Shifting Finance Towards Sustainable Land Use: A Case Study on the European Union

At the centre of the EU climate commitments stands the EU Green Deal, the European overarching plan to make the EU's economy sustainable, and its commitment to become carbon neutral by 2050. While the Land Use, Land Use Change and Forestry (LULUCF) sector is a net carbon sink (it removes more carbon than it emits annually), the agriculture sector is a net GHG emitter. There is a large potential to reduce Agriculture, Forestry and other Land Use (AFOLU) emissions and increase carbon sequestrations within this sector in the EU to achieve net zero. With the appropriate policies in place, the land use sink could not only be maintained, but also enhanced, for example through combining measures such as optimisation of forest management practices (changes in rotation length, ration of thinning versus final feelings, harvest intensity or harvest locations), promoting afforestation, implementing agriculture practices aiming at improving the soil carbon sequestration and dietary changes that help free up land for afforestation. This study seeks to support governments in their efforts to implement land use and agricultural policies to shift finance flows in line with the goal of Article 2.1c of the Paris Agreement. It discusses the Common Agricultural Policy, as well as public interventions that are commonly applied by governments, channel large amounts of finance, and have a clear potential to impact GHG emissions. These public policy instruments influence how, where and when financial support flows to the land sector.

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