What is LULUCF? By 2030, EU land use is set to save 310 million tons of CO₂

The land-use sector LULUCF (Land Use, Land Use Change and Forestry) is the only area of European climate policy that, by definition, is supposed to sequester more CO₂ than it emits. Forests, soils, and wetlands act as natural carbon sinks.

With the LULUCF Regulation (EU) 2018/841 – amended by Regulation (EU) 2023/839 as part of the „Fit for 55" package – the EU has established binding rules on how this sinking performance measured, accounted for, and distributed among the 27 Member States. By 2030, this sector is expected to achieve a net removal EU-wide of 310 million tonnes of CO₂ equivalent achieve. This would represent a further reduction of 15 % in greenhouse gas emissions compared to the 2016–2018 reference period. Each Member State contributes to this through an individual, legally binding target derived from historical emissions data and its share of the EU’s cultivated land area.

This article explains which land use sectors the regulation covers and how the target architecture develops between 2021 and 2035. Furthermore, the focus is on the complete targets of all 27 EU member states as well as their calculation methodology.

The six land use sectors in the LULUCF framework

The LULUCF Regulation distinguishes six land categories in which Member States must record emissions and removals. Each land area is assigned to one of these categories based on its actual use and, in the event of a land-use change, is transferred to the new category:

• Forest Land: By far the largest contribution to the European carbon sink. What counts as a “forest” is by no means defined uniformly across the EU – each member state sets its own thresholds for minimum area, canopy cover, and tree height that fall under the forest criterion.
• Cropland Agricultural land including fruit and viticulture as well as agroforestry systems, provided the woody vegetation remains below the respective national forest threshold.
• Grassland: Permanent grassland and pasture land without arable farming.
• Wetlands Peatlands, peat extraction sites, and water-covered areas are particularly sensitive from a climate policy perspective, as drained organic soils are among the largest single emitters in the sector.
• Settlement areas: Built-up and sealed areas, transport infrastructure and urban greenery.
• Other Land: Residual category for all areas that cannot be assigned to any of the aforementioned categories (e.g., rock, desert, unvegetated soil).

In addition, the regulation covers a special category: Harvested Wood Products (HWP). Processed or manufactured wood – such as in construction timber or paper – continues to store carbon beyond the time of harvest and is therefore accounted for separately, regardless of the area where the raw material originally stood.

LULUCEF in practice

For example, as soon as a municipality converts grassland into a commercial area, this process appears in the national greenhouse gas inventory as land conversion. The carbon released or no longer bound in the process is therefore factored into the state's LULUCF balance as an emission. Mathematically, this emission increases the gap to the national 2030 target value. Consequently, the respective EU country must compensate for it elsewhere in the sector, such as through afforestation or peatland rewetting. This does not create a direct, individual obligation for compensation for individual projects.

Whether compensatory measures are necessary for a specific construction project is not regulated by LULUCF, but rather by national nature conservation law—in Germany, the impact regulation pursuant to §§ 13–15 of the Federal Nature Conservation Act (BNatSchG). Both systems run parallel, but are legally separate: LULUCF accounts for the macroeconomy at the state level, while the impact regulation applies on a project-specific basis at the level of the building permit.

Brief: LULUCF is a macro-level regulatory instrument between the EU and member states – not an approval instrument for individual land-use developments.

Legal basis: From Kyoto logic to linear target-setting

The basis is Regulation (EU) 2018/841 of May 30, 2018, by which the EU integrated the land use sector into its climate target architecture for the first time in a binding manner. Originally closely aligned with the accounting logic of the Kyoto Protocol, a fundamental revision took place as part of the “Fit for 55” package. This amending regulation (EU) 2023/839 of April 19, 2023, tightened the EU-wide removal target for 2030 and replaced the old, category-specific accounting with a simplified system with a single, sector-wide target per Member State.

This makes LULUCF part of the broader “Fit for 55” regulatory framework – alongside the EU Emissions Trading System (ETS 1/2) and the Effort Sharing Regulation (Effort Sharing Regulation, ESR). The crucial difference: While ETS and ESR address emission reductions, LULUCF is the only sector that structurally acts as a net sink and whose expansion therefore actively contributes to achieving the target.

Two regulatory periods with different crediting logics

Period 1 (2021–2025): The no-debit rule
During this phase, only a minimum requirement applied to each member state: recorded emissions could not exceed recorded removals (the “no-debit” rule). Accounting still followed differentiated rules per land category, based on Kyoto.

Period 2 (2026–2030): Binding national targets
From 2026, category-specific accounting will be completely eliminated. Instead, a single, binding target for net removals in 2030 will apply to each member state. Between 2026 and 2029, a linear target trajectory must additionally be met. This is based on an average value for the years 2021–2023, and the trajectory runs linearly to the 2030 target value. The sum of the annual values defined in this way for 2026–2029 results in the member state's so-called “budget” for this period.

How are the national targets calculated?

The EU-wide target of 310 million tonnes of CO₂ equivalent net removals by 2030 is based on two components, which are directly reflected in the country overview:

1. Column B – the initial value: the average annual net value from the 2016, 2017, and 2018 greenhouse gas inventories (2020 inventory submission) per Member State. A negative value represents a net sink, while a positive value represents a net emission source – for example, Denmark, Ireland, the Netherlands, and Malta show a positive balance for this period, meaning their land use sector was a net emitter there.
2. Column C – the target: the additional removal capacity that each Member State must achieve by 2030 compared to its baseline. This additional effort of −42,296 kt CO₂ eq. EU-wide is not distributed equally, but is allocated based on each Member State's share of the total managed land area in the EU and its previous climate mitigation performance in the sector.

Column B plus Column C equals Column D, the binding target value for 2030 – for Germany, starting from an initial value of −27,089 kt, an additional target of −3,751 kt, resulting in a target value of −30,840 kt CO₂ eq. in the year 2030.

An overview of the 27 national LULUCF targets

Notable: The largest removers are geographically large, heavily forested countries such as Sweden, France, Spain, Poland, and Finland – together they account for a significant portion of the EU-wide sink capacity. By contrast, four states (Denmark, Ireland, the Netherlands, Malta) start from a net emissions position and will need to transform their sector from a source into a sink in the future.

Sanction mechanism: The factor 1.08

If a Member State fails to meet its binding LULUCF budget for the period 2026–2029, an automatic adjustment mechanism pursuant to Article 13c of the Regulation applies: the net emissions exceeding the budget are multiplied by a factor of 1.08 and added to the already existing target value for 2030. Thus, anyone who exceeds their budget by, for example, 100 kt CO₂ eq. between 2026 and 2029 will have to achieve a total net removal of 108 kt CO₂ eq. in 2030. A missed target is therefore not made up for one-to-one, but with an 8 percent surcharge.

The mechanism works structurally like the malus in the Effort Sharing Regulation, with one crucial difference: while under the ESR the sanction applies year after year to the following year's annual emission allocation, the LULUCF surcharge is condensed into a single deadline—the binding 2030 target. A budget overrun accumulated over several years can thus build up into a noticeable need to catch up in the final target year if countermeasures are not taken early on.

The review takes place in two stages: compliance with the “no-debit” rule for 2021–2025 will be checked in 2027, while compliance with the budget and the 2030 target for the second period will not be checked until 2032—following a comprehensive review of the submitted greenhouse gas inventories. Only after the completion of this LULUCF-specific compliance check does the compliance cycle under the Effort Sharing Regulation begin.

How EU Member States Can Offset LULUCF Targets

Art. 12 – Transfer between LULUCF and ESR

If a Member State fails to meet its LULUCF target, it may use emission allowances from the ESR sector to cover the shortfall. Conversely, a Member State with a LULUCF surplus may use that surplus to meet its ESR target or transfer it to other Member States. The transfer is capped at a maximum of 50 % out of 262 million metric tons of CO₂-eq. per period (2021–2025 or 2026–2030).

Art. 13 – Forest Flexibility 2021–2025

If managed forest areas are accounted for as an emission source rather than a sink under the Kyoto-style accounting of the first commitment period, this deficit can be offset—provided that the Member State demonstrates a genuine net sink effect and incorporates the maintenance or expansion of the forest sink in its long-term strategy. This is capped at 50 % of the national limit specified in Annex VII (e.g., France: −61.5 million metric tons, Sweden: −47.5 million metric tons for the entire period).

Art. 13b – Land Use Mechanism 2026–2030

A mechanism capped EU-wide at 178 million t CO₂ eq. for the second period. Prerequisites: The EU achieves its overall target, the Member State has already exhausted Article 12 and documented sink conservation measures. Compensation is phased – initially without further proof, then preferentially for damage from natural events, and finally from a pool limited to 50 million t for climate change impacts or high shares of organic soils. If exceeded, a pro-rata reduction will be applied.

Outlook: Joint Climate Neutrality Starting in 2035

Beyond the 2030 target, the regulation commits the EU and its member states to another milestone: Starting in 2035, the land-use sector and agriculture are to climate neutral together . This means that, starting at that point, the net sink capacity of LULUCF must offset the remaining emissions from agriculture (primarily methane from livestock and nitrous oxide from fertilization)—for the first time, both sectors will be treated as a single accounting unit for this purpose, rather than being managed separately under LULUCF and ESR rules, as has been the case until now.

A binding target for the period after 2030 has not yet been set. However, the Commission is required, as part of its Reporting Requirements to examine the further development of the regulatory framework—including, among other things, the possible inclusion of CO₂ storage in products as well as additional measures for carbon sequestration in agricultural soils. For investors and landowners, it is important to note that regulatory pressure on the sector continues to increase structurally, even though the specific details beyond 2030 remain to be determined.

Frequently Asked Questions About LULUCF