With the publication of the heads of the promised climate change bill now imminent, it is interesting to note that two Oireachtas Comittees, the Joint Committee on Climate Change and Energy Security and the Joint Committee on Agriculture, Fisheries and Food, have just published a report on the role of forests in future EU climate policy. The paper was written in the context of the Committees’ role in responding to EU proposals, in this case an EU Commission Green Paper on Protecting Forests against Climate Change.
The report raises some important issues on the treatment of carbon sequestration by forests in the context of EU climate policy, where arguably Irish interests differ from the rest of the EU. Although its conclusions need further discussion, the report is a good example of how the Oireachtas can contribute to public debate and for this reason alone it should be welcomed. For the record, Andrew Doyle T.D. (FG) was the rapporteur for both committees and he was assisted in preparing the report by EPS Consulting (formerly A&L Goodbody Consulting).
Trees absorb CO2 when growing but release it when they are felled or burned. Steady-state forestry is broadly neutral with respect to carbon emissions; afforestation is associated with carbon sequestration (for the period until the steady-state is reached), while deforestation is associated with carbon emissions. Land use change – primarily deforestation – is estimated to have contributed around 20% of global GHG emissions between 1989 and 1998.
Kyoto Protocol rules allow CPs to count verifiable net changes in carbon stock between 1990 and the first KP commitment period (i.e. between 2008 and 2012) resulting from afforestation, reforestation and deforestation activity towards their KP commitments. The carbon sequestration resulting from Ireland’s recent afforestation (put in the report at between 1.56 to 2.39 MtCO2e currently based on 2006 figures) is estimated at 2.7 MtCO2e annually over the five-year KP commitment period in the EPA’s latest (2010) projections. To put this in perspective, projected emissions from the non-ETS sector excluding forestry for the first KP compliance period lie between 45.8 and 46.3 MtCO2e, depending on the scenario assumed. Ireland’s KP ceiling for the non-ETS sector is 40.6 MtCO2e, so forestry sequestration makes up almost half the ‘distance to target’ during this period.
Potentially, it can play an even greater role in meeting the 2013-2020 annual targets. The latest forecasts from the Environmental Protection Agency envisage that carbon sequestration could be as high as 4.8MtCO2e by 2020. However, the carbon sequestration potential of Ireland’s Kyoto‐eligible forests (i.e. those planted since 1990) is wholly dependent on the rate of afforestation (on which more below).
Also, there is uncertainty about the EU’s commitment to including LULUCF (land use, land use change and forestry) in reporting requirements after 2012. The fall-back position is that they will not be included, but it was agreed by the EU Parliament and Council in December 2008 that, in the event that an international agreement on global reductions is not reached by the Community by 31 December 2010, Member States would be allowed to include emissions and removals from LULUCF activities towards meeting the 20% reduction target relative to 1990.
The main recommendation of the Committees is that forest carbon offset schemes should be provided for in the context of the EU’s evolving climate change strategy. The idea behind this is that landowners would be paid for the carbon sequestration value of new forests, providing an additional income stream and encouraging a higher rate of afforestation.
In principle, it is entirely appropriate that the same carbon value should be attached to carbon sequestered as to carbon emitted. However, the Committees are somewhat coy on who would be expected to pay for these credits.
Currently, there are two markets for carbon offsets. One is industries covered by the Emissions Trading Scheme which buy offsets to comply with the caps on the total amount of carbon they are allowed to emit. The other, smaller, voluntary market is made up of individuals and companies buying offsets to mitigate their own GHG emissions.
Allowing ETS operators to buy forestry carbon offsets would have the effect of further lowering the restrictive effect of the ETS ceiling (it might also run into problems unless there is a renegotiation of the KP because currently only forest projects in developing countries give rise to eligible offsets). This would be unpopular with the Commission which sees a stable and rising carbon price as an important incentive to industries to invest in low-carbon technologies.
Importantly, it would seem to mean that these offsets would no longer be available to the Irish non-ETS sector, thus making achievement of the already tough non-ETS target in 2020 more difficult. This potential conflict is not recognised in the report.
Voluntary offset reductions can be implemented currently and do not need to wait for EU legislation. However, the number of individuals and non-ETS companies which are willing to pay to offset their carbon emissions is relatively small.
A third source of funding might be the Rural Development Pillar 2 of the CAP. This CAP pillar already funds forestry premia for farmers who undertake planting (worth between €241 and €573 per hectare for periods of between 15 and 20 years) and it would need careful analysis to show whether adding a further incentive would be economically justified.
Apart from this question of who would pay for the forest carbon offsets, a number of other issues are raised in reading the report.
The report suggests that the Commission has recommended to Member States that LULUCF activities cannot contribute to national compliance efforts under the EU’s 2020 climate change and renewable energy package. This seems to be based on a misunderstanding of the relevant Commission documentation, as what the Commission working paper (Part 2) does is simply to note that at present the targets for post-2012 do not include the possibility to account for absorptions or emissions from LULUCF activities and therefore cannot contribute to the compliance under the climate and energy package. However, it goes on to note that LULUCF can be included in the future reduction effort provided that the permanence and the environmental integrity is ensured. To me, this does not read like a recommendation that LULUCF cannot be taken into account under any circumstances.
However, it is true that, for the same reason why the Committee argues for the inclusion of LULUCF in EU inventories (that it would make it easier for countries like Ireland to meet their targets), the Commission argues that their inclusion would significantly weaken the level of ambition of a post-Kyoto agreement, particularly if the somewhat lax KP rules were applied. As the EPA warned in their 2010 projections: “It is not yet clear how the inclusion of carbon sinks would impact on Ireland’s 2020 target and whether including their impact would mean a stricter limit for Ireland.” This issue was also not addressed in the Committees’ report when advocating the inclusion of LULUCF.
The Committees were aware that the rate of afforestation has slowed down significantly in recent years. Forestry is not commercially viable without the forestry premium paid to farmers, but the largest forest manager, Coillte, is not eligible for the forest premium and has thus ceased new planting. There is thus a danger that what might initially appear as a lucrative income stream could become a negative liability after 2020 if forest offtake began to exceed new planting. On the other hand, a carbon offset payment would in itself help to maintain if not increase the rate of planting, thus postponing the day when LULUCF net emissions might become negative.
Despite these caveats, this report is a useful contribution to formulating the Irish position on future changes to EU climate policy and should be welcomed.