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Unlocking the Potential: Expert Insights on the Long-Term Compatibility of Forest Carbon Credits with the EU ETS

  • Abstract Forest-based carbon credits are crucial in most Emissions Trading Schemes as they offer a cost-efficient means of offsetting hard-to-abate emissions. To date, this has not been the case in the European Union Emissions Trading Scheme (EU ETS). However with the Paris Agreement rulebook now finalized, there could be an opportunity to revive this flexibility mechanism in European climate policy. Based on 24 expert interviews, we examined the forest potential within the EU ETS across short, medium, and long-term time frames. We found that the compliance system will remain blocked until 2030, but there is a greater likelihood of transitioning towards the inclusion of forest-based removals and reductions in the long term. Although forestry projects have faced significant reluctance in the EU, there is unanimous agreement on the importance of both technological solutions and such initiatives for climate protection. To fully leverage the potential of forest activity in the future, it will be necessary to adopt different methods and tools (e.g., liability regimes), stricter legislation on socio-economic factors (e.g., land use rights), overcoming implementation hurdles (e.g., do not compromise deterrence through mitigation), and maintaining an open political stance. This study provides a comprehensive perspective on the barriers and potentials of forestry projects within the compliance system of the EU which is essential to be addressed when re-opening the discussion on future eligibility. The implication of the findings suggest an immediate start to adopt to the barriers for carbon credit readiness in the next phase of the EU ETS beginning of 2030.
Author:Carsten Müller, Sebastian Bleuel
Series (Serial Number):Discussion Papers in Business and Economics (24)
Document Type:Working Paper
Date of Publication (online):2023/08/28
Date of first Publication:2023/08/28
Publishing Institution:Hochschule Fulda
Release Date:2023/09/04
Tag:European Emissions Trading Scheme; Forest carbon; Forest carbon sequestration; Paris Agreement; Trade barriers
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoEinfaches Nutzungsrecht

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