Governments around the world are focused on economic recovery after the devastating impact of coronavirus. A ‘green recovery’ is very much the buzz phrase. Potential carbon taxes are mooted and those looking to establish woodland, and trade carbon units may benefit from establishment grants. The UK is set to launch its own Emissions Trading Scheme (ETS) from 1st January 2021 as it leaves the European ETS. Whilst this will initially focus solely on the trading of emission allowances, the Government has suggested that they are open to reviewing the process and including carbon offsetting as a means of decarbonising the economy. This would open the market to those partaking in carbon capturing schemes such as the Woodland Carbon Guarantee.
MPs have called for an extra £30 billion for a green recovery plan. As in Europe, the emphasis is on ‘Building Back Better’ for a more resilient society, decarbonising the economy whilst supporting the environment. The UK was due to host the UN Climate Change Conference in Glasgow, whilst this is now postponed until 2021, it allows the UK the opportunity to come up with an ambitious national strategy. This is a chance to come up with creative ways to combat climate change and achieve the pledged emission targets by the key dates of 2030 and 2050. This will include tree-planting, restoring wetlands and peatland from agricultural use, through appropriate policies and incentives that would provide farmers with an alternative source of income. The EU has announced a €750 billion relief fund to stimulate recovery in member states. This includes 25% set aside for climate action. Loans and grants distributed to member states will allow investments and reforms for recovery in a green direction.
Emissions Trading Scheme
The UK will withdraw from the European Union Emission Trading Scheme in favour of a UK ETS from the 1st January 2021. At this stage, offsetting emissions through the use of credits like the ‘Woodland Carbon Unit’ is not under consideration. This could be set to change once the initial scheme is more established. The Government states it is open to reviewing the usage of offsets alongside emissions trading once they have seen the impact of other decarbonisation mechanisms like the Paris Agreement and CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation).
CORSIA will require airlines to buy offsets for emissions above 2020 levels, at the end of a recurring three-year phase, for each of the previous three years. Buying an offset means purchasing a credit that has been verified as having reduced emissions elsewhere. This is used to cancel out their emissions for this phase. Having purchased and applied it, a credit is removed from the pot and cannot be used again.
Whilst the UK Government aims to reduce carbon emissions rather than simply offset it, certain industries will be unable to remove it completely. This means that eventually, offsetting will have to be used as a means of achieving the Government’s aim of net carbon neutrality by 2050. The Government already encourages the establishment of woodland through the Woodland Carbon Guarantee and purchases the ‘woodland carbon units’ produced. These units would be an obvious choice as a verified offsetting credit. The first entrants to this scheme have sold their units to the Government at an average of £24.11 per unit. Over the course of 50 years one hectare would be expected to produce 300-400 units. The landowner can choose to sell these on the open market. If, or rather when, they are allowed to be used in offsetting, the larger market could drive the price up further. Now is the time to look into carbon capturing and establish your project.