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Vulcan Insight | Fighting deforestation: Making the European Green Deal a reality

On Wednesday, the European Commission unveiled three new initiatives it views as necessary to making its European Green Deal a “reality”. Included in its proposals are new rules aimed at curbing EU-driven deforestation. Speaking in relation to these proposals Executive Vice-President of the European Commission, Frans Timmermans emphasised the need for Europe to “take responsibility to act at home as well as abroad”, adding the Commission’s deforestation regulation “answers citizens’ calls to minimise the European contribution to deforestation”.

Similarly, Commissioner for the Environment, Oceans and Fisheries, Virginijus Sinkevičius stressed Europe’s responsibility highlighting our obligation to “stop exporting pollution and supporting deforestation ourselves”. From 1990 to 2020, the world lost 420 million hectares of forest. An area larger than the European Union itself. These new regulations aim to ensure products bought, used and consumed by EU citizens on the EU market will not contribute further to global deforestation and forest degradation. To accomplish this, the new regulation will make it illegal to sell or export any of the key commodities the European Commission deems to be linked to agricultural expansion, the main driver of deforestation. Among the commodities listed include soy, beef, palm oil, wood, cocoa and coffee, and other derived products. The Commission has pushed back against the inclusion of rubber.

Commissioner Sinkevičius has stated that the commodity list is likely to “be extended over time”. A deforestation-free label will be awarded to the commodities that are deemed not to have been produced on forest land that had been converted to agricultural use post-December 31st, 2021. Meanwhile, in practice, companies themselves will be obligated to police their supply chains, submit due diligence statements, and help prevent deforestation. Small and medium-sized companies, for example, will need to “collect a record of their suppliers and customers, keep that information for at least five years, and make such information available to competent authorities upon request”.

EU countries are being granted the responsibility for implementation and setting penalties. Punishments are likely to include measures such as fines, seizure of offending commodities, confiscation of revenues made from trade of offending commodities, temporary exclusion from public procurement processes. Compliance will be measured and verified primarily through the use of satellite data and imagery.

For exporters, products from high-deforestation countries will face increased scrutiny entering the EU market and producers will also be required to follow local rules and laws. To fight against exposure to loopholes, the Commission will introduce a benchmarking system to establish if exporters are at a high, standard, or low risk of deforestation. The Commission will weigh the rate of deforestation against the rate of expansion of agricultural land for the commodities targeted. The benchmarks created will also consider agreements exporting countries have in place with the EU to address deforestation, exporting countries’ contribution to Paris climate agreement pledges related to emissions and removals from forests and land use, as well as the laws of the countries themselves to address deforestation.

While the draft is to be approved by the European Parliament and EU member states, the proposal was broadly welcomed by Pascal Canfin, chair of the European Parliament’s environment committee. The Commission’s proposals broadly follow the recommendations set out in the Parliament report in 2020. Despite this, however, Canfin noted that the Parliament may push for an earlier cut-off point than the December 31st, 2021 date outlined in the current proposals. Debate will also likely occur regarding transition periods for how long producers have to conform to the new rules, in addition to debates over broadening the regulation to guarantee the regulatory clampdown on deforestation does not shift environmental damage to other ecosystems such as savannahs and peatlands.

Regardless, this regulation appears to be a step in the right direction in the fight against deforestation. Moreover, the regulation will be assessed after two years to identify whether or not its scope must be extended while there are plans for the regulations to be reviewed every five years thereafter. There is hope that this regulation will inspire similar measures to be adopted by the U.S, as we seek to end deforestation.

Compliments of Vulcan Consulting – a member of the EACCNY.