The price you pay for a product is determined by the value you attach to it. For the seller of that same product, the price which they receive should broadly match the one paid, minus the transaction costs. In the woodland carbon market, those transaction costs are limited.
Indeed, they are akin to those of an estate agent. A legal contract is necessary between the buyer and the seller. There are costs associated with establishing the forum for marketing. It also takes time to match a buyer with a seller, establishing relationships on both sides and ensuring they agree with the terms of the agreement.
This simple system unravels when there are a limited number of ways in which buyers and sellers can engage with each other. Unfortunately, the woodland carbon market, due to its infancy, has been a perfect example of just such a market.
Until CarbonStore’s launch yesterday, the choice of operators in the woodland carbon market was sparse across the UK. Moreover, it would seem that a substantial gap exists in some cases between the price paid by companies and that received by landowners
The size of that gap became clear from two recent conversations. Within the last few weeks, a company based in the south east has been quoted £10 per PIU. Meantime, a landowner has been offered just £5 per PIU. These two quotes suggest a mark-up of 100%. In reality, it is likely to be even higher (please see part 2 tomorrow).
CarbonStore wants to rectify this problem so that companies pay and landowners receive a fair price for woodland carbon. Our website proves this. We market our carbon-related woodland schemes fairly and openly and we charge only a minor commission for arranging the transactions between landowners and companies.
Only once the woodland carbon market functions properly can the Woodland Carbon Code have a realistic chance of incentivising landowners to plant more trees. And it is only by planting trees that we can all appreciate the benefits of more woodland coverage across the UK. It is strongly in landowners’ and companies’ interests to use CarbonStore’s website to buy or sell their woodland-generated carbon units.
David McCulloch, Head of CarbonStore