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Could your next venture be “Carbon Farming”?

Fri 18 June 2021

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?

Be Prepared:

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.

  • Countryside Stewardship Scheme - the current application window for a 5-year mid-tier scheme closes 30th July.  
  • The first carbon focused grant scheme is now open to applications. Please see details below.

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?

  • 100% of standard capital costs for tree planting (capped at £8,500/Ha)
  • An annual maintenance payment of £200/Ha for 10 years

Top-up contributions (if eligible):

  • Nature and species recovery – between £1,100/ha and £2,800/ha available where woodland creation will help woodland-dependent priority species to recover
  • Tree planting near watercourses and rivers (riparian buffers) – £1,600/ha available for the creation of native broadleaved woodland alongside watercourses
  • Reduced flood risk - £500/ha available where woodland creation can help reduce the risk of flooding
  • Improved public access - £2,200/ha available where woodland creation will provide long-term permissive access for the public to enjoy
  • Planting close to settlements - £500/ha
  • Improved water quality - £400/ha available for woodlands reducing pollutants from entering watercourses. 


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:

  • Similar to above, the England Peat Action Plan was released in May 2021 with funding through the Nature for Climate Fund to manage, protect and restore the UK’s peatlands.
  • The Sustainable Farming Incentive – Applications for the first round are expected to open later this month for those that expressed an initial interest, with further rounds in 2022 open to all BPS applicants. The scheme will centre around a set of standards which will pay farmers to manage land in an environmentally sustainable way; more information can be found here; Annex 1: Payment overview.
  • Local Nature Recovery – Trials in 2022 to launch in 2024 - Payment for actions that support local nature recovery and meet local environmental priorities. Encouraging the collaboration between farmers to work together to improve their local environment.
  • Landscape Recovery schemes – Trials in 2022 to launch in 2024 - Support for the restoration and enhancement of natural ecosystems through land use change projects delivered over the long term.  These projects will include the creation of woodland, restoring wetlands and peatlands, enhancing bogs, fens or saltmarshes or a mosaic of different habitats. 


For more information please contact our Professional Services team.

 

 

 

 

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