Land use in forestry, agriculture, energy and recreation in Latvia will be influenced not only by the EU Green Deal but also by environmental policy, related decisions made in Brussels and Latvia, and the relationship between the public and landowners.
These insights were shared at the 7th international conference of the Forest Certification Council of Latvia, entitled “Sustainability of Land Use Sectors – In the Context of European Environmental Policy Requirements and Geopolitical Realities”.
The energy resource issue
“Key questions are: how do we use the land; how efficiently do we do it; what do we produce on it; and what is its potential? These are important, especially in a situation where there is still land in Latvia that produces nothing, while at the same time there is a struggle for land as a means of production,” emphasised Arvīds Ozols, Director of the Forest Department at the Ministry of Agriculture. He reminded attendees that there is an opportunity to use fertile, unmanaged land for agricultural purposes, while using poor-quality soils for forestry. There is also a third option: the consumer – ecosystem services – but these do not yet have a market price, and unfortunately, it is a matter of compensation.
In the current geopolitical climate, one of the most pressing topics is energy. Total energy consumption in Latvia in 2021 was 193 petajoules (PJ), which is 4.9% more than in 2020. “In the structure of total energy consumption, the share of renewable energy sources (RES) has continued to increase in recent years. Over ten years (2012–2021), the share of natural gas consumption has decreased by 5.7%; in 2021, it was 21%,” explained A. Ozols. He pointed out that RES consumption in total energy use has increased by 14.9% over the ten-year period (2012–2021), reaching 41.3% in 2021. “That is welcome, but now this transition will have to be carried out much more rapidly,” A. Ozols emphasised.
Last year, 43.7 PJ of wood pellets were exported, which is 3.3 PJ or 8.3% more than in 2020. “The dilemma is not so much one of availability, but the fact that Latvia is now at European price levels,” A. Ozols explains. He drew attention to the fact that the highest energy consumption in 2021 was in the wood products manufacturing sector – 22.2 PJ, or 54% of final energy consumption in industry.
“The sector is a major player, and half of the problems and their solutions are (will be) on the sector's shoulders,” concluded A. Ozols. He noted that as total RES consumption increases, Latvia is approaching the general target for promoting RES use – to reach a 50% share of energy produced from RES in gross final energy consumption by 2030.
“We are close to meeting the target, which will be further facilitated by the rapid rise in gas prices,” said A. Ozols. Latvia has the third-highest share of RES in final energy consumption in the EU; in 2020 it was 42.13%, even though the EU average was only 22.09%. However, it should be noted that Latvia must ensure that 7% of energy consumed in transport is renewable by 2030. In 2020, the share of RES in transport in Latvia was 6.73%, while the EU average was 10.22%. “It is a challenge for the forest sector because, for example, factories are already operating in Finland that produce fuel components from wood by-products; for instance, they produce so-called wood oil from sawdust, which is sold to oil refineries,” informs A. Ozols.
Risks of draft directives
“For forestry, together with agriculture, to become a climate-neutral segment by 2035, the question is on which land we will do it. Scientists, together with the sectors, will have to find solutions,” A. Ozols emphasised. In his opinion, this must be based on reliable information about what we have in Latvia: based on this information, scientifically based analysis and forecasting, and action scenarios based on them (which will then be a political choice) regarding what is beneficial for Latvia.
“Every hectare of Latvian land must produce a product or a service,” explains Arvīds Ozols. A. Ozols mentions several proposed changes to regulations as current and future challenges – regarding wood (deforestation), taxonomy, nature restoration, and renewable energy sources. A. Ozols explained that the essence of the new deforestation regulation is that the EU will not buy goods that originate or are produced from deforested areas. “There are new definitions that are starting to worry Latvia, such as other wooded land, which by definition will mean areas covered with shrubs,” says A. Ozols. He also points out that there is no clear definition of what is meant by forest degradation.
“There is no unified viewpoint among EU member states, because the 'old' and southern EU countries want the maximum, while the Nordic countries and the Baltics want to maintain a cooler perspective regarding wood products,” says A. Ozols. He admits that it is proposed to create completely new satellite monitoring and surveillance systems. In reality, these could be set up within the next 5–10 years.
“The question is – why are new ones needed and can we not use existing systems, especially since one already operates in Latvia – the State Forest Register with forest inventory data, the felling licence (which Scandinavia does not have), which is confirmation that it is not deforestation, and also the nature data system Ozols,” says A. Ozols, evaluating the situation. He points out that in the context of the Renewable Energy Directive, the forest biomass fuel raw materials obtained in Latvia comply with sustainability criteria; therefore, there is reason to believe that all forest biomass fuel obtained in Latvia is sourced sustainably. It is proposed that member states must not support the use of sawlogs, veneer logs, stumps and roots for energy production.
“It is a risky point in the discussions that primary biomass cannot be used for energy production, which is exactly why it is important to review the definition of primary forest biomass and prevent the proposed restrictions regarding it in the emerging directive, because otherwise branch chips, and even firewood, will not be considered a sustainable resource, unlike sawdust and chips obtained, for example, in the sawn timber production process,” A. Ozols explained.
A proposal has been prepared for a nature restoration regulation, under which member states will have to implement effective, area-restoration-based measures that will collectively cover at least 20% of EU land and sea areas by 2030, and all ecosystems in need of restoration by 2050. “The question is – to what state should it be restored, given that the Second World War ended 70 years ago?” says A. Ozols. Every EU member state will have to prepare a nature restoration plan. Unfortunately, Latvia has indicated in its Habitat Assessment Report (which cannot be delegated to non-governmental organisations for preparation) that all forest habitat types are in poor condition. He predicts that the areas available for forestry production will decrease.
A decision by Members of the European Parliament partially allows biomass energy, including primary wood biomass, to continue to be counted towards renewable energy targets. According to the proposal, based on the latest available data, the share of energy from solid biomass fuels derived from primary wood biomass must not exceed the average share of energy consumption of such fuel in 2017–2022. MEPs also adopted amendments calling for the gradual reduction of the share of primary wood biomass considered to be renewable energy. 550 scientists have sent a letter to European Union leaders calling for the implementation of climate-smart forestry to correct the mistakes that have been made.
The owner must be interested
Aiga Grasmane, Executive Director of the Latvian Forest Owners' Association, pointed out that there are very many challenges outlined for forest owners by European structures. An interesting development is the European network for nature conservation on private land, which has created cooperation between nature conservation specialists and landowners. “In Europe, as in Latvia, these two parallel movements never meet, so Europe realised that by working separately, it is impossible to achieve the set biodiversity goals,” explained A. Grasmane. She admits that there are various tools that would stimulate landowners themselves to pay more attention to nature conservation; such tools work elsewhere and could also be introduced in Latvia. One such is an income tax discount if a property or part of it is set aside for nature conservation. The calculation can be based on lost income or on expenses from nature management measures, reducing the tax rate on income arising from the implementation of nature management measures. A real estate tax discount already exists in Latvia if business activity on the property is restricted for the purposes of nature conservation. Abroad, a discount on inheritance tax is applied to property that has been set aside for nature conservation or whose economic use is restricted in the future.
Another solution is payments to landowners from the budget, as well as various payments – grants and funds administered by environmental non-governmental organisations. There is also partnership between landowners and companies, namely, companies paying insurance premiums for high-pollution risk measures or compensation for damages caused. Landowners can apply for this funding to carry out nature conservation measures. Likewise, nature conservation measures carried out by a landowner can be a compensatory measure to offset the negative impact of a development project. At the same time, A. Grasmane had a question as to whether there would be enough land for such compensatory measures. As another solution, there are nature conservation brands and certification – a market access instrument – and financing for land acquisition for nature conservation. The USA has a safe harbour law – a condition that protects the landowner from restrictions if natural values on the property increase as a result of their actions.
“The owner concludes an agreement with a state institution that they will carry out measures on their land that increase or promote biodiversity. Then no one will come and impose a micro-reserve. If such a system existed in Latvia, then there would also be a completely different attitude towards nature diversity,” A. Grasmane emphasised.
Untapped opportunities
Andrejs Domkins, Director of the Latvian State Institute of Wood Chemistry, pointed out that the Green Deal is aimed at reducing the impact of consumption on the climate, such as that caused by the felling of rainforests; essentially, the EU will be denied access to those resources obtained from such deforested areas, and since Latvia has sustainably managed forests, there are great advantages. The EU Forest Strategy will promote a bioeconomy of all sustainable forest resources in such a way that it works in synergy with the EU's most ambitious climate and biodiversity ambitions. The most important role of wood products, according to A. Domkins, is to help the construction sector transform from a source of greenhouse gas emissions into a carbon sink, as outlined in the Renovation Wave strategy and the New European Bauhaus initiative. “There are broad opportunities, because the share of wood products in the building materials market is less than 3%; they currently make up a negligible part of building materials in Europe, where the supply is still dominated by energy-intensive, fossil-fuel-based materials,” A. Domkins pointed out.
The European Commission will develop a roadmap for 2050 on how to reduce carbon emissions throughout the entire life cycle of buildings, as well as develop a standard methodology that will allow the climate benefits of wood building products and other building materials to be expressed numerically. “To promote the use of wood products, the EU must also take measures on the demand side, namely, to fight against false notions about fire safety and insufficient durability, and to highlight the advantages of wood products in aspects such as reducing pollution and energy consumption during the construction, operation and demolition phases,” explained A. Domkins.