There is room for more, where we can demonstrate carbon benefit over and above ‘business as usual’. There will also be a Woodland Water Code, about paying for benefits such as flood prevention.
Codes are an attractive policy tool for landowners, businesses, and governments. They redistribute income towards decarbonisation without being a tax. They raise land management standards without being a regulatory framework.
Woodland carbon units, for example, not only accredit carbon capture, they also signal compliance with the UK Forestry Standard, ensuring good practice in soil, water, biodiversity, landscape, historic environment and people.
Codes benefit all parties. Buyers buy units, enabling them to offset the CO2 they produce. Governments control standards while enforcement is done by independent auditors. Landowners control the process, earning income from natural capital investment that was previously impossible.
So how are carbon codes used to achieve these goals? First, decide what you want to do with the land, and with the carbon. For example, if your entire estate is a peat bog, and your business model is to restore it and sell the carbon credits, that makes sense. You just need to understand the risks and obligations, and get the best price.
However, if you also have holiday cottages on the site, you might want to retain carbon to sell net-zero holidays. This principle applies also to wider business interests. Trading units is a costly way to cut carbon. It’s not just the process of validation and selling, but the loss of measurable carbon benefit through buffers that are applied to make the trading process robust.
If you have farming activities, you can retain some or all of your credits to demonstrate net-zero beef or lamb production, as supermarkets and food companies set targets for zero-carbon supply chains. This will be far more relevant with the new soil and hedgerow carbon codes coming through.
Dairy farmers know of milk producers’ interest in carbon; and we recently heard McCain Foods is taking a similar interest in potatoes. Meat requirements are coming in, and supermarkets’ net-zero targets will affect fruit and veg.
When distilleries come under pressure to tackle scope three emissions, expect huge interest in regenerative barley for whisky. Biofuel will come under increasing scrutiny to demonstrate genuine carbon benefit. And timber is increasingly in demand as a low-carbon material to displace concrete, steel and plastic.
In cases like these, it could be far more efficient to treat carbon sequestration internally as you would diesel or nitrate use: to simply measure it accurately and put it on the balance sheet, rather than registering offsets. The carbon code provides the science-based tool for measuring.
Land is crucial to the green economy. Farmers can shape their processes and ensure investment as early adopters, by marketing produce from a landscape that absorbs more carbon than is used in production.
Farming and forestry are at the heart of a regenerative bioeconomy. That’s why it’s vital to see carbon units in a wider context – but it’s wider even than just the bioeconomy.
We can’t ignore the changing seasons and extreme weather events. Interest in nature is growing, from warnings of global biodiversity decline to local interest in connecting with the natural world. In government support, access to markets and operating licences, nature is starting to play a huge role in the bioeconomy.
That’s why at Galbraith we look at the whole, all-encompassing natural capital picture.
Our natural capital assessments are informed by and bring to bear the on-the-ground expertise of our rural, forestry and energy teams at every stage, engaging the wealth of spatial data now available.
So while we can certainly help you with carbon credits, we may also suggest you take a step back, to see them in the context of low-carbon production and provisioning, climate adaptation and biodiversity, and how they all work in our fast-changing world.
This is an edited version of a presentation given at the Scottish Land and Estates conference.
Natural Capital: Galbraith’s expert advisers guide our clients in realising value in all land uses – by assessing and measuring natural assets, furthering opportunities in biodiversity net gain, and ensuring stakeholders are rewarded fully for their investment in and contribution to delivering ecosystem services and net-zero outcomes.