Policy info

Brief description 

The Common Agricultural Policy (CAP) sets specific objectives for land management practices and provides funding for actions with positive effects on carbon sinks. The CAP is divided into two pillars:

• direct support consisting of payments granted directly to farmers and 
• rural development measures co-financed by Member States. 

The CAP aims to contribute to climate change mitigation and adaptation, which is closely linked to the LULUCF regulation. For example, it promotes the establishment of landscape features and soil protection, which are essential for carbon storage. Also, 24% of CAP direct payments are allocated to eco-schemes that incentivise environment friendly farming practices, such as organic farming, agroforestry, or soil conservation (see Case study 1 on agroforestry).  

The Governance Regulation requires Member States to monitor and report on status and planning related to the Energy Uni Climate Action. To that end, one of the key elements are the National Energy and Climate Plans (NECPs).

In the NECPs, for LULUCF, Member States need to document their targets and provide an analysis of the state of play. They should outline measures planned to reach their national legally binding targets for 2030 and provide projections to demonstrate that these measures will be adequate to reach their targets. 

Within the NECPs Member States need to identify improvements for collecting information and monitoring needed for effective policy implementation in the LULUCF sector and specify how they plan to increase net removals 

The Effort Sharing Regulation (ESR) establishes national targets for Member States for the reduction of greenhouse gas emission by 2030. These targets cover emissions from domestic transport (excluding aviation), buildings, agriculture, small industry, and waste. With these national targets Member States will collectively contribute to an emission reduction at EU level, in the ESR sectors, of 40% compared to 2005 levels. They are translated into annual emission limits for the years 2021-2030 for each Member State.  
For compliance under the ESR Member States can apply several flexibility mechanisms. One of these is the use of credits from LULUCF. If Effort Sharing emissions are higher than their annual emission limits, Member States can use up to 131 million of LULUCF credits over each of the 2021-2025 and 2026-2030 periods to comply with their national targets.

The recently adopted Carbon Removal and Carbon Farming Regulation (CRCF) establishes a Union voluntary framework for certifying high-quality carbon removals and associated soil emission reduction generated by activities located in the EU. Building on best practices, CRCF requires carbon removals and soil emission reductions to meet a set of quality criteria (quantification, additionality, long-term storage, and sustainability) and rules for third party verification and certification. The Commission will develop detailed methodologies to operationalise the quality criteria, considering the specific characteristics of the different carbon removal activities. 
By providing harmonized rules for monitoring, the CRCF can facilitate the upscaling and financing of carbon farming through the CAP, State aid but also voluntary carbon markets to help achieving national LULUCF targets. By collecting project level data, the CRCF can also help improving the quality of national GHG inventories. The visibility of CRCF activities in national GHG inventories is an important incentive for Member States to finance these projects. 

The revised State aid rules for the agricultural and forestry sectors align State aid with the EU’s strategic priorities, in particular the CAP and the European Green Deal. The State aid rules include the Agricultural Block Exemption Regulation (ABER) that exempts specific categories of aid from the requirement of prior notification to and approval by the Commission if they fulfil certain conditions. 
The revision introduced new incentives for a change in agricultural practices beyond what is legally required, a higher incentive for forest ecosystem services, collective schemes, and result-based payments schemes, such as carbon farming schemes and a simplified procedure for the authorisation of state aid for measures co-financed under the CAP. Member States can quickly provide aid and steer domestic policies to deliver on LULUCF targets thanks to the wider possibilities to block-exempt national measures.

The Renewable Energy Directive (RED) establishes the policy framework to promote renewable energy in the European Union. The recently revised RED III aims at achieving an overall 42.5% share of renewable energy by 2030 with related national renewable energy targets and binding targets for the respective sectors. 
RED III does not directly regulate LULUCF activities. However, the RED III provides that EU Member States must require economic operators, such as bioenergy producers, to demonstrate that the bioenergy used for achieving national renewable targets complies with EU sustainability criteria. These relate to land use, GHG saving criteria and energy efficiency requirements. These sustainability criteria play a direct role in maintaining and enhancing carbon stocks under the LULUCF Regulation. For instance, harvesting for bioenergy must be executed in a way that maintains soil quality and biodiversity and has to improve long-term production capacity of the forest. 

In 2020, the European Commission adopted the Biodiversity Strategy that contains specific commitments and actions to be delivered by Member States by 2030. These commitments include to legally protect a minimum of 30% of the EU land and sea, of which at least one third should be strictly protected, including all remaining primary and old-growth forests. The Nature Restoration Regulation (NRR) adopted in 2024 establishes recovery measures that will cover at least 20% of the EU’s land and 20% sea areas by 2030, and all ecosystems in need of restoration by 2050. It sets specific legally binding targets for nature restoration in each of the listed ecosystems - from agricultural land and forest to marine, freshwater and urban ecosystems.  
There are opportunities for Member States to meet climate goals set in the EU Climate Law by 2050 and the LULUCF land sink target in the LULUCF Regulation with a significant scaling-up of nature restoration. The NRR focuses especially on restoring ecosystems with a high potential for climate mitigation as it aims at scaling up nature-based carbon removals.

The EU Soil Monitoring Law establishes the first EU‑wide framework for monitoring and assessing soil health, with the goal of achieving healthy soils by 2050. In force since 16 December 2025, it requires Member States to monitor soil condition across all land uses, address major soil threats such as erosion, contamination, loss of organic matter and soil sealing, and identify and manage contaminated sites. By improving the availability and comparability of soil data, the law supports climate, biodiversity, food security and environmental protection objectives under the European Green Deal and the EU Soil Strategy for 2030.

The Regulation on deforestation-free supply chains (EUDR) was adopted in 2023. It repeals the previous EU Timber Regulation. The regulation introduces a mandatory due diligence procedure: Relevant commodities and products shall not be placed or made available on the market or exported, unless (a) they can count as “deforestation-free”; (b) they have been produced in accordance with relevant legislation of the country of production; and (c) they are covered by a due diligence statement. This obligation applies to wood, soy, palm oil, cocoa, coffee and cattle, and products made from these (e.g., leather, chocolate, charcoal, printed paper etc.). 
The reduction of emissions from deforestation and degradation in the EU will directly contribute to the targets under the LULUCF Regulation. Synergies between EUDR and the LULUCF Regulation also emerge from the databases that is required for both, assessing deforestation risks associated with products and annual emissions and removals form land use and land-use change and forestry.