The role of carbon credits in woodland creation

There has been much discussion about the role of carbon credits in woodland creation as an alternative to grant funding. To date, their popularity has not been universal and they have not had the impact that was originally expected.

However, the UK government is looking into a Woodland Carbon Purchase Fund – announced in November 2025 – with a possible £250 million budget to provide an upfront purchase mechanism for Pending Issuance Units (PIU). Each PIU represents one tonne of CO2e that will be sequestered by trees as they grow, from the day they’re planted until the end of the project, 30-100 years later.

The hurdle of additionality

To be eligible for carbon credits, however, landowners must demonstrate that the woodland would not have been planted without the financial incentive provided by selling carbon units, and that the project is not a legal requirement.

Woodlands are being designed to stay within this additionality test, which favours slower-growing broadleaf species. But what’s really needed for good long-term carbon sequestration are more timber trees. The UK imports 80% of its timber and with increasing global pressures economically and politically, this is a significant risk.

The benefits of tree planting

Tree planting requires a permanent land-use change which is something landowners need to consider carefully from the outset.

Nevertheless, even with the associated challenges, there is still valuable potential to be explored within woodland creation. Generally, the benefits of tree planting include mitigation of flood risk, cleaner water and improved soil health, new income streams via leisure and recreation opportunities, carbon storage, future timber security and enhanced biodiversity.

Indeed, according to the Woodland Trust, despite increasing tree cover, woodland biodiversity continues to decline. The woodland bird index was 37% lower in 2022 than in 1970 – largely due to our woodlands being in poor ecological condition. So, creating woodland within a landholding, with the best possible tree species mix, will undoubtedly enhance local biodiversity.

Future-proofing our woodlands

Creating woodland from scratch can also future-proof our woodlands, by promoting long-term resilience when compared to natural tree regeneration. With natural regeneration, there’s no genetic diversification and no species diversification – you simply end up with more of what you already have. But the trees we have now will not necessarily be well adapted to the conditions and climate in 100 years’ time.

For landowners, estate-wide strategic reviews and feasibility reports are key to assessing the various options available and expected returns. Once a decision is made, it’s important to define what tree planting means in their particular context. This can be based on what they want to deliver – natural regeneration for carbon modelling, timber production or biodiversity enhancement, for example – and the different ways in which value can be defined.

For more information on tree planting and other rural news, read the latest edition of Savills Aspects of Land

Further information

Contact James Adamson or Mark Townsend