What is carbon capture and how could it help my farming business?


27 August 2021

The international dialogue around climate change continues to dominate environmental discussion and so it is scarcely surprising that it proves a major point of consideration across a range of sectors and industries.

The impact of global warming, as accepted by experts, is almost impossible to miss. Living in an era where even turning on a news station exposes us to an array of stories about extreme weather, it is not surprising that questions around the future impact of global warming on our environment and our economy continue to be prevalent. This is certainly true of farming businesses.

Climate change, the process by which experts argue an excess of ‘greenhouse gasses’, including carbon dioxide (CO2), trap the sun’s heat and force the average global temperature to rise, has become a critical point of not only debate but also of concern. Many question not only the impact that this process may have on the environment more generally, but on individual businesses. In the UK, farming businesses are met with questions around the effect of climate change on crop yield and soil quality and how best to tackle these problems head on. If the impact is significant, what can be done to ease it and can there be any benefit to UK farming businesses in the process of easing that impact?

It is here, that carbon capture has begun to play a significant role, not only on a national level, but as a beneficial scheme for many of our clients.

Announced by the UK Government in October 2017, the carbon capture scheme involves the prevention of excessive CO2 reaching the atmosphere and contributing further to climate change. In the UK, one of the most popular forms of carbon capture involves the planting of trees and hedgerows. This allows a greater quantity of vegetation to store the CO2 as stable organic carbon and therefore reduces the amount of CO2 that is emitted into the atmosphere.

With UK farms hosting the potential for soil and plants to absorb significant amounts of carbon, there is a real opportunity for farming businesses to lead the way in carbon capture and the fight against global warming, playing a significant role in the way that we approach climate change. With greater quantities of vegetation added to UK farmland, the expansion of organic matter in soil will only increase its fertility and ultimately play a beneficial role for both individual businesses and climate change action. With careful curation, what is already a significant role played by the hedges and woodland of UK farmland, can be expanded and maximised to, what is expected to be, exceptional proportions.

Grant support is available for landowners or occupiers as part of the Countryside Stewardship Scheme, aimed at creating woodland in the UK, and there is an important opportunity to engage with the carbon capture scheme. The Woodland Creation and Maintenance Grant agreement introduced in 2021, combines the existing Woodland Creation grant and the Woodland Creation Maintenance payments to allow for more opportunities and assistance in becoming involved with carbon capture benefits. This agreement is made up of a capital element (which runs for a two-year period during which all capital works to create the woodland must be completed), and a woodland maintenance element, which runs for ten years and will involve an annual grant payment per hectare. These schemes are set to be in place until 2024 when the full Environmental Land Management scheme will start.

In addition, in guidance released in 2018, the Forestry Commission highlighted that carbon ‘rights’ can be sold, providing a new income source for landowners. Woodland Carbon Units bought from verified Woodland Carbon Code (WCC) projects will further help companies to compensate for their unavoidable emissions. As some companies are currently willing to pay a fee of up to £15 per tonne of CO2 captured in a WCC verified project (with new woodland being predicted to capture up to 400 tonnes of CO2 per hectare by year fifty of the scheme) the financial benefits could be extremely rewarding.

In a similar vein, as part of its 2018 autumn budget, the UK government announced the Woodland Carbon Guarantee, aiming ‘to help accelerate woodland planting rates and develop the domestic market for woodland carbon for the permanent removal or carbon dioxide from the atmosphere’. This scheme will provide landowners with a further option to sell carbon they have captured to the Government for a guaranteed price every five or ten years, whilst also retaining the possibility of sale on the open market. Although it works on a similar premise, this is different to the Countryside Stewardship agreement outlined above as it is neither a grant nor a fund, and does not contribute towards the cost of planning, establishment or early maintenance. However, it does still provide the potential for a fixed income, providing an interesting and useful point of reflection when considering involvement with the scheme.

Needless to say, with the complexities of each of the differing schemes, we would recommend using an agent to navigate the best plan for your business.

At Birketts, we have helped clients entering into carbon capture arrangements with third parties which includes carbon offset agreements, lease arrangements with royalty payments on account of carbon offset and we are able to assist with contracts for WCU sales. This has enabled our clients to engage with carbon capture schemes and consequently contribute not only on a national level, but enhance and benefit their individual businesses.

Carbon capture is a rapidly expanding and increasingly important consideration for farming businesses, and through our expert services, we are able to assist clients in engaging with the projects outlined above to best benefit farming businesses and contribute to the nationwide move towards a more responsible land stewardship.

If you have any questions about the matters covered above, then please get in touch with Esther Round or another member of our Agriculture and Estates Team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at August 2021.

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