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Hannah Lukins of Stags Professional Services team discusses the Carbon Farming Initiative
“Carbon Farming” is set to be a land management enterprise alongside livestock, arable and forestry. In time, this may well exceed the profitability of traditional ventures as the government strives to reach net zero emissions by 2050.
Social and legislative pressure is putting the climate crisis in every conversation; the government is committed to reaching its target and agriculture, criticised for its emissions, is a huge part of the global solution.
Agriculture is the ONE sector that has the ability to go beyond net zero and sequester CO2. The UK will require one-fifth of the nation’s farmland to be transformed over the next 30 years into landscapes designed to store carbon and cut emissions to meet its target.
Now is the time to seriously evaluate your business emissions, its natural assets and, as the Basic Payment Scheme is brought to an end, to learn how emerging alternative income streams can help to plug the gap.
What can I do now?
This is a new area of work in which Stags is becoming increasingly involved. We can provide advice on emerging opportunities, challenges and carbon audits. Call Stags to register your interest in the topic and we will keep you up to date with information as it is released.
Apply for Grants:
Schemes are now being designed to lead into new future environmental schemes. Agreement holders will be able to break their agreements without penalty once they have secured a place in a new ELM scheme. Contact your local Stags Professional now if you would like further advice on applying.
The England Trees Action Plan 2021 to 2024, released in May 2021, has announced its first new flagship grant scheme “The England Woodland Creation Offer”. Supporting the creation woodland while providing greater financial incentives for landowners and farmers to plant and manage trees.
What will be funded?
Top-up contributions (if eligible):
APPLICATION NOW OPEN.
Can I sell the carbon?
On top of the above scheme, carbon captured can be sold!
By registering with the Woodland Carbon Code, carbon units (one tonne of CO2e) stored by the woodland will be independently calculated. Woodland Carbon Units can be sold on the private market to companies working towards carbon neutrality or through a reverse auction held by the government’s Woodland Carbon Guarantee scheme. If an auction bid is accepted, landowners will be granted a conditional 30 to 35-year contract to sell the carbon dioxide captured by their woodland, with the price agreed at an auction index linked to protect against inflation.
Within the UK, Woodland Carbon Units are valued around £20 /tCO2e; to put it into perspective a new native woodland can capture 300-400 tonnes of CO2 equivalent per hectare (tCO2e /ha) by year 50, and 400-500 tCO2e /ha by year 100.
Currently, profits arising from the commercial occupation of woodlands are not chargeable to Income Tax & Corporation Tax and the value attributable to trees is exempt from Capital Gains Tax. The sale of voluntary carbon credits is not currently chargeable to VAT. However, you should always seek professional independent advice based on their specific circumstances before making any long-term investment decisions.
What Else is Coming?
We expect further details on the following grant funding schemes to be released very soon and look forward to discussing these options with our clients:
For more information please contact our Professional Services team.