Take a look at other topics that we address in our EnviLaw newsletter #7:

• New standard for European green bonds to facilitate raising capital for sustainable projects
• Energy regulation is on the verge of a revolution, with changes coming at the European and national levels
• Environmental litigations are on the rise and drive the fight against climate crisis
• The European Commission presented the most comprehensive set of climate and energy proposals to date

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New EU Forest Strategy for 2030

Following the escalating climate and biodiversity crisis, the European Commission adopted a new EU Forest Strategy for 2030 in July 2021 as one of the follow-up initiatives of the European Green Deal. Its principal objective is to develop a multifunctional role of forests and their potential to achieve a sustainable and climate neutral economy by 2050 while securing necessary protection of all ecosystems.

The new strategy puts emphasis on the need to ensure an adaptive renewal of forests and introduce ecosystem management approaches in order to create conditions for subsequent forest bioeconomy. It anticipates the adoption of a legally binding instrument for the ecosystem renewal and introduces a detailed plan for planting at least 3 billion of other trees by 2030.

It additionally covers the actual principles of sustainable management in forests and discusses the expansion of the Forest Europe criteria to include the indicators relating to biodiversity and climate change. It anticipates the creation of guidance for environmentally friendly management in forests, for biodiversity friendly forestation and reforestation. The strategy additionally suggests the preparation of a voluntary certification system for environmentally friendly management in forests and announces a revision of legal regulations on forest reproductive material.

The strategy focuses on two principal issues: production of wood and non-wood production of forests. In wood-based production, the strategy predominantly points to the existing LULUCF Regulation, which determines binding objectives in emissions from land use and forestry. To achieve these objectives, the Regulation not only supports forest carbon stocks, but also allows to take into account the stock of carbon in products from harvested wood. In relation to a sustainable use of wood, it highlights the necessity to respect the circular economy principles, including the cascading principle of wood use. To this end, it will be necessary to ensure a close cooperation with the downstream sectors, such as construction industry, and the sectors where it is possible to replace the equivalents of products from fossil resources. In bioenergy, the strategy emphasises the need to adopt enhanced sustainability criteria for bioenergy, as the forests are a principal source of renewable energy with a 60% share in Europe.

As the second issue, the strategy emphasises significant benefits and services resulting from non-wood production. It relates to numerous important products and services (from food to ecotourism) which are particularly significant for the economy in rural areas. The value of non-wood products in Europe is around EUR 19.5 billion per year, where 86% of harvested non-wood forest products is intended for personal consumption. It is then necessary to set all forestry measures intended to enhance the potential of the forests and prosperous forest management in synergy with the ambitions of the EU in relation to climate and biodiversity.

In line with the growing demand for ecosystem services and sustainable management that would be more friendly to biodiversity and that would strengthen the resilience of forests, it is apparent that the requirements for forests and forest owners will increase. It raises the question who will bear the costs of these measures and which funds will be used to finance new approaches. The strategy sees a solution primarily in payments for ecosystem services, in a new common agricultural policy in the Rural Development Programme or new business models, such as carbon removal certification.

New era of forestry: What is the future of forestry in the context of the new EU strategy?

The publication of the new EU strategy for forestry with an outlook until 2030 presents an appropriate opportunity for a debate on current and future challenges of the forestry sector in the Czech Republic and the future of the regulation on the EU level. On that occasion, Deloitte Legal organised, as part of the Act of the Year society-wide platform, an online panel discussion on the topic of the New Era of Forestry: Challenges and Opportunities , which was held on 5 October 2021.

The discussion suggested that the new EU Forest Strategy for 2030 had brought numerous challenges and resulted in an enhanced strategic view of the role of forests and regulation on the EU level. The panel speakers primarily emphasised the importance of forests, forestry and wooden products for other strategic areas of the union. However, they also pointed out to an increasing demand for ecosystem services of forests and for wood as a renewable source, which may play a key role in the preparation of other plans.

The Strategy itself can be seen, according to our panel speakers, as a document which is not legally binding for the member states, however, the individual measures will result in various legally binding documents in the future. There was criticism of insufficient involvement of stakeholders and imbalance of strategy in favour of environmental functions, curtailing the social and economic pillar.

It will be essential for the future of forestry to determine a comprehensive set of approaches and measures:

• Multifunctional role of forests. To use all the benefits of forests, it will be essential to kickstart the forest bioeconomy in line with the principles of circular economy and set conditions for the cascade use of wood. The biodiversity and climate protection approaches should be an integral part of the solution rather than a limiting element.
• Fair financing. Foresters should be remunerated for the care for forest benefits. The payments for ecosystem services thus appear to be a suitable tool, however, the dependence of forestry on subsidies should not be encouraged – on the contrary, flexibility should be maintained for the selection of appropriate measures.
• High added value and innovations. The manufacturing of wooden products and a short supply chain are the key to fulfil the potential of forests and financial independence of forestry.

New Common Agricultural Policy for 2023-2027

The EU’s Common Agricultural Policy is one of the key strategic areas having a major impact on securing the productivity of agriculture, standard of living of the rural population, food security, but primarily it has an impact on the condition of the environment and countryside in Europe.

In this respect, it is important that the European Parliament, the EU Council and the European Commission have reached a political agreement on the future form of the new Common Agricultural Policy for 2023 to 2027 (CAP) at the end of June 2021. This agreement was preceded by 3 years of complex negotiations. The CAP aims to create a competitive sector, support the income of farmers and rural areas, and it contains an obvious emphasis on elements of sustainability. This is because the CAP is supposed to become a key tool for the achievement of the objectives contained in the “Farm to Fork” strategy and the European Union’s Biodiversity Strategy for 2030.

A new element of the CAP are national strategic plans that provide the member states with the possibility to set the conditions of the CAP in line with national conditions and needs of farmers. Unifying elements include common framework objectives, requirements for “greening” and determination of the minimum percentage from the budget for certain measures. The fulfilment of the objectives through national strategic plans will be assessed on an ongoing basis using simple criteria for monitoring.

The central factor of the new CAP is the overall “greening” and fairer setting of rules – increased requirements will be imposed on farmers in terms of the protection of the environment and landscape, including the setting of criteria for the conditionality of payments that will be based on stricter obligatory requirements. The new approaches are additionally based on motivational elements for farmers, as 35% of direct payments are allocated to eco-schemes with high added value for the environment and 25% of the budget from rural development is supposed to be used for measures relating to climate change, protection of biodiversity and animal welfare.

The total budget of the CAP for 2021 to 2027 amounts to EUR 387 billion. As part of the first pillar,
EUR 291.1 billion was earmarked for the European Agricultural Guarantee Fund and EUR 95.5 billion for the second pillar intended for rural development, to be paid from the European Agricultural Fund for Rural Development. In order to take into account the differences in the member states, it is possible to move up to 25% of the funds between the first and the second pillar, and additionally increase the funds for measures beneficial to the environment.