A2 Review article, Literature review, Systematic review
Forest carbon payments : A multidisciplinary review of policy options for promoting carbon storage in EU member states (2024)
Assmuth, A., Autto, H., Halonen, K.-M., Haltia, E., Huttunen, S., Lintunen, J., Lonkila, A., Nieminen, T. M., Ojanen, P., Peltoniemi, M., Pietilä, K., Pohjola, J., Viitala, E.-J., & Uusivuori, J. (2024). Forest carbon payments : A multidisciplinary review of policy options for promoting carbon storage in EU member states. Land Use Policy, 147, Article 107341. https://doi.org/10.1016/j.landusepol.2024.107341
JYU authors or editors
Publication details
All authors or editors: Assmuth, Aino; Autto, Hilja; Halonen, Kirsi-Maria; Haltia, Emmi; Huttunen, Suvi; Lintunen, Jussi; Lonkila, Annika; Nieminen, Tiina M.; Ojanen, Paavo; Peltoniemi, Mikko; et al.
Journal or series: Land Use Policy
ISSN: 0264-8377
eISSN: 1873-5754
Publication year: 2024
Publication date: 18/09/2024
Volume: 147
Article number: 107341
Publisher: Elsevier
Publication country: United Kingdom
Publication language: English
DOI: https://doi.org/10.1016/j.landusepol.2024.107341
Publication open access: Openly available
Publication channel open access: Partially open access channel
Publication is parallel published (JYX): https://jyx.jyu.fi/handle/123456789/99441
Abstract
Forest carbon sinks can play an important role in mitigating climate change, but currently only a few policies exist globally where economic incentives are created for forest owners to maintain and strengthen sinks. This article aims to facilitate the design and implementation of governmental payment schemes for forest carbon uptake services by presenting a multidisciplinary analysis of the many challenges involved in such schemes and by proposing potential solutions. We assess the consequences, opportunities, and risks of carbon payment schemes from economic, ecological, social, and legal points of view based on existing literature. Our analysis is set in the context of the European Union (EU), but many of the central findings have relevance for a broader geographical area. The main economic challenges of implementing carbon payment schemes relate to potential leakage, the question of additionality, and uncertain forest-owner behavior. The most important ecological considerations include effects on soil carbon dynamics and biodiversity as well as issues of non-permanence and forest resilience. Our exploration of the social acceptance of carbon payments among the general public, key market actors such as forest owners and forest industry, and other stakeholders suggest that both the process of developing the scheme and its details are significant. Further, our legal analysis indicates that central challenges for carbon payment schemes within the EU rise from the requirement to comply with competition and state aid regulations. Finally, we synthesize our findings and suggest a two-step approach for introducing public carbon payments in an EU member state. Initially, the scheme could be launched via De minimis aid or the new aid scheme (GAFSRA). A low carbon price could be applied to moderate market effects, and the payments could be limited to additional carbon storage only. Peatlands, where tradeoffs exist between tree biomass carbon and soil carbon, should initially be excluded from the standard payment scheme, and regulated with command-and-control instruments and measure-based payments instead. In the future, an improved knowledge base and institutional changes may enable schemes that encompass all ecosystem carbon pools on all relevant soil types and create optimal incentives for both forest management and land-use choices by pricing all land-based sinks and emissions. Such schemes could utilize, e.g., cap-and-trade instruments and be complemented by import tariffs to control carbon leakage.
Keywords: carbon sinks; carbon balance; forests; peatlands; sustainable forest management; emission trade; carbon offsetting; political decision making; EU policy
Free keywords: carbon payment scheme; forest carbon; additionality; carbon leakage; social acceptance
Contributing organizations
Ministry reporting: Yes
VIRTA submission year: 2024
Preliminary JUFO rating: 2