly non-anthropogenic (and therefore avoidable) since poor management practices lead to forests having a lack of resilience. LULUCF activities are inherently reversible and therefore more risky. 20 Article 15 The Commission shall report to the European Parliament and to the Council by 28 February 2024 and every five years thereafter on the operation of this Regulation, its contribution to the EU's overall 2030 greenhouse gas emission reduction target and its contribution to the goals of the Paris Agreement, and may make proposals if appropriate. Within six months of the facilitative dialogue to be convened under the UNFCCC in 2018 to take stock of the collective efforts of Parties in relation to progress towards the global long-term goal, as well as within six months of the global stocktake in 2023 and subsequent global stocktakes thereafter, the Commission shall submit reports to the European Parliament and to the Council assessing the need to update and enhance PE v /18 PA\ docx

17 the combined ambition of this Regulation, Regulation / of the European Parliament and of the Council 1a and Directive / of the European Parliament and of the Council 1b. Those reports shall assess the need to enhance the Union's 2030 and 2050 greenhouse gas emissions targets, including LULUCF, to ensure coherence with achieving the Paris Agreement's longterm goals, i.e. to hold the increase in global average temperature to well below 2 C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 C, and to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century. Those reports shall be accompanied by legislative proposals, as appropriate. 1a Regulation / of the European Parliament and of the Council of on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 for a resilient Energy Union and to meet commitments under the Paris Agreement and amending Regulation No 525/2013 of the European Parliament and the Council on a mechanism for monitoring and reporting greenhouse gas emissions and other information relevant to climate change (OJ L,, p. ). 1b Directive / of the European Parliament and of the Council of amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments (OJ L,, p. ). The proposed Regulation is unambitious and must be strengthened in several ways in order to ensure the LULUCF sectors sufficiently contribute to the objectives of the Paris Agreement to keep temperature rises to well below 2 C and pursuing efforts to limit it to 1.5 C. It should be PA\ docx 17/18 PE v01-00

18 reviewed in line with more ambition. A regular review mechanism allows the EU to participate proactively in the periodic global stocktake and ramping up of ambition required by Article 14 of the Paris Agreement. PE v /18 PA\ docx