The UK forest carbon market - a win-win-win.... - February 2014

Despite the many benefits UK woodlands bring to the UK – including flood amelioration, carbon dioxide sequestration, improvements in health and well-being, wildlife habitat, and river quality improvement - one thing stands in the way of much more substantial private sector carbon investment in the green infrastructure of our country: the non-offset status of Woodland Carbon Code credits.

This is brought about by the inclusion of forestry carbon sequestration in the UK’s Kyoto commitments and accounting, which creates the ‘double-counting’ scenario of emissions reductions being used by both the government and the carbon investor.  It forces companies making a valuable (and voluntary) contribution to the nation’s fabric to use nuanced and convoluted language which doesn’t appropriately demonstrate the impact of their investments.

A 2009 Forestry Commission report, endorsed by the government of the day, recognised that an effective tripling of the rate of planting of all types of woodland across the UK could lead to emissions abatement of around 10% of the national footprint by the 2050s. Unfortunately we are nowhere near achieving that aspiration – an increase from around 8,000 ha per annum to 23,000 ha per annum – but access to the voluntary carbon market could provide much needed extra funding.

That win – win – win – win scenario…

With carbon emission reduction targets now hard-wired into UK law and government policy, and assuming we all accept that woods are good for us, it could make sense to make it possible for businesses to invest unequivocally in UK woodland creation – without the contorted language.  There is a solution to this.

Thanks to the rigour of the Woodland Carbon Code (WCC) it would be possible for the UK government to cancel its own Kyoto units against certified new woodlands – safe in the knowledge that they were genuinely additional and the carbon estimates were sound and conservative. At a stroke this measure would allow UK business to report woodland creation as a full grade carbon offset – conferring carbon neutrality and meeting UK government environmental reporting guidance.

Sounds simple, but why would a government cancel its Kyoto units when there could be a call for them in meeting future targets, and a financial burden if it were short of them? The answer is that the cancellation would actually lead to a net increase in emissions reductions, with the added (and not inconsiderable) bonuses of economic benefit, employment creation, flood mitigation, quality of life improvement, habitat creation, river protection and timber supply chain security.

If we were to persuade the government to do this, and we were able hit our national woodland creation aspirations, what would the sums look like?

Carbon benefit

The creation of an extra 15,000 ha per annum would lead to, on average, the issuance of 4.5mt Woodland Carbon Code ‘forward’ credits per annum, which in turn would lead to the cancellation of 4.5mt Kyoto units (AAUs) per annum – less than 1% of the UK total. Because the Woodland Carbon Code measurement methodology is conservative this amount of woodland creation would lead to an actual carbon sequestration figure of between 5.6mt and 7.5mt per annum – all deposited in the UK government's Kyoto Land Use, Land Use Change and Forestry (LULUCF) pot.

These figures don’t include harvested wood products however, which also generate an emissions reductions pool for the carbon balance sheet of the nation that grew the timber. This could amount to a further 3.0mt per annum of carbon gain (though this has a shelf life, it’s still an important part of reducing emissions).

Economic benefit

Our crude estimates suggest that 15,000 ha of new planting per annum would be responsible for creating over 8,000 jobs in the rural economy, as well as protecting a further 16,000 jobs and maintaining necessary investor confidence in the long term health of the timber harvesting, haulage and processing sectors.

UK carbon offset projects could also offer a possibility for export – meaning a (small) positive contribution to the balance of trade.

Finally – an increase in UK planting offers improved supply chain security for a material that will become increasingly important. In 2011 the UK was the third largest net importer of timber globally, behind China and Japan, and in 2012 around 80% of all timber consumed in the UK was imported.

Environmental and social benefits

The estimation of environmental benefits resulting from new woodlands is currently a key theme in much UK government thinking, such as the National Ecosystem Assessment and the Natural Capital Committee. Benefits would include:

Riverbank planting
The 2010 UK National Ecosystem Assessment (NEA) estimates that climate change could double the number of households at serious risk of flooding by 2060, and that without mitigation the costs of damage to households will increase from £1.4 billion in 2000 to at least £20.2 billion in 2080. With mitigation it is estimated that this figure would be reduced significantly to something in the range £2.2 billion to £6.7 billion. These figures do not include flooding losses incurred by agriculture. There is no doubt that woodlands planted in the right locations are a cost-effective tool for long term flood amelioration.

The NEA also reports that the pollution remediation effects of woodlands are likely to be substantial, and studies show that riparian woodlands achieve almost complete prevention of diffuse agricultural pollution into rivers.  

At the time of writing, 63 new woodlands covering 2,377 net planted hectares have been validated under the WCC. These have resulted in 115 miles of river and stream bank protection, and many have been designed with such benefits in mind.

Habitat creation
To date WCC validated projects have created 23 miles of new adjoining woodland boundary for the benefit of wildlife mobility, and initiated 1,649 net ha of UK Biodiversity Action Plan Priority Woodland Habitats.  

Social benefit
We believe the greatest social benefit is the creation of rural jobs. However all new woods created under the Woodland Carbon Code offer public access and many provide opportunities for education and community involvement.

In addition to this 2010 and 2012 reports by the Forestry Commission highlight several studies that demonstrate the health benefits of green space, particularly woodlands, including reduced health inequality, improvements in levels of physical activity, improved mental well-being, and increases in life expectancy, all consequent on proximity to green spaces.

Is there demand?

Having established that woods are good for us, what evidence do we have of the demand for this investment? Feedback we receive tells us that the need to use nuanced language and the non-offset status of UK woodland projects are a significant barrier to participation for large corporates subject to Defra Environmental Reporting rules, and for those already committed to 'carbon neutrality'. Despite these limitations, and as an example of the potential, Forest Carbon Ltd and its corporate partners have been integral to 9.7% of all new woodland planting in Scotland in the past five years.

In the UK’s commitment to Kyoto, and its own Climate Change Act, there is clearly a desire to reach our emissions reduction goals. Our aim is to work out how can we remove barriers that stop businesses making an investment they want to make in something that’s so obviously good for our country.

Stephen Prior