Over the last few weeks I’ve undertaken a range of media interviews to highlight how farmers and landowners are very much part of the solution in tackling climate change. The interest has been sparked by COP26 where the eyes of the world have been on Glasgow as political leaders tried to thrash out further global agreements on mitigating climate change.
It is an inescapable truth that the environmental debate is, fundamentally, a political one. While some still hope the market will provide the answer to climate change, most now recognise that decarbonisation requires massive government intervention.
The UK’s transition away from coal, for example, has been impressive. As recently as 1970 over half of our energy needs came from coal, but now the figure is below 2%. Meanwhile, almost half of the UK’s energy now comes from renewable sources, and the transition towards electric powered cars and hydrogen powered ships is well under way. All of it as a result of government intervention, funded by the tax payer.
Alongside the government’s involvement however, all businesses have a role to play in tackling their emissions and the race to net zero is firmly on. The Financial Times recently reported that nearly half of the FTSE 100’s constituents have set net zero targets. Pressure is growing on food supply chains to rise to the net zero challenge. Sainsbury’s just brought its net zero target forward by five years to 2035, matching the date targeted by Waitrose and Tesco, just to mention a few of the UK’s major supermarkets.
The key aim of net zero emissions is to limit warming to 1.5 degrees Celsius, as targeted by the Paris Agreement and recommendations by the Intergovernmental Panel on Climate Change (IPCC). In practice, net zero means reducing carbon emissions as far as possible across all activities, and balancing what’s left with sequestration – the process of capturing and storing carbon dioxide from the atmosphere.
While the impacts of climate change make for largely depressing reading, this is one aspect which can provide new opportunities for many land managers. Carbon is stored in all organic matter – so natural habitats such as soils, trees, peatlands and saltmarshes can all absorb carbon. They can also be managed to store extra carbon, for example, by increasing organic matter in soils. This means that landowners are in the unique position of being able to sequester carbon as part of their businesses, and with it enter a new, potentially lucrative market: voluntary carbon offset markets.
For the many businesses with net zero commitments, once they have reduced their emissions to as low as possible, they will need to balance their remaining unavoidable emissions by purchasing carbon credits. These credits can represent carbon which has been avoided elsewhere, carbon which has been removed via new technologies, or – key for the land use sector – carbon which has been sequestered via nature-based solutions.
For certain habitats, there are standards which can be followed such as the Woodland Carbon Code and the Peatland Code. But for others, these are still in development. This means new markets for nature-based carbon are expected to open up in the coming years. Indeed, it is estimated that 65-85% of growth in carbon markets will be supplied by nature-based solutions.
However, as with any emerging markets, there are some complexities which need to be navigated. The cost of carbon is volatile, and its true value will only be fully understood in the coming years. Land managers should be cautious about committing to long-term off-setting agreements until the picture becomes clearer in terms of how the markets will operate.
But a first step is pretty clear for land managers: create a carbon account. Whilst different carbon calculators may report different results, it is a useful exercise where land managers can gauge where they are sequestering and emitting their own carbon.
Once you have your baseline, you can look for ways to reduce emissions and increase sequestration, thereby creating a net zero business. You can then be in an educated position of understanding whether you would be able to sell any surplus on the voluntary carbon market, to enable other businesses to offset their emissions as part of their net zero strategies.
As the saying goes, knowledge is power, so get soil sampling and start tracking your carbon. The CLA has guidance on carbon markets for its members which is available here.