In late 2018, the Woodland Carbon Guarantee (WCaG) was announced by Forestry Commission England – a £50 million scheme which aims to incentivise woodland planting to mitigate the eﬀects of climate change and permanently remove carbon dioxide from the atmosphere.
The woodland Carbon Guarantee provides landowners with the option to sell captured carbon in the form of veriﬁed carbon credits, called woodland Carbon Units (wCUs), to the government for a guaranteed price every ﬁve or 10 years up to 2055/56.
The wCaG contract price is determined via a sealed bid reverse auction. Once the auction closes contracts are awarded to sellers who have submitted the lowest bids. Following the online auction process, successful bidders will be oﬀered the option to sell wCUs to the government over 35 years at a guaranteed price protected against inﬂation.
The scheme reﬂects the government’s conﬁdence in the continued growth of markets for woodland carbon, as landowners will have a revenue streaming future from selling carbon on the domestic market. The scheme is not available in Scotland, but it does provide both direct and indirect beneﬁts. Direct beneﬁts include a developing interest in the purchase of upland hill ground for planting in the Borders of Scotland. This is reﬂected in the recent inﬂation of the price per hectare. Upland hill ground in the Highlands usually sells for £2,000–£3,000/ha, but prices in the Borders have now risen to circa £4,000/ha.
This reﬂects companies’ growing awareness of the importance of the carbon market, while also obtaining the additional asset of owning of a woodland.
Indirectly, the previous auctions can now give us a better understanding of the average price of a wCU. The average price of bids accepted in the second, most recent, auction was £19.71 per wCU. This provides reassurance to Scottish landowners in a burgeoning market.
In September 2020, Fergus Ewing announced a further £100 million towards the Forestry Grant Scheme, ensuring funding beyond December 2020. This, combined with further certainty in the carbon market, makes tree planting a very attractive prospect.