Carbon credits: helping protect the planet and your livelihood

Carbon credits are establishing themselves as a viable source of additional income for farmers and landowners. A large part of their appeal is the way they can benefit businesses as well as allow farmers and landowners to practise environmental integrity.

With the government and private companies keen to buy credits, the temptation to sell can be great, especially after the financial challenges experienced during the pandemic.

However, caution – and long-term thinking – is required if you want to increase your chances of success.

Responsible farmers, who are mindful of their carbon footprint, can take steps to reduce it. Measures can include everything from using less fertiliser, to finding alternatives to processed feed. Ultimately, though, the nature of farming means that some unavoidable agricultural practices will continue to contribute to carbon emissions.

With this in mind, your first priority should be to focus on managing your own agricultural emissions, before selling your credits to others.

Depending on your business plans, it may be the case that you will require the credits yourself to meet your future obligations.

Once you are certain you have accrued enough credits to cover your future needs, you could then consider selling any surplus.

Where feasible, it is advisable to explore possible ways of using part of your land to generate carbon credit.

Woodland creation projects, which reduce the amount of carbon being released into the air through soil carbon sequestration, are a popular example.

This is also a way of optimising land that is not suitable for growing crops.

Woodland planting has been incentivised by the government’s Woodland Carbon Guarantee (WCaG). This £50 million scheme gives those who have created woodland the option of selling captured carbon in the form of verified carbon credits, called Woodland Carbon Units (WCUs,) on the open market or to the government.

Another route into generating carbon credits is to apply for Peatland Action funding from the Scottish Government. Peatlands are highly effective at locking in carbon and the government has launched a national programme to restore the country’s degraded peatlands.

Funding from the Scottish Government is also available for soil carbon audits through its National Test Programme. Phase 1 is designed to help farmers prepare their farms to meet the conditions of future agriculture policy.

With the huge momentum towards a cleaner and greener future – it’s an appropriate time to consider whether carbon credit creation could work for you.

Advice and guidance should be sought from specialist insurance brokers, who will be able to enlighten you of the pluses and potential pitfalls.