Defra to buy carbon credits to incentivise tree planting

Farmers and landowners are being promised a long-term income stream to encourage them to create new woodlands – highlighting the government’s new strategy of offering ‘public money for public goods’.

The new £50m Woodland Carbon Guarantee scheme is being introduced to boost tree-planting rates in England.

The government is committed to planting 11m trees by 2022, as part of its effort to hit net zero carbon emissions by 2050 to tackle climate change.

See also: Plan unveiled to encourage farmers to plant more trees 

The new scheme will offer farmers the option to ‘sell’ the carbon dioxide they capture by growing trees in the form of verified carbon credits, called Woodland Carbon Units (WCUs), to the government for a guaranteed price every five or 10 years up to 2055/56.

Ministers are hoping that by giving land managers an additional long-term income from woodland it will encourage more people to invest in carbon sequestration – the process by which trees lock up and store carbon from the atmosphere.

Guaranteed price

Although it is already possible to sell carbon credits from woodland, Defra says the open market price for domestic forests is low.

This means that woodland creation projects aimed at long-term carbon sequestration are often unviable, particularly when compared to other land uses and in areas of higher land value.

It claims the Woodland Carbon Guarantee will provide landowners with a guaranteed price for the carbon credits, set at a level required to make the investment worthwhile.

Pricing information

According to the Forestry Commission, the price paid for each WCU will be set through an online reverse auction.

A series of auctions will take place every six months for up to five years, beginning in early 2020.

To bid in the auction, land managers will need to calculate how much money they need (per tonne of carbon dioxide) to make their project financially viable and worthwhile.

If their auction bid is successful, the government will offer a conditional 30-35-year contract to buy the carbon dioxide, with the price agreed at auction being index-linked to protect against inflation.

Land managers will be able to apply for grant support to establish the woodland through existing woodland creation grant schemes.

To apply for the Woodland Carbon Guarantee, land managers will need to register their projects with the Woodland Carbon Code – the voluntary standard for UK woodland creation projects where claims are made about the carbon dioxide they sequester.