Woodland Carbon Update – August 2022
August 2022 Woodland Carbon Update, including more information about the changes to additionality rules, and future trends in the market.Read more
Land use is changing in the UK and the services rendered by our rural landscape will expand dramatically in coming years. This means that the role of farmers, as landowners, will expand from simply food producers to also encourage a role as environmental caretakers of our countryside.
The evolution of the market for Natural Capital and the policy discussions surrounding the government’s Environmental Land Management System will incentivise farmers to manage their land both to produce food and to generate ecological benefits.
The Scottish Farmer highlighted an important aspect of these changing practices on 20th July in an article titled: “The benefits of farm diversification into agroforestry.” It outlined the Scottish government’s ambitious plans to raise tree cover from 18% to 21% by 2050, the financial grants available to farmers for woodland creation and, most interestingly, the new income streams provided by woodlands, especially from woodland carbon.
The article offered a highly conservative estimate for carbon-related income, assuming just 130 tons CO2e per hectare and a price for woodland-generated carbon units of just £3 per ton. We believe a patch of commercial woodland, if designed, planted and managed effectively could deliver approximately 200 tons per hectare over 40 years while mixed broadleaves, with a project duration of 100 years, could store 500 tons/hectare.
CarbonStore would also secure a significantly higher price than just £3 per ton. This is due to both the competitive nature of our specific service and trends in the wider market. Woodland-generated carbon prices have been rising over the past 2-3 years.
In populated areas of southern England, farmers might achieve £15 per ton (or more). In less populated parts of lowland Scotland, prices range around £10 per ton, enough to generate an additional £2,000 per hectare, even on commercial forestry projects.
Farmers’ potential income stream is further improved by the nature of the service which we, at CarbonStore, offer. Unlike our competitors, we are incentivised to maximise the price which farmers receive for their carbon units. Moreover, if a farmer contracts Tilhill to undertake the planting and establishment, we will offer our carbon-related service at zero cost.
On a 20-hectare scheme, earning 300 tons per hectare and generating 6,000 woodland-generated carbon units, each worth £10, we could be saving farmers as much as £10,000-£12,000. This means Tilhill and CarbonStore are, together, offering an end-to-end package of woodland creation and carbon marketing which not only leads the forestry industry in the quality of our work but does so for industry-leading value. The rural economy is changing and we must all prepare for that new landscape. This type of innovative new service from Tilhill and CarbonStore allows our clients to stay make the most of these emerging opportunities while staying at the forefront of these changes.