Land use, land-use change and forestry (LULUCF, known in Latvian as ZIZIMM) is one of the most complex and hottest points in Europe's negotiations on the 2035 climate interim targets. In this context, a decision is being made on a radical policy shift – merging agriculture and forestry into a single regulatory framework and a requirement to achieve full climate neutrality by 2035 precisely “on the land”. Naturally, our country too is caught up in these twists and turns.
The AFOLU concept. Merging agriculture and LULUCF by 2035
The goal of the EU Climate Law and the revised LULUCF Regulation is to merge, from 2031, two large sectors – traditional LULUCF, with the natural CO₂ removals and emissions of forests and soils, and agriculture's non-CO₂ emissions – methane (CH₄) from livestock farming and nitrous oxide (N₂O) from mineral fertilisers. This new, merged sector is called AFOLU (Agriculture, Forestry and Other Land Use). Once again we get a new Europe-wide abbreviation…Europe's goal is to ensure that by 2035 the AFOLU sector across the entire EU is fully climate-neutral. This means that forests and land must remove enough carbon to fully offset all greenhouse gas (GHG) emissions generated by agriculture and ensure a net-zero balance.
The main points of contention and challenges in the negotiations
Since the EU agreed on 5 November 2025 on the overall 2035 target – reducing total net emissions by 66.25-72.5%, huge resistance is evident in the negotiations over the place of LULUCF and agriculture.
To reach the target, forests have to act as giant “carbon sponges”, yet in real life, including in Latvia, climate change – storms, bark beetles, drought and forest fires – is rapidly reducing forests' ability to absorb carbon. A real political clash has emerged, as several member states are demanding greater flexibility and a softening of the targets in the negotiations, pointing out that they cannot be punished for “emissions caused by natural disasters”. That is an absolute truth, because the European Union must respect change and, ultimately, the rights of member states too. Decisions on matters that are often unclear even to the decision-makers themselves, and detached from reality, must not be made automatically in Brussels offices. Brussels constantly “distinguishes itself” in this way.
Unlike energy, agriculture cannot completely abandon biological processes – cows will keep releasing methane no matter what documents are drawn up in Brussels. For agriculture to fit within the 2035 net-zero framework, mineral fertiliser use needs to be dramatically reduced and livestock numbers possibly cut. Given the mass farmer protests seen across Europe in recent years, politicians are afraid to set strict, binding 2035 targets for agriculture, as this would threaten food security and the sector's competitiveness, as well as further undermine the already low level of trust in politicians.
The disputes also concern requirements to rewet drained agricultural soils and peatlands, which is the fastest way to halt huge CO₂ emissions. Farmers and forest owners oppose this, as it excludes this land from active economic use. Many researchers also criticise this approach on the basis of science-based facts.
What does this mean for Latvia?
For Latvia, where forestry and agriculture are pillars of the economy, the 2035 negotiations are existential. Our country is thus turning from a carbon sink into an emitter. Historically, Latvia's forests absorbed a huge volume of CO₂, but due to age structure and the intensity of harvesting, the LULUCF sector in Latvia has in recent years become a source of net emissions. Latvia can expect a huge burden as early as after 2030. If the European Commission, as planned, sets binding national 2035 AFOLU targets, Latvia will have to find a way to dramatically increase forest growth and carbon storage, for example by targeted afforestation of low-value agricultural land.
What is the solution? “Carbon farming”, or Carbon Farming
To get farmers and forest owners to cooperate rather than protest, Europe's 2035 strategy places heavy emphasis on market mechanisms. Politicians in Brussels are very afraid of widespread protests by land managers. A system is being built in which a farmer or forest manager who applies climate-friendly methods, for example, no-till direct seeding, precision fertilisation or tree planting, receives official carbon certificates that can be sold to other companies (for example, industrial giants) wanting to offset their unavoidable emissions, creating a new business model in rural areas. How, and whether, this will work in practice on a large scale in Latvia? We may well find out fairly soon…
Strategic approaches: Latvia and the Nordic countries
In preparing for the European Union's 2035 interim targets and the move towards full climate neutrality for AFOLU – the merged agriculture and LULUCF sector – the strategic approaches of Latvia and the Nordic countries differ sharply. This is shaped both by each country's historical balance of natural resources and by its political readiness to restrict economically important sectors.
Latvia's strategic scenarios – the struggle of shifting from “sponge” to emitter
Latvia's policymakers and scientists are currently working in a situation where the historical baseline scenario no longer holds. Although many disagree, the prevailing view is that, due to age structure and management practices, Latvia's forests are no longer able to naturally sequester the required amount of CO₂, which is why the national strategy is focused on two main directions.
One is the cautious, or economy-preserving, scenario. In this scenario Latvia, in international negotiations, tries to defend its traditional sectors, emphasising that food production and forestry are pillars of the national economy that must not be sacrificed for the rapid achievement of other goals. Latvia's position calls for flexibility, pointing out that the decline in forest carbon removals is driven by natural processes – storms, drought and pests caused by climate change, for which the state should not be punished with financial sanctions. However, there is a lack of a firm stance backing the national interest, which Latvian politicians urgently need to learn from the Finns and the Swedes.
The second is the active bioeconomy and transformation scenario. This direction, integrated into the national plans (NECP), envisages targeted intervention in land management. Instead of reducing harvest volumes in state forests, Latvia plans to increase carbon sequestration through technological improvements – targeted afforestation of low-value agricultural land and scrubland, restoring forest drainage systems to speed up tree growth, and the use of selectively bred planting stock. In agriculture, the main emphasis is placed on so-called precision fertilisation and “carbon farming” certification, trying to motivate farmers financially rather than through bans.
The Nordic countries' strategic scenarios. High technology and readiness for radical reform
The Nordic countries – Finland, Sweden, Denmark and Norway – traditionally position themselves as pioneers of climate policy, though each country's internal scenarios differ depending on its geographical characteristics.
Sweden's and Finland's forest “maximisation” and BECCS scenario
In Sweden, the forest sector still functions as a huge carbon sink, absorbing up to 80% of the country's total emissions. Sweden's strategy in the 2035 context relies on high technology, namely BECCS (Bioenergy with Carbon Capture and Storage). Their scenario envisages continuing to actively use wood in bioenergy, capturing flue-gas CO₂ and injecting it into underground storage sites, for example in the North Sea, thereby achieving negative emissions. Finland, meanwhile, is experiencing a crisis similar to Latvia's, where forest carbon removals have fallen, so its strategic scenario envisages stricter restrictions on the management of peat soils and, possibly, curbing harvesting volumes.
Denmark has very small forest areas, but extremely intensive agriculture, which generates most of the country's emissions. That is why Denmark's strategic scenario is the most aggressive in Europe – it is the first country in the world to agree to introduce a direct carbon tax on livestock farming – per cow or pig. Denmark's scenario for 2035 envisages flooding agricultural land on a massive scale, i.e. rewetting peatlands, and switching to plant-based protein production, clearly signalling that, in the name of climate targets, the structure of food production will be changed by force. The Danes may well be a very law-abiding nation, but such strict rules could rile up even the placid farmers of the Kingdom of Denmark. The slogan “all quiet in the kingdom...” is hardly fitting here.
Norway, meanwhile, has a “low-emission society” scenario. Since Norway is not an EU member state but voluntarily aligns its targets with the European Climate Law, its strategy for 2035 and 2050 does not focus on the classic “net zero”, but on an actual 90-95% reduction in territorial emissions. Norway's scenario envisages maximising the electrification of all agricultural machinery and introducing strict requirements to phase out peat extraction, while using its vast forest areas and financial resources to offset the remaining “pollution”.
Overall, while Latvia's scenarios try to balance economic survival with Brussels' demands and look for ways to technically boost forest productivity, the Nordic countries either use technological megaprojects, i.e. industrial carbon capture, or are prepared for politically painful reforms – such as taxing farmers.
The cost of BECCS technology – 2026 data
Bioenergy with Carbon Capture and Storage (BECCS) is one of the most expensive and, at the same time, most effective technological methods for achieving negative emissions. The costs consist of three main stages: capture at the plant, transport, and long-term underground storage. According to market data and information from international carbon credit platforms such as Puro.earth, the price of certified European BECCS carbon removal credits currently ranges from €300 to €400 per tonne of CO₂. So what is the net cost of the capture process itself? Excluding transport and storage, capturing CO₂ at large biomass plants alone costs €40 to €240 per tonne. The cost range is wide because the process requires a huge additional amount of heat and electricity – the so-called “energy penalty”, which reduces the plant's efficiency. The International Energy Agency (IEA) estimates that as the technology develops and reaches industrial scale after 2030-2035, the long-term potential cost of BECCS could fall to €60-200 per tonne of CO₂. Large-scale projects require subsidies measured in billions. For example, the total lifetime cost to consumers of the UK's Drax BECCS megaproject over a 25-year cycle is estimated at around £31.7 billion
Possibilities for applying the Nordic approach in Latvia
Direct transfer of the Nordic models – BECCS integration in industry, or taxing agriculture – to Latvia runs into serious technological, geological and economic obstacles. However, there are certain avenues for adaptation.
The technological approach – the Swedish and Finnish model
Sweden plans to capture CO₂ at its large pulp and bioenergy plants and store it in depleted North Sea oil fields. Latvia is at a geological dead end. Our country has excellent geological layers for gas storage, for example at Inčukalns, and options for storing liquefied CO₂ there were studied in the past. However, Latvia's climate-neutrality strategy and the latest research indicate that establishing permanent CO₂ storage sites (CCS) on Latvian territory is currently economically unjustified and too inefficient. An alternative could be so-called CCU – carbon capture and utilisation. Since Latvia cannot easily inject CO₂ underground, the country's strategic focus is directed at CCU. This means capturing CO₂ from large emitters, such as SCHWENK Latvija cement plant or large biomass cogeneration stations, and, instead of storing it, converting it into new products – synthetic aviation fuel, or e-fuel, plastics or green methanol, in cooperation with the developing hydrogen ecosystem.
The radical tax approach – the Danish model
Denmark's approach – introducing a direct carbon tax on livestock farming – is currently practically impossible in Latvia for political and social reasons, since it would pose a total threat to competitiveness. Danish agriculture is extremely intensive and high in added value, whereas Latvian farms are financially weaker and more dependent on direct EU payments. Introducing a tax on Latvia's cows would destroy the local dairy and meat sector, shifting production to countries outside Europe, the so-called carbon leakage.
Latvia's alternative is motivation rather than penalties. Instead of copying Denmark's taxes, Latvia is trying to adopt the Nordic experience in “carbon farming”. Namely, using European structural funds to pay farmers for direct seeding, rewetting peatlands or precision fertilisation, thereby creating a voluntary, economically incentivising system.
A hybrid model?
Direct implementation of the Nordic countries' clean technology – BECCS – and tax models in Latvia is not realistic due to the high costs (€300-400/t) and local geological constraints. Latvia's most realistic option is a hybrid model: using captured carbon (CCU) to produce exportable e-fuels, combined with improving natural processes – targeted afforestation of low-value land and improved forest selection.
CCU and CCS projects in Latvian industry
While Latvia's long-term climate strategy does not envisage the creation of a state-scale CCS network by 2030, the private sector has already taken its first steps and launched real CCU – carbon utilisation – and CCS – storage – projects.
One such example is the SCHWENK Latvija megaproject in Brocēni. The Brocēni cement plant has become a pioneer across the whole Baltic region. In 2025 the company successfully launched its first carbon capture test unit, or demo unit, which captures around 2 tonnes of CO₂ a day. A final investment decision is planned for 2027. The goal is to build a full-scale plant by 2030 capable of capturing 800,000 tonnes of CO₂ a year, fully decarbonising cement production. The project's total cost exceeds €500 million, and it has secured co-financing from the EU Innovation Fund. Since Latvia will not store CO₂ underground, SCHWENK Latvija has formed an alliance with Lithuanian and Nordic partners – Akmenės cementas, KN Energies, Mitsui O.S.K. Lines and others. The plan is to transport the captured gas by pipeline or rail to the Port of Klaipėda, from where it will be shipped by specialised vessels to permanent underground storage sites in the North Sea, Norway.
What financial support mechanisms exist for Latvian farmers?
To motivate Latvian farmers to switch to “carbon farming” and help meet the AFOLU sector's targets, two main sources of funding are available – state and European public support, and the private carbon market.
Under the Common Agricultural Policy (CAP), farmers receive direct payments for climate-friendly practices. This includes funding for minimum soil tillage – no-till direct seeding, growing cover crops that fix nitrogen and carbon in the soil, and “precision fertilisation”. Latvia's Rural Support Service administers targeted programmes for farm modernisation. For example, an €8 million programme has been opened that covers the costs of biogas production – capturing methane from manure, solar panels, and improving energy efficiency.
The private carbon credit market as extra profit
Latvian farmers are increasingly getting involved in private programmes, such as the eAgronom carbon programme. This programme has recently received international Verra VCS registration under the strict VM0042 methodology. If a farmer rotates crops, sows cover crops and reduces fuel/mineral fertiliser consumption, CO₂ is locked into the soil. This amount is scientifically measured, and the farmer is issued carbon certificates – credits. These credits are bought on the eAgronom platform by large corporations wanting to offset their footprint. Typically 70% of the credit's value goes directly to the landowner, providing stable additional income – several tens of euros for each tonne of CO₂ sequestered – on top of standard farm income.
What technologies measure carbon in agricultural soil?
To give buyers in the voluntary carbon market confidence that one tonne of CO₂ really is locked into the soil, climate technology companies such as eAgronom, working with international partners Regrow and South Pole, use a combined approach known as the MRV (Measurement, Reporting and Verification) system. Contrary to the myth that everything can be determined from satellites, the basis is still physical soil probing. Special GPS-equipped machines take soil samples in the field at a set depth – usually down to 30 cm. In the laboratory, using so-called dry combustion, the total amount of soil organic carbon (SOC) is precisely determined. Since digging up soil across every field every year is too expensive, the physical sample data is fed into a complex computer program – a biochemical model. This model simulates the activity of soil microorganisms, plant root exudates and carbon cycling depending on soil type – clay, sand – and moisture level. Satellites – for example, the EU Sentinel – continuously scan Latvia's fields. The technology measures plant green mass – the NDVI index, to determine whether the farmer has really sown cover crops, exactly when the field was worked, and whether straw residue was left on it after harvest. The farmer records every tractor pass, fuel consumed and precise fertiliser quantities on a digital map. Algorithms calculate the balance – whether the carbon sequestered in the soil exceeds the amount of exhaust emitted by the tractor.
What requirements must forest owners in Latvia meet?
In forest carbon credit programmes offered in Latvia, such as Arbonics or Ecobase/SIA Palus, forest owners can earn additional income – on average, forest in Latvia sequesters around 6 tonnes of CO₂ per hectare per year. To qualify for international certification schemes, such as Verra, several strict conditions must be met.
The principle of additionality – this is the most important rule. Credits cannot be earned simply because you own a forest that is already growing naturally. The owner must prove that they are carrying out additional activities that increase CO₂ removal above the normal level.
Naturally, a number of conditions must be observed:
Afforestation – planting new forest on agricultural or scrubland. An important requirement – this land must not have been registered as forest for the past 25 years.
Improved forest management – extending the harvesting rotation cycle, for example felling trees 10-15 years later than the legally set minimum age, moving away from clear-cutting in favour of selective felling, or replacing low-value stands with higher-value conifers.
Permanence and the commitment period – a forest is a long-term project. The owner must give notice of planned fellings. If the forest is hit by fire or bark beetles, credits are not lost, because the system uses a “buffer pool” – a portion of credits is held back as insurance against natural disasters.
Minimum area limits – to make administrative and satellite measurement costs worthwhile, companies usually set a minimum area. For afforestation projects in Latvia, this is at least 1-5 hectares of contiguous land.
Documentation and data transparency – forest owners must submit up-to-date State Forest Service (VMD) database files once a year, so that verifiers can use satellite data and analysis to confirm the real increase in timber stock.
These mechanisms ensure that both farmers and forest owners in Latvia are integrated into Europe's new climate-neutrality system, receiving real money from private capital that may help the country meet the shared targets Brussels requires of us.