Towards Net-Zero in the EU? Explaining the Ratcheting Up of the EU LULUCF Regulation and its Policy Implications

As part of the Fit for 55 Package, the EU adopted a revised and more ambitious land use, land-use change and forestry (LULUCF) regulation in 2023. Forest sinks – the largest contributors to the EU’s carbon sinks (EEA 2025a) – are regarded as crucial for achieving the LULUCF net carbon removal target for 2030, and even more so the EU net-zero target by 2050 enshrined in the European Climate Law (Regulation 2021/1119). However, the European forest sink is on a declining trend (EEA 2025a). Most European countries are experiencing declining net removals due to increased timber harvesting rates, ageing forests, climate change, natural disturbances such as droughts, forest fires and bark beetle damage, land-use changes, and deforestation (Korosuo et al. 2023). The diminishing forest sink represents a serious challenge to reaching the EU’s 2030 and 2050 climate targets. Against this backdrop, we examine the ratcheting up of the LULUCF regulation from 2018 to 2023 and its policy implications. In a nutshell, the puzzle examined is: Why did the EU decide to increase the ambition of the LULUCF regulation, despite knowledge of the diminishing European forest sink? To examine policy implications, we discuss the feasibility of reaching the net removal target with existing policies and potential trade-offs with other FF55 polices, especially the Renewable Energy Directive (RED). Even if both policies are generally geared towards climate change mitigation, the promotion of forest biomass as a renewable energy source may conflict with the LULUCF target of increasing the European forest sink. The study is based on various EU documents and other written sources as well as semi-structured interviews with key individuals in the European Commission, European Parliament, member states, and in other organizations that sought to influence the process. We find that the ratcheting up of the regulation was motivated both by the objective to reverse the trend of declining LULUCF net removals and to allow the EU to move quicker towards reaching its 2030 and 2050 emission reduction targets. The changes to the LULUCF regulation were primarily a result of the entrepreneurial role played by the European Commission. However, the net carbon removal target in the 2023 LULUCF regulation appears to be much more challenging than first anticipated by the Commission. The study finds that time inconsistency problems and trade-offs in the LULUCF sector are likely to arise because a policy that is optimal to increase carbon sinks towards 2030 is suboptimal towards 2050 and beyond. The study underscores the importance of recognizing the potential trade-offs between promoting forest biomass for renewable energy and preserving forest carbon sinks. We also find that there are hardly any EU policy instruments or economic incentives for increasing net removals in the member states.