How to make reforestation projects pay
ClimateCare is focusing on reforestation projects in the UK. Here’s how such projects realise financial benefits - by Mark Rowland
ClimateCare is a profit-for-purpose environmental and social impact company that helps organisations deliver carbon offset projects. At present, it is focusing a lot of effort into what it calls natural climate solutions. This includes protection and improvement of peatlands, and the creation of new woodland.
One such project is Boor Farm Woodland, along the banks of Loch Ewe in Scotland. The project planted 31,000 trees last winter. ClimateCare has worked with the landowner to ensure that the project is fully funded and verified, and took care of the stakeholder engagement.
Such projects are more complicated and costly than landowners expect
While the UK government offers grants to landowners to undertake reforestation projects, the grants don’t actually cover the costs of a reforestation project and the removal of any other uses that land might have, says Tom Morton, a director at ClimateCare. The landowner at Boor Farm approached the company to help with the costs initially.
“We believed that we could take the project through the Woodland Carbon Code [the UK’s voluntary carbon standard for woodland creation projects], and because ClimateCare works end-to-end, both on the ground on projects and in the market, we can take it through the whole process,” Morton explains.
To get the full value out of a reforestation project, it is crucial that landowners engage with the Woodland Carbon Code through a thorough assessment of documentation and an audit of the site. Once the project gets its initial validation, a verification audit occurs five years afterwards. A second occurs 15 years later, then once a decade after that.
“It’s important to understand how the Woodland Carbon Code works, have all of the information gathered in the correct way and be able to prove it, because it is audited,” says Morton.
“For a typical project, you may need to hand in 25 to 40 documents. That includes legal things like the title deeds, historical information that shows that it hasn’t been woodland that was cut down in the last 20 years, planting plans, environmental consent, evidence to show your local conservation body has approval – there’s a lot of paperwork to pull together.”
Selling emissions reductions – what to consider
ClimateCare prepared all of the documentation for the Boor Farm project. Morton’s team created a project design document that is currently being reviewed by an independent third party.
“We have prepared a projection of emissions reductions over the next 100 years. We have then sold the initial emissions reductions to a company in Scotland that wants to use them as part of its portfolio of environmental projects to compensate for its CO2 emissions.”
Managing the budgets and raising funds is one of the trickiest aspects of reforestation projects. Costs are spread out over decades, as the regular audits cost money. “How do you account for that over such a long period? You are taking on a liability to deliver emissions reductions in the future. Then there’s the economics of going to market: is it better to sell now, or hold off and sell in the future?”
Verified reforestation projects can sell carbon credits to organisations that want to offset the carbon released through their activities. This comes in two forms. Pending Issuance Units (PIUs) are based on potential carbon captured as the forest matures. As the trees grow, organisations can purchase Woodland Carbon Units (WCUs).
This is not an easy decision to make – while PIUs will bring immediate returns, WCUs might be more valuable. “For a lot of landowners, this is an intergenerational question. It might be their daughters or sons who are going to be taking the benefits in the future, so how do they split that revenue?”
Helping landowners come to a decision
ClimateCare does not make this decision for landowners, but does give them the information to make the decision. It helps to facilitate the sale of those carbon units to clients looking to offset their carbon emissions.
“We sell emissions reductions normally through a portfolio of projects, so clients will have a bit from one project, a bit from another and so on,” says Morton. “That may vary by geography, technology or age of credits.”
Clients like to undertake site visits, sometimes getting involved in the planting itself, and want regular reassurance that an investment will pay off. ClimateCare spends a lot of effort on stakeholder engagement as a result – arranging site visits and photo opportunities, and keeping in regular communication through newsletters and conference calls.
“They’ve got to see the value in the project. That communication is a mixture of work between the project manager and our marketing team.”
Projects such as this will be a big priority for ClimateCare in the future in the UK: “We have a colleague in Oxford now working exclusively on natural climate solutions in the UK. If we do projects in the UK now, we’re simply helping the UK government do what it set out to do.”