<2°C: Let’s start with what might be obvious to you, but difficult to grasp for others: Why should we care about the LULUCF-sector when accounting for what is essentially a fossil fuel emissions problem?

A conversation with

Bill Hare, founder and CEO of Climate Analytics

Bill Hare: Because the LULUCF sector is often used by countries to avoid reducing their emissions from fossil fuels and other industrial sources.

Q: How?

A: Let’s say a country has a target, for example 50% reduction by 2030, compared to a base line in 1990. You could achieve this by cutting only fossil fuel emissions, which would achieve your goal. But you can also argue that it requires a reduction of net emissions: Fossil fuel emissions minus whatever the forest sink is absorbing.

These sinks in effect get added to the allowed emissions for each target of carbon dioxide. This is called in shorthand the net target. In countries where you’ve got an increase in the forest sink, that can lead to fossil greenhouse gas emissions reduction of not 50% but 25 or 30%. Hypothetically.

Q: Good for them, right?

A: Not really. Fossil fuel and industry emissions are the main drivers of global warming. We must get those down to stop global warming. It becomes a really serious issue if you are avoiding action for a long period of time and essentially covering up that inaction with the land sink.

Q: But the land sink is a real thing, does it not make sense to account for the uptake it represents?

A: Forests and soils store carbon, yes, but they also represent sources of emissions, and figuring out the ratio between sink and source is complicated. So, you can never really be sure whether the forest sink is real, or at least of the magnitude claimed. Many years ago, the IPCC did a report on this and flagged what could be a very dangerous problem where countries choose to count more of a sink in the forest and ignore the sources. This has proven to be a common pattern: Countries tend to preferentially count what their forests are storing and ignore activities that possibly lead to the release of carbon. We call this asymmetric accounting.

The other problem is that unfortunately, global warming is affecting the ability of our forests to hold carbon. This is particularly a major problem in the northern boreal forests. And as we’ve seen in Canada this year, it can turn into a catastrophic problem that you’ve got heat drying out and wildfire conditions leading to a loss of carbon.

Q: But that is not a problem as long as you count that loss of carbon in, right?

A: That is another issue. Loss of carbon from wildfires, or even extreme drought, would very likely be counted as a natural impact and therefore not accounted for. Which creates another challenge: We have climate change induced losses of carbon going on that we don’t factor in.

Finally, there’s a third issue: The carbon dioxide added to the atmosphere has a fertilisation effect that probably has contributed to a lot of the additional carbon stored in our forest globally. By some estimates, probably at least 50% of the additional carbon stored in standing for us globally since the 1960s is from CO₂ emissions we’ve added to the atmosphere. So that means you are almost double counting using the land sink.

Having said that, it is of course absolutely critical that we protect our forests and our soils. We need to maintain the ability of our natural ecosystems and soils to hold carbon if we’re going to bring climate change under control.

One of the other challenges in this area, which those concerned with nature conservation, biodiversity and so on would also know, is that if you overfocus on carbon storage in an ecosystem, you’ll probably be crowding out other species that are really important to the integrity of the system as well as its biodiversity.

Q: Like planting monocultures to fix CO₂, or BECCS or palm oil plantations and such?

A: Right. Another issue: In certain regions you need a lot of water to grow trees. Not irrigation water, but water from rivers and streams. They will simply not flow as well as they used to when you have big carbon plantations planted along them.

This overfocusing on the carbon side comes at the expense of focusing on what people call ecological resilience of managing our forests and ecosystems. So they can withstand shocks that are coming from the climate side, and still provide necessary ecosystem services.

Q: Meanwhile, the EU has changed their way of counting forest uptake in with their Fit for 55-programme. And some are urging that Norway do the same, because then we could cut emissions far less and still reach our 2030-goal.

A: The European Union has indeed included more land use sector accounting than it had previously. But they have limited it in a way to limit that exact degradation of their real reductions. So that’s a bit of a political compromise. It would have been better if they hadn’t done that, but that’s what happened.

For other countries, there can be quite significant changes in the reductions in fossil fuel and industrial greenhouse gas emissions based on the LULUCF accounting. It’s not a unique problem for Norway’s government. The challenge for many of them is really about providing the resources for landscape level management of ecosystems without relying on carbon credits.

It is also a question of how to fund protection of biodiversity and forests. In the EU, a substantial amount of resources come both from direct taxes in the member states and from the EU itself for ecological management without relying on LULUCF credits. But other countries might want to avoid taking money from the central taxation system, especially some developing countries.

Q: Is this what the so-called voluntary offset market is about?

A: Yes, which is pretty much discredited now, but it has worked to create carbon offset units from protecting forests in developing countries. Persuading countries to sell credits on the international voluntary offset market to protect those forest.

In general, that hasn’t worked for a range of different reasons which I won’t go into, The Guardian has published a series of articles on it, and there are also scientific papers on this. Which has led to allegations of land grabbing and so on. But on the other side of the equation, you will come across well motivated countries – like Norway – that wanted to invest in protecting forests and biodiversity in developing countries without using land use offsets. Again, it is a question of how to finance and justify it.

Q: Are there other ways that different practises in accounting and managing the LULUCF sector affects the international cooperation on climate mitigation?

A: I don’t think there’s a simple answer to that. The most developed of the developing countries are focused on getting leveraged public and private sector investments in decarbonising the power sector or industry. That’s where I would think the majority of attention has gone.

But then there are a lot of countries with huge deforestation problems and so on, and in that context, you’ve got the REDD+ schemes. Reduced deforestation and degradation schemes, bilaterally funded, where countries like Norway try and fund changes in land management sustainability in developing countries, which then is supposed to take the pressure off deforestation.

Q: But that has not been a huge success, has it?

A: No, and that’s an ongoing challenge. There are, as with everything else humans do, good and bad things at the way things worked out. There are some really positive examples on REDD+, and some really negative ones. It’s a work in progress, I think.

Q: Returning to these carbon offset schemes, there’s the term of additionality that that tends to be recurring when people talk about this.

A: When you talk about emission crediting systems in a general sense, there are some basic issues that need to be looked at every time. First, whether the emissions reductions are real and additional, meaning that something measurably happened, that otherwise would not have happened, second, that you avoid leakage, and third, whether what happened is permanent. None of these are trivial problems. Additionality is a really fundamental test, but also a difficult one.

Q: How so?

A: First, in the classic case of REDD+, projects claim to reduce emissions below a hypothetical baseline of deforestation. The challenge arises when you try to measure the actual emissions saved to this baseline, which can be manipulated. There is an incentive to inflate it. The scientific literature indeed shows that most REDD+ projects suffered from lack of additionality. And leakage was also an issue – that emissions may be reduced in the area you target, while the activity causing emissions just shifts to another area.

There’s also an issue with determining additionality. Say I invest in a wind farm in India. Did that wind farm get built because of my investment? Or did I just take credit for something that would have happened anyway, with someone else’s money? It’s also complicated because that additionality equation changes over time. Take direct air capture, or DAC. There’s hardly any of it going on now, so it could very well be considered additional now. But in 20 years it might not be, depending on how prevalent the technology becomes.

Q: And permanence?

A: This is also a very fraught issue. With industrial sector emissions, the conventional wisdom is that you can generally consider emission reductions to be permanent. But the LULUCF-sector faces challenges here. Both human activity and climate change – not just rising temperature but altered weather systems – can affect both emissions and the landscape’s ability to capture and store carbon. Also, there is a limit to how much carbon the LULUCF sector can actually store anyway. Relying solely on land-based carbon offsets has never been a silver bullet.

Q: But some developed countries might struggle more than others to achieve 100 percent emissions reductions domestically. What is the harm in helping these countries transition – in addition, of course, to what they already must do themselves under their SDC’s under the Paris Treaty – if doing that brings us closer to the global goal?

A: First, the moral and economic equation of this is not simple. There is an ongoing debate about whether this is genuinely helpful or just a way for rich countries to shift responsibility.  And second, it is something of a challenge to negotiate and get to work properly. The exact proportion of what can be taken abroad is also subject to debate. The primary emphasis should therefore always be on countries reducing emissions at home.

Q: Going back to the accounting conundrum, is it at all possible to create accounting practises for the LULUCF sector that would be universal and precise and reliable enough?

A: Probably not, given the inherent complexities. But it might be possible to avoid the need to do it altogether. It might be more effective to handle LULUCF targets separately from those related to industrial and fossil energy emissions. By doing so, we could potentially tolerate the natural uncertainties of the land sector without compromising our overall emission figures.

There is an idea about taking a pooled approach to LULUCF targets across countries. You say, we have these LULUCF targets for countries, let’s put it all together in a big pool, and then you pool in the risk of wildfires and losses and so on. Such a system could cater to multiple ecological objectives, ranging from biodiversity to food security. That could avoid some of these issues.

Is it even remotely politically realistic? No, not right now, anyway. Governments are too invested in the present framework, unfortunately.

Q: So… is focussing on net changes in the sector as good as it gets for now?

A: The problem with these net changes is they can mask some of the really bad stuff. You might have a country with a LULUCF sector showing as a net sink. But dig a bit deeper and there’s a fair bit of deforestation happening, which isn’t great for biodiversity or water and so on. That net number, because of how it’s accounted for, can sometimes give a skewed picture. Why? Because it is focused only on the carbon.

This points to a genuine issue. The LULUCF sector is about a lot more. People’s livelihoods, water, food, all the animals and plants we share space with.

I would say that it would be better to unpack the sector. Having clear goals on reducing deforestation or setting specific land protection targets, as part of an overall land management system. From that, you’d still get your net numbers, but they might tell a more honest story.

And I think you will find many in the biodiversity field who’d agree. They’re concerned about this whole overemphasis on the net number, especially in developed countries, because it can cover up so much bad stuff.