Environmental markets

The Woodland Carbon Guarantee is a £50 million scheme that aims to help accelerate woodland planting rates and develop the domestic market for woodland carbon for the permanent removal of carbon dioxide from the atmosphere. It is an objective in the 25 Year Environment Plan and was announced in the autumn 2018 Budget. The Woodland Carbon Guarantee provides the option to sell captured carbon in the form of verified carbon credits, called Woodland Carbon Units (WCU), to the government for a guaranteed price every 5 or 10 years up to 2055/56. This provides an additional long-term income from woodlands. The credits can also be sold on the open market rather than to the government. WCUs are generated through verification checks carried out under the Woodland Carbon Code, which assess how the woodland has grown and therefore how much carbon dioxide has been captured.

Our research findings and advice were “instrumental” in shaping the design of the Forestry Commission’s Woodland Carbon Guarantee scheme. According to Pat Snowdon, Scottish Forestry, we helped overcome challenges with designing an auction when the contract is an option to sell, rather than an obligation to sell, and in trying to ensure diversified woodland project types (i.e. offer more weight to carbon coming from native species mix woodland).

To date, the scheme has delivered 2,750 hectares of new woodland and encouraged a diversification in woodland type and tree species. An estimated 2.41m tonnes of carbon sequestration has been delivered by the scheme to date which is helping the UK tackle climate change and deliver on its Net Zero targets.  The benefit-to-cost ratio of the scheme was calculated to be in excess of 3:1, meaning the social value of carbon sequestration was 3 times greater than the price paid to fund the scheme. This delivered a cost saving of one third of the government’s standard price estimates for removing carbon, valued at £12.4m to the public purse. Pat Snowdon explained that this was considered this “a very successful outcome” which had “impressed” H.M. Treasury.