Carbon Leak - Carbon leakage effects

Background and Objective

The political relevance of the project is to analyze the planning and implementation of climate protection measures in the LULUCF and agriculture sector in Germany and Europe and their effects on the agricultural and timber markets. We further investigate related impacts such as leakage effects on emissions  for the LULUCF and agriculture sector in other countries induced through international trade activities.
The final result is an impact assessment of the net effect of German and European climate protection policy in the LULUCF and agriculture sector from a global perspective with a particular focus on leakage effects on emission. Although the focus is on effects of climate protection, socio-economic and ecological effects are as well considered. In two case study countries (Brazil, Indonesia) of production relocation, policy analyses and spatially-explicit modeling will be used to further reveal which goal conflicts of land use can be expected at the local-level and how related international policy goals can be affected by that too.
The main focus is on climate protection (UNFCCC and REDD+ measures, especially in the LULUCF and agriculture sector), forest protection in general (e.g., deforestation-free supply chains) and the Sustainable Development Goals (SDG).

Main project objectives:

• Quantification of the net climate protection effect of the targets of the Federal Climate Protection Act 2021 (KSG 2021) for the LULUCF and agriculture ector in Germany and corresponding regulations for Europe and the effects on climate protection from a global perspective.
• Estimation of production and trade changes of climate protection measures in agricultural and forestry production.
• Assessment of the effects of proposed immediate measures for CO₂ pricing on climate protection from a global perspective.
• Quantification of ecological and socio-economic sustainability effects in Germany and elsewhere resulting from the Climate Protection Act.
• Derivation of recommendations for international forest and land use policy, based on policy analyses considering in particular coherence of various national and international climate policy objectives.

Target Group

Policy, science, relevant stakeholders at regional and national level, in particular in Brazil and Indonesia, and similar areas of transition 

Approach

The project is being carried out in close cooperation between the Thünen Institute of Forestry and the Thünen Institute of Market Analysis and is structured into the following subprojects (TPs):

• WP 1: Natural and economic assessment of the reduction of timber harvesting in Germany, effects of climate protection measures in forests on timber harvesting and forest carbon stocks in Germany
• WP 2: Coordination
• WP 3: Scenario development
• WP 4: Modeling the impact of climate protection measures on shifts in the production and trade of raw wood and semi-finished wood products
• WP 5: Modeling the impact of environmental and climate measures on shifts in production and trade in the agricultural sector
• WP 6: Modeling the effect of accompanying measures, e.g., CO₂ pricing
• WP 7: Regional modeling of LULUCF sink potentials for two case study countries
• WP 8: Assessment of potential sustainability effects
• WP 9: Coherence of international climate policy coherence including two national case studies, Brazil and Indonesia

Our Research Questions

• What impact will climate measures under the German Climate Protection Act and the EU's Common Agricultural Policy (e.g. Farm-to-Fork-Strategy) have on agricultural and forestry production in Germany and the EU?
  To what extent does the reduced supply in Germany and in the EU as a whole lead to a shift in timber harvesting and agricultural production to other countries?
• For this purpose, different scenarios for the implementation of climate protection measures are tested, especially in the form of Nationally Determined Contributions (NDCs) for LULUCF and considering interactions between agriculture and forestry?
• What impact does the relocation of agricultural and timber production from the EU have on the emissions balance of agricultural and forestry land in other countries?
• The processed agricultural and timber products as well as potential subsequent forest degradation and deforestation are considered in the various scenarios. As a result, do German or European climate protection measures lead to less climate protection (leakage) from a global perspective?
• What effect would a carbon price in Germany or the EU have on energy wood imports and on wood used for material purposes from climate-damaging forestry, as proposed for the 2022 Climate Action Program?
• What impact will the projected changes in agricultural and timber production have on sustainability effects, e.g. income and employment, and on biodiversity in the countries concerned?
• To what extent can expected changes in production and trade conditions be implemented under the given political framework conditions in partner countries?
  Will these lead to conflicts of interest that will probably make it more difficult to implement the climate targets in these countries?