Cysteine protease required for the cytoplasm to vacuole transport (Cvt) and autophagy. Is not essential for autophagy development under normal conditions but is required for a proper autophagic response under stressful conditions such as prolonged starvation. Cleaves the C-terminal amino acid of ATG8 family proteins MAP1LC3 and GABARAPL2, to reveal a C-terminal glycine. Exposure of the glycine at the C-terminus is essential for ATG8 proteins conjugation to phosphatidylethanolamine (PE) and insertion to membranes, which is necessary for autophagy. Has also an activity of delipidating enzyme for the PE-conjugated forms.