Ministerial workshop on the role of boreal forest in CO 2 balance Tuczno, April 26 – 29, 2016 Land use sector: A fair, cost-effective and affordable deal Arvīds Ozols Director Forest department Ministry of Agriculture

Latvia`s Forest Sector Profile Forests cover 52% (3,35 million ha). Average in EU 32,4% Latvia: 4 th higher forest cover country in the EU people work in forest sector (5% of the total number of employees). Average in EU – people per country 18% of forests are under different protection regimes Sustainable forest management in Latvia: Multiple benefits including social, ecological and economic A base for all nature friendly operations (including climate aspect) 2

3 What is the role LULUCF should play in decarbonizing the EU economy? What is the expected contribution from LULUCF? What is the value we attribute to forest sinks (RMU price)? Forest sector in climate policy - just a flexibility for other sectors or a strict target? Don’t forget, that forest measures also requires investments. What flexibilities related to LULUCF should be in place? Flexibilities for forest sector itself or flexibilities to gain from forest sector (e.g. Non-ETS)? Credits (RMU) to compensate for other sectors. How to deal with long term perspective and high LULUCF sector uncertainties (updated data & recalculations annually). Forest Sector Role in post-2020 Climate Policy

Active land management – a way to ensure sustainable long- term benefits for both nature and economy National land resource potential should be considered first in order not to create carbon leakage (production in 3 rd countries) Latvia has still unused land and production efficiency potential 4 Forest Sector Role in post-2020 Climate Policy

5 Forest Sector Role in post-2020 Climate Policy In Latvia forests cover 52%, however we do not expect the LULUCF to be natural post-2020 (expect debits). But timber harvest levels in Latvia have never exceeded annual wood increment. Essential aspects: Forest credits highly depends on the methodology chosen, Does not consider the whole forest resource, only changes or delta comparing to chosen period of yrs. Age structure (aging forests), Historical development trend (e.g ) should be representative. The Land reform in Latvia from 90 ies, Projections (models). Making projections for the LULUCF sector, and esp. of harvest levels is very complicated, it involves consideration of a number country- level developments and policies. The problem is that models not always are able to consider country-level trends. With high uncertainties (incl. the effect of methodologies) and the huge share of LULUCF sector in the total GHG balance, the burden for land sector is very high & is a real challenge for Latvia.

How to ensure a good reflection of forest measures and CO 2 balance? Lessons from the past: FMRL ( ) Models and modelling. Need to improve modeling, the choice of assumption and thus ensure better comparability among countries The chosen period of years for setting FMRL should be representative for each MS in order to make correct projections for the future development, BAU reference period should disregard peaks or periods which don’t reflect stable management level EU average trends vs non-EU average development (problem for models) FMRL should consider availability of wood, respectively, age structure of forests in the projections and consider potential to increase deliveries of roundwood and biofuel using favorable market conditions in certain countries Development potential should be considered when setting targets for different countries. If there is potential to increase area of arable lands without deforestation, this should be taken in account in the projections. Countries with higher development potential are under higher risk to increase the GHG emissions from arable lands 6

How to ensure a good reflection of forest measures and CO 2 balance? Taking forest age structure as the main element in setting the FMRL, we could solve several problems, for example, assumption of recent forest management level and assumptions for the future trend, because age structure reflects historic forest management activities and lays down potential & possibilities for the future Forest-rich countries as for example Latvia, already having 52% of forest area has a limited potential in afforestation FMRL, we should think of possibilities to provide more incentives for the forest sector in terms of incentivizing more forest sector activities besides afforestation e.g. use of selected reproductive material, selection of species for regeneration and thinning of forest stands can increase CO 2 removals in long term, but so far only afforestation is directly incentivized by the LULUCF accounting In the process of elaborating post 2020 accounting, the elements for the Infrastructure development related deforestation should be treated separately since for the MS with high forest cover infrastructure development in many cases requires deforestation, however, infrastructure development cannot be linked with a lack of environmental policies 7

How to ensure fairness, affordability and cost efficiency of 2030 EU climate policy Necessity for harmonized approach for different EU policies (energy, esp. RES, climate, Common Agriculture Policy) Bioenergy. Latvia is one of the leading EU MS regarding renewables, and we want to underline, that all 3 aspects - carbon sequestration, substitution in materials and also fossil energy substitution - are equally important and should be reflected adequately in the post 2020 LULUCF sector accounting It must be respected, that the LULUCF sector, and especially forestry has long-term development, that is far longer that the given commitment period. It is obvious, that in forestry and land sector investments have long-term return and exceeds the term of one commitment period Flexibility between accounting periods of LULUCF sector should be ensured. to carry over LULUCF sector RMU units (credits and debits) from to If the FMRL is not achieved in , it can be achieved by additional efforts in the subsequent period (e.g ). This would reflect the long-term effect that is typical in forestry, and would even out the effect of forest age structure 8

Website: As we design our common future, it should be done with a long-term perspective and in a smart way Thank you! Arvīds Ozols Director Forest department Ministry of Agriculture