The climate policy of the European Union (EU) is among some of the most well-developed in the world. However, with that depth comes complexity which inevitably leads to misunderstanding. One of the most misunderstood points is the “zero-emissions” factor that sustainable wood-based biomass receives in the EU Emissions Trading System (EU-ETS). This means that the combustion of wood-based biomass carries no price under the EU-ETS, colloquially known as the “zero-rating”.
If you engage with the wood-based biomass debate, you’ll surely come across the zero-rating, which is often mistakenly claimed to mean that any emissions from wood-based biomass are not counted. This is far from the case. The EU-ETS has a zero-emissions rating for wood-based biomass because its emissions are already accounted for in the Land-Use, Land-Use Change and Forestry (LULUCF) sector as a change in forest carbon stocks.
Why is it structured this way? Firstly, this approach avoids double counting. If wood-based biomass emissions are counted in the LULUCF sector and when used in the energy sector, they’d be counted twice.
Secondly, it is more accurate and appropriate to count emissions in the LULUCF sector. Wood-based biomass used in energy comes from distinct pathways, making it difficult to accurately account in the energy sector. Compare, for instance, a forest residue that was harvested a few months before energetic use against post-consumer wood that was harvested possibly decades before. Since emissions reported in the LULUCF are based on the annual change in carbon stocks, all emissions are covered if and where they occur, without a complicated ex-post subtraction from the LULUCF sector accounts.
Thirdly, it has been made clear by the IEA, IPCC, and EU Commission that we need to increase the use of modern bioenergy if we are to meet net-zero targets. Placing a price on wood-based biomass in the energy sector would be a severe disincentive for using bioenergy, harming climate ambitions and benefiting fossil fuels.
The approach of accounting for wood-based biomass in the LULUCF sector and not the energy sector is not a quirk of EU’s Climate Policy either. As noted by the EU Commission’s Joint Research Centre: “This approach is adopted by the IPCC guidelines for national GHG inventories (IPCC 2006, 2019) and by the UNFCCC for the accounting under the Paris Agreement.”
Greg Marland from Oak Ridge National Laboratory explains the very deliberate choice made to handle biomass this way: “[t]he IPCC inventories do not exempt bioenergy systems. They very purposefully account for emissions from fossil fuels where and when they occur, and they account for changes in biological stocks of carbon where and when they occur.”
Of course, the zero-rating only makes sense if wood-based biomass is being sourced from forests where carbon stocks are stable or growing, meaning the only emissions are from the supply chain (which are capped by the Renewable Energy Directive). The EU recognises and addresses this. The zero-rating is not assumed upon energetic use. The EU-ETS specifically requires installations using biomass to comply with the sustainability criteria laid out in the Renewable Energy Directive which assures three things, regardless of the source of biomass:
- Regeneration of harvested areas;
- That harvesting maintains or improves the long-term production capacity of the forest; and
- That appropriate accounting, laws or management practices are in place to ensure that carbon stocks and sinks levels are maintained.
A zero rating for sustainable biomass in the EU-ETS is a logical, deliberate, and well-researched decision that reflects internationally accepted accounting methods and the carbon reduction benefits of wood-based biomass. These benefits are enhanced further when one bears in mind that wood-based biomass comes from harvested wood that is generally not utilized in higher-value markets, increasing the economic incentive for forest owners to keep forests as forest.
A decision to not rate wood-based biomass as zero would encourage resource waste, make it less attractive to keep forested land forested, and put us further away from the goal of a fossil-free future.
About the author
Andrew Georgiou
Director, Policy and Regulation Europe, Enviva
Andrew Georgiou is the Director of Policy and Regulation in Europe for Enviva, the world’s largest producer of industrial wood pellets. With almost 15 years of experience working in politics and public policy he leads Enviva’s engagement with policymakers across Europe. He sits on the Board of Bioenergy Europe and takes part in a number of working groups on a broad range of biomass policy issues affecting the EU and UK.
