Negative Emissions in Agriculture and Forestry: A Win-Win-Win for Climate, Nature, and the Economy. Policy Recommendations for Carbon Markets

In addition to drastic emission reductions, mitigating climate change requires the active removal of carbon dioxide (CO₂) from the atmosphere. The German Climate Change Act stipulates that the land use, land use change and forestry (LULUCF) sector must achieve a net sink capacity of -25 million tons of CO₂ equivalents (tCO₂e) by 2030. This is in stark contrast to the reality that the LULUCF sector is increasingly becoming a source of CO₂ instead.

Germany’s LULUCF sector has become a source of emissions and must return to being a sink

The targets for the LULUCF sector set out in Section 3a of the German Climate Change Act are currently a long way off. For thousands of years, the LULUCF sector was a carbon sink. Since 2018, this is no longer the case. Instead of acting as a carbon sink, the sector even caused net emissions of 68.7 million tCO₂e in 2023. This trend urgently needs to be reversed by investing in climate-resilient forestry and nature restoration. However, a path to achieving the LULUCF carbon sink target has not yet been identified.

Voluntary carbon markets can help finance nature-based climate mitigation

The report “Negative Emissions in Agriculture and Forestry: A Win-Win-Win for Climate, Nature, and the Economy. Policy Recommendations for Carbon Markets” by Climate Focus in cooperation with the German Association for Negative Emissions (DVNE) shows that voluntary carbon markets can mobilize private capital for nature-based climate mitigation and Biochar Carbon Removal (BCR) and thus make a decisive contribution to scaling the urgently needed natural carbon dioxide removal in the LULUCF sector.

Confusing policy signals and negative reporting have so far discouraged private investment, creating barriers for the deployment of high-integrity nature-based and BCR projects in Germany. Smart policies can build trust in a credible carbon market in Germany and create a supportive environment for investment.

The German government needs to make a clear commitment to carbon markets

A clear stance by the German government on market-based solutions can mobilize enormous investments in nature-based climate mitigation already today. In the short term, this requires a clear commitment to the voluntary carbon market with clarifications on double counting, permanence and climate claims. In addition, further facilitation and incentives for project developers, the creation of demand and the removal of unnecessary legal hurdles for BCR are necessary.

Read the full report for the complete set of policy recommendations (in German).