There are a plethora of natural capital income streams available to land-based businesses.

We now have the 2023 Environmental Improvement Plan and a legally binding commitment to reduce carbon emissions 41% by 2025 and 78% by 2035, leading to net zero in 2050. So nature-based solutions are vital – either for compliance or, more interestingly, as a diversification opportunity.

The need for high-integrity markets

Landowners are finding innovative ways to derive income from carbon credits, by providing a portfolio of nature-based solutions to meet the needs of the wider economy. And in the long term, UK landowners will benefit from the market becoming more segmented. We can never compete with Central Africa or South America on volume alone, so the UK needs to become synonymous with high integrity, value-added carbon markets.

Carbon credits

Currently we have two broad types of credit. Firstly, permanence credits – new tree planting or peatland restoration, for example, – and these deals generate the highest values out there, reaching between £60 and £80 per tonne. Secondly, there are emission reduction credits which, though not as lucrative, are still a potentially good source of income. Simply changing how you feed your livestock, for example, could enable new contracts and generate higher values.

Start with a plan

Whichever route you hope to take, you need to start with a net zero plan that gives the baseline picture of where you are now and what you have to do to achieve net zero by 2050. That will indicate whether you have surplus carbon credits available to sell and, if you do, it’s logical to make them a viable part of your diversified business.

Key considerations

Be aware that:

• Trading in carbon credits is a long-term strategy and the changes you make to your land may have to be permanent
• It’s important to learn how to navigate the data and understand the opportunities 
• There is some reputable (but historic) Office for National Statistics backed data available online and support is available to help landowners understand how their carbon sits within the wider marketplace. Indeed carbon is often bundled, informally, with other forms of nature restoration so what appears to be one type of carbon credit product could potentially be three or four, with different pricing structures in between

Like many diversification opportunities, the carbon market requires some entrepreneurial flair. You have to be prepared to put your business out there and tell potential customers what makes your credits more attractive than your competitors’. It’s also highly scalable – there’s no reason why a 50-acre block in southern England can’t be equally productive, from a carbon market perspective, as a much larger parcel of land in northern Scotland.

Admittedly, carbon market transparency is still not as clear as it could be, but it’s here to stay and this is the perfect time for all landowners to engage in one form or another.

Further information

Contact Jon Dearsley