All that glitters is not gold in carbon offset agreements

Farmers considering entering management contracts for carbon sequestration projects have been advised that ‘all that glitters is not necessarily gold’ – and warned to think carefully about their own carbon offsetting requirements before selling these assets off to big business.

Jeremy Moody of the Central Association of Agricultural Valuers (CAAV)

Stating that carbon sequestration was too important for farmers to sell easily or cheaply, the Central Association of Agricultural Valuers (CAAV) have urged farmers to consider the carbon offsetting requirements of their own businesses first.

“Net zero isn’t just a target for corporate organisations to achieve through offsetting,” said the organisation’s adviser, Jeremy Moody.

“Farmers will also need to find and use their own sequestered carbon to offset their own emissions. Selling carbon early will make that harder for the farmer.”

Stating that while the carbon market had heated up in recent months, Moody advised that early sellers could lose out as the value of the carbon stored in farmers’ soils and woodland was likely to increase substantially in coming years – and warned that signing up to selling it could also unwittingly tie them into restrictive agreements.

“Putting it simply,” he said, “the business of being a farmer is about managing carbon – and if producers get themselves into a position whereby they can no longer touch the carbon they have sold, this will severely limit the ability to farm.”

Farmers also needed to consider what penalties might be included in an agreement if they were unable to meet the carbon sequestering goal: “If you commit to plant trees or ensure a percentage of carbon in your soils in a legal agreement – and then the land is compromised by events such as fire, disease or flooding, what fines could you be subject to and what is your liability?”

And the length of any contract had to be carefully considered, Moody warned, as contractual obligations could also impact on longer-term plans and decisions such as the development or sale of land.

But he indicated that planting woodlands for carbon wasn’t a licence to print money.

“At farm level, the price is not great,” said Moody, who pointed out that one of the main woodland schemes would see a hectare of oak return around £2,000 – over 80 years: “There just isn’t a great deal of value to sell.”

He also warned that the need for area reductions to act as a buffer for contingency and risk management would also make returns less than many expected.

But stating that woodland didn’t properly offset carbon until it was 100 years old, he said that storing carbon was still important and might be best down in soils.

“Instead, it could be safer to enter into agreements where farmers are paid to manage land in a carbon friendly manner like improving their soils, rather than just selling the carbon,” he advised.

However, even here, for those considering this option he warned that the value wasn’t high and constraints could be crippling: “All that glitters is not gold,” he concluded.