Last year, one of the central issues in the work of the European Parliament (EP) was, undoubtedly, the European Green Deal (EGD). The responsible committees and the parliament as a whole have adopted a series of decisions within the extensive EGD legislative framework that affect many sectors. Significant changes are also expected in the forestry sector, which is vital to the Latvian economy. While I am not an expert in forestry and work daily in committees for other sectors, I am bewildered by how inert the responsible Latvian ministries have been in addressing EGD issues. The ambitious plans of the Green Deal, despite a number of member states beginning to slow down the pace of the “green roll-out,” involve huge financial flows, expenditure, and investments – however you wish to read it. Even wealthy Sweden, a former pioneer of climate policy, has loudly expressed outrage at the unachievable climate targets. Yet here – there is silence.

What does the Renewable Energy Directive provide for?

Delving into those components of EGD policy that could specifically affect the forestry sector, I consider it important to address, first of all, the Renewable Energy Directive. Since its inception in 2009, when it was projected that a 20% share of renewable energy in total EU consumption would be reached by 2020, we are now faced with the condition that in less than seven years, by 2030, this share must reach 45%. Although this target is largely intended to be met by improving the energy efficiency of buildings and promoting the transition to electric transport, the forestry sector also faces a series of challenges.

In pursuit of the title of global ecological leader, Europe is trying to restrict forestry and agriculture with increasingly comprehensive sustainability criteria. By changing the criteria for calculating greenhouse gas emissions—for example, by including peat in the balance sheet, which was not previously included—it is a very likely scenario that the wood we use in energy will suddenly become “unsustainable,” and therefore subject to carbon emission quotas. In other words, it will become more expensive. Wood fuel is a significant resource in Latvia—it makes up about a third of total energy resource consumption. If the directive is adopted in its current version, this will significantly increase heating costs in Latvia. By the way, in the EU as a whole, biomass has so far accounted for up to 60% of the total renewable energy resource mix. Since biomass mainly comes from forests, the proponents of the Green Deal have found it important to put an end to this “eyesore.” But relatively painlessly, that is, not by increasing the share of other green resources, but by declaring biomass no longer quite so sustainable.

To mitigate these risks, at least in the future, the Latvian government must not miss the opportunity to point out to the European Commission the shortcomings in data accounting, as the Commission will carry out an assessment by the end of 2026 as to whether the mentioned emission reduction criteria truly achieve the target as effectively as possible.

Likewise, the Latvian public, and the industry in particular, should closely monitor the work of the responsible ministries regarding how effectively they will be able to adapt internal regulations, even if only concerning the amendments to Article 3 of the directive. Specifically, in certain cases, member states could depart from the biomass cascading principle (the principle of sequential use, which dictates that biomass should primarily be used in products with higher added value rather than as fuel) if it is justified by the argument of energy security. The government must also be able to prove situations where local industry is unable to use biomass for anything with higher added value than fuel, which would thereby open up the possibility of channelling it more advantageously into energy production.

The regulation will also affect energy-producing plants. Specifically, the regulation provides for voluntary verification mechanisms for energy-producing plants, which means that they must specify their capacities in quite some detail. Previously, equipment only needed to be verified for large plants with a capacity of over 20 MW, but now – for smaller ones as well. However, again, there is a caveat in the directive that member states can develop more favourable rules for themselves. Therefore, the solution relies on the capabilities and professionalism of our government. A portion of power plants will also have to reckon with involvement in the emissions trading system. Plants with a capacity of over 7.5 MW will have to worry about how to suddenly purchase emissions, while the state will have to think about how to sell this volume of emissions without contradicting the targets in national climate plans.

Taking into account Latvia’s climatic conditions, wood as a fuel, whether we like it or not, will continue to be a significant element in ensuring the most essential needs of society for some time to come. However, thinking about the further future, we can predict that as technologies develop, the issue of using biomass as fuel might resolve itself. Specifically, alternative methods of energy extraction will have developed to such an extent that there will no longer be a need for wood fuel.

The forestry sector will also be affected by the so-called Deforestation Regulation

It should be recalled that, with the aim of ensuring sustainable forestry, the EU also adopted the so-called Deforestation Regulation last summer. According to this, every business or trader who places certain goods on the EU market or exports them must be able to prove that these products do not originate from recently deforested land or that the products have not contributed to forest degradation. The regulation is mainly intended to control the supply chains of soy, palm oil, beef, coffee, and other sectoral goods, but it will also apply to wood supply chains. This means that market participants (which will also include small and medium-sized enterprises) will very soon face manual and time-consuming work and potential data mismatches in reports when preparing due diligence declarations and other bureaucratic papers to prove that the origin of goods is not linked to forest degradation, which will lead to dissatisfaction among the parties involved. In itself, the principle of “tracking wood” is correct, but, similar to the hurried Green Deal as a whole, its implementation is not well thought out.

There is a feeling that on the way to a green future, the EU has switched on the maximum-impact scenario. This approach is also visible in the plans developed by the Ministry of Environmental Protection and Regional Development for the expansion of habitats of EU importance. As is known, the European Commission initiated infringement proceedings against Latvia several years ago, and the ministry is proposing to rectify these infringements with a vengeance. If that is the political agreement, it would only be correct to explain it precisely and with head held high to the forestry sector, while just as convincingly offering compensation and real solutions for the viability of the industry. The forestry sector is essential for the Latvian national economy because it not only produces wood products but is also the foundation for our country’s energy security.
Material prepared with the financial support of the European Conservatives and Reformists Group