Browsing by Subject "LULUCF regulation"
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(2020)We analyse the forest reference level (FRL) projection in Finland. FRLs are included in the European Unions’ new land use, land-use change and forestry (LULUCF) regulation (EU 2018/841) that is part of the actions towards the Paris Agreement’s climate mitigation targets. The regulation defines the accounting rules for carbon dioxide (CO2) emissions within the sector. We build on the LULUCF regulation, the provided guidance documents on the FRL projection, national forestry accounting plans and the existing studies concerning the FRL projections. Business-as-usual reference levels were used for the Kyoto Protocol’s second commitment period. The parties of the Kyoto Protocol had an incentive to report high harvest levels (Frieden et al. 2012). Thus, the reference levels overestimated the harvests by including in assumptions about future policies. Some of the assumptions did not materialize and this led to windfall carbon credits (Grassi et al. 2018, Krug 2018). Such overestimation has happened, for example, in Finland. In this thesis we analyse, whether the new forest reference levels are able to avoid problems that occurred during the Kyoto Protocol. The LULUCF regulation is set for the compliance period (CP) of 2021-2030. The forest reference level is a baseline projection for the forest carbon sink, defined by the historical forest management practices of the reference period (2000-2009). Age-related dynamics of the forest can be taken into account but any anticipated policy changes need to be excluded from the projection. The FRL indirectly defines the level of harvests that are not considered as emissions. The excess carbon sink can be traded to other Member States or be used to compensate the effort sharing sector’s emissions. One of the suggested principles to project historical forest management is to utilize the intensity of management (Grassi and Pilli 2017, Grassi et al. 2018), which is calculated by dividing the reference period’s harvest by the amount of biomass that was available for the wood supply during the same period. The future harvest level is computed by keeping the intensity of management constant. This principle is used in Finland and in several other EU member states. To analyse the suggested principle, we utilize a partial equilibrium model for forestry and agriculture (Mitra and Wan 1985, 1986, Salo and Tahvonen 2004). Using this model, we are able to compute a FRL in a case where policy shock has increased harvest levels after the reference period. This resembles the situation in Finland. Our numerical results show that the choices on the biomass available for wood supply, interest rate and the starting year of the projection can have significant impacts on the FRL computation. By these choices, a member state is able to overestimate the harvest possibilities. Thus, the EU fails to set a regulation that fully excludes national incentives in specifying the FRL. The setting of the Finnish FRL includes a tendency of minimizing the restrictions on the future harvest levels. This outcome follows by choosing high interest rate, early starting year for the projection and a loose definition for the biomass available for wood supply.
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