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Detailed guide: Woodland Carbon Guarantee

Forestry Commission

December 18
13:28 2019

The Woodland Carbon Guarantee (WCaG) is a 50 million scheme that aims to help accelerate woodland planting rates and develop the domestic market for woodland carbon for the permanent removal of carbon dioxide from the atmosphere. It is an objective in the 25 Year Environment Plan and was announced in the autumn 2018 Budget.

The Woodland Carbon Guarantee provides you with the option to sell your captured carbon dioxide in the form of verified carbon credits, called Woodland Carbon Units (WCUs), to the government for a guaranteed price every 5 or 10 years up to 2055/56. This provides an additional long-term income from your woodland. If you prefer, you can still choose to sell the credits on the open market rather than to the government. WCUs are generated through verification checks carried out under the Woodland Carbon Code, which assess how the woodland has grown and therefore how much carbon dioxide has been captured.

What is on offer?

Unlike most existing woodland creation support mechanisms the WCaG is not a grant or a fund and it does not contribute towards the cost of planning, establishment or early maintenance.

Woodland creation projects accepted into the Woodland Carbon Guarantee have the option to sell WCUs to the government every 5 or 10 years up to 2055/56. The government will buy the WCUs for an agreed guaranteed price that is index-linked for the life of the contract. You can still choose to sell the carbon credits on the open market at any time.

Find out more about the funding on offer in our Woodland Carbon Guarantee leaflet (PDF, 849KB, 4 pages).

What are the benefits?

The open market price for carbon credits from domestic forests is currently low, meaning that woodland creation projects aimed at long-term carbon sequestration are often unviable, particularly when compared to other land uses and in areas of higher land value.

The Woodland Carbon Guarantee provides long term certainty for participants. It provides landowners with a guaranteed price for the carbon credits, set at the level required to make the investment worthwhile.

The guaranteed price, coupled with the index-linking can significantly reduce the financial risk associated with the long-term investment.

Currently, profits arising from the commercial occupation of woodlands are not chargeable to Income Tax & Corporation Tax and the value attributable to trees is exempt from Capital Gains Tax. The sale of voluntary carbon credits is not currently chargeable to VAT. However, you should always seek professional independent advice based on their specific circumstances before making any long-term investment decisions.

Find out if you are eligible

The WCaG is open to land managers who are owner occupiers, tenants, landlords and licensors, as long as they have control of the land and all the activities needed to meet the obligations of the WCaG for the full duration of the contract.

The WCaG application cannot include land:

  • which is covered by a statutory requirement to establish or restock woodland
  • which is not entirely within England
  • where the applicant does not have management control for the length of the agreement and is unable to have an application countersigned by the landowner
  • which is owned by public bodies

In order to apply for the Woodland Carbon Guarantee, woodland creation projects will need to be registered with and managed under the Woodland Carbon Code.

For further information see the section on Eligibility Criteria

How to apply

If you would like to apply and you are already registered for the Woodland Carbon Code and meet the other eligibility requirements please complete the Woodland Carbon Guarantee application form and return it to:

wcag@forestrycommission.gov.uk

Woodland Carbon Guarantee
Forestry Commission
620 Bristol Business Park
Coldharbour Lane
Bristol BS16 1EJ

You can get further advice on WCaG or help completing the application form from the Forestry Commission by emailing wcag@forestrycommission.gov.uk or by calling our WCaG enquiry line: 0300 067 4822.

How it works

There are four main steps to the Woodland Carbon Guarantee process, you can view our Overview of how the Woodland Carbon Guarantee works (PDF, 109KB, 1 page)

1 - Application

Alongside the normal woodland design and planning processes, you (or your agent) will register your project for the Woodland Carbon Code and then submit a Woodland Carbon Guarantee application form.

2 - Auction

Once your application has been accepted, you will be invited to participate in an online auction, which is used to agree the price at which the WCUs will be sold to the government. This approach aims to deliver value-for-money for government while establishing carbon prices that will provide you with sufficient incentive to make your woodland creation project financially viable.

The auction will operate on a simple single-shot, sealed bid process, although the design of the auction may change over time. The Forestry Commission will communicate details of the auction process to applicants ahead of each auction. You will be asked to provide your best offer of the price that you require in order to make your woodland creation project viable and worthwhile. Bids will be in Pounds Sterling per Woodland Carbon Unit (/tCO2). Lower bids are more likely to be successful.

Once the auction closes the bids will be accepted on the basis of price (below the reserve) until the available budget has been committed. For successful bids, the price agreed at auction will be index-linked based on the Consumer Price Index for April of each year as published by the Office of National Statistics. Index-linking will commence from the WCC start date, which is the last date that trees are planted for the project.

Auctions will initially be held on a national basis every 6 months (to be confirmed as January or February and August) for 4 or 5 years depending on the rate of uptake and therefore available funds. In advance of each auction the government will set an opening reserve price above which bids will not be accepted, the reserve price will not be made public. The government will also set a maximum budget for each auction depending on the level of interest and the remaining available funds. These measures will further help to ensure value for money and minimise the risk of oversubscription.

If the project is successful at the auction then a conditional 30-35 year contract is offered. An example of the sample participant contract (PDF, 141KB, 12 pages) is available for you to view.

The next auction will run from 12pm (midday) on Monday 20 January 2020 to 12pm (midday) on Friday 31 January 2020.

In order to participate in the this auction, your application will need to be received by the Forestry Commission no later than Friday 17 January. Participation in the auction cannot be guaranteed until your application has been approved, so you are advised to sub

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