Brussels is developing the Carbon Removals and Carbon Farming (Carbon Removals and Carbon Farming, CRCF) framework as a new business model to financially reward forest owners for measures that sequester additional carbon and improve forest resilience to climate change.
The primary criterion for receiving funding is to prove that carbon sequestration is greater than it would have been under standard, existing management practices. It is difficult to establish an accurate baseline because forest growth is also affected by unpredictable factors – droughts, storms, and pests. For small forest holdings, the costs of certification, monitoring, and verification can exceed the potential income from carbon credits. The solution lies in the cooperation of smallholders and their consolidation into landscape-scale projects.
It is estimated that projects combined with commercial forestry would be profitable if the carbon price were €30-50 per tonne of CO₂, whereas completely removing forests from economic activity would require around €100 per tonne. Carbon credits will be obtainable not only for processes in the forest but also for long-term carbon storage in wooden buildings. The necessary funds could be co-financed by large consumers of timber and paper through voluntary 'buyer clubs'.
How does it affect Latvia and how can it be implemented?
Latvia has tens of thousands of private forest owners with small holdings. For the CRCF system to work in Latvia, the involvement of forest owner cooperatives must be promoted. Cooperatives or forest advisory centres could take on the role of an 'aggregator', combining hundreds of small holdings into a single carbon project, thereby distributing and reducing administrative, remote sensing, and certification costs.
Management of peatlands and degraded soils
Latvia has significant areas of historically drained forest soils and peatlands that are currently generating greenhouse gas (GHG) emissions.
By using EU methodologies for peatland restoration already approved in July 2026, 'Latvijas valsts meži' and large private forest owners can apply for renaturation projects for degraded bogs and peat soils, turning them into a new source of income.
Adapting forests and promoting timber construction
Recent years' storms, bark beetle infestations, and drought periods in Latvia prove that monocultures, such as spruce stands, are quite vulnerable. Forest owners can be financially incentivised to create mixed-species stands, carry out more timely thinning of young stands, or increase the felling age. Carbon payments would serve as compensation for risks or deferred income.
As a major timber exporting country, Latvia has huge potential to create higher value-added products that store carbon for a long time. By developing a methodology for carbon storage in buildings, Latvia's construction sector and wooden house manufacturers could gain additional benefits. At the national level, construction regulations should be changed to promote the construction of multi-storey wooden buildings, which would allow for the attraction of EU CRCF funding and investors.
Using technology for measurements
To reduce expensive field visits for forest inventory, Latvia must use its strong IT and remote sensing expertise. The Forest Research Institute 'Silava', in cooperation with state institutions, must improve national forest growth models using satellite data and LiDAR scanning to ensure a cheap, accurate, and EU-compliant baseline for carbon accounting.