Ecosystem Marketplace’s State of the Forest Carbon Markets 2013 report tracked a miniscule number of forestry offsets transacted under the UK’s Woodland Carbon Code (WCC) program in 2012. That could change now that the WCC has started listing future offsets available for sale on the Markit Registry.
For the first time, potential buyers of carbon offsets generated by forestry projects under the UK’s Woodland Carbon Code (WCC) program can see future offsets available for sale, allowing them to make long-term offsetting plans.
In July 2013, the WCC Registry went live on the Markit Registry, but only listed offsets that were already sold. Starting this week, companies can now buy Pending Issuance Units (PIUs) that represent promises to deliver Woodland Carbon Units (WCUs) in the future once the trees have grown and the carbon sequestration has been verified, which allows the PIUs to be converted into WCUs.
"PIUs represent units of woodland carbon to be sequestered in the future, and can only be used to report against emissions after they have been verified,” said Vicky West, climate analyst with the UK Forestry Commission. "However, buying them now allows companies to plan their compensation for future emissions while helping to tackle climate change and contributing a wide range of other environmental and social benefits."
The UK Forestry Commission launched the WCC in 2011 as a domestic voluntary carbon offset program to incentivize local action on forestry. The WCC is the standard for woodland creation projects in the UK that generate verifiable WCUs – measurable amounts of carbon dioxide (CO2) removed from the atmosphere by the growing trees. Under the program, companies can establish woodlands on their own land or buy the rights to the carbon sequestered in woodlands established by others.
Since April 2013, UK companies have been required to report their gross CO2 emissions. However, the UK Department for Environment, Food and Rural Affairs allows UK companies to claim any support for WCC projects against their annual emissions reporting – one of only two cases of a national government allowing voluntary offsetting claims against mandatory emissions reporting (the other being Japan).
Ecosystem Marketplace’s State of the Forest Carbon Markets 2013 report tracked 0.1 million tonnes of WCC offsets transacted in 2012, with 19 projects validated, all under the afforestation/reforestation project type. The WCC had a 2% market share by domestic standards, according to the report (see Figure 45).
Back to the Future
The first verified WCUs will be available in 2016, according to the commission. The average global price of woodland carbon in January 2014 was £6/tCO2, although there was wide variation around this figure, depending on the nature of the project, the commission noted.
A total of 63 woodland projects have been validated under the WCC, covering 2,500 hectares and projected to sequester nearly 1.2 MtCO2. Nearly 130 additional projects have been registered but not yet validated, with expectations that they will sequester more than 4.4 Mt CO2 over their lifetime. Details of all WCC projects are held on the Markit Registry, enabling changes of ownership of each tonne to be tracked, with the registry recording when credits are listed and retired.
One example of a project that has already been validated under the WCC is the Moorside Woods project. The land was previously heavily grazed pastureland, but new woodlands have been created on inorganic soils in undulating farmland close to the Lake District National Park in Cumbria, located in North West England. The project is estimated to sequester 18,891 tonnes CO2e over 100 years.
Durham, England-based consultancy Forest Carbon brokered the carbon finance supporting the project with The Green Insurance Company, which got involved as part of a commitment to offset the annual emissions of the vehicles insured by the company. The landowner received a grant from the commission, but the insurer provided about 35% of the project costs to allow the new woodlands to be planted.
About 13% of the UK’s land area is covered by woodland, more than double the woodland cover of 100 years ago, according to the commission.