The advent of environmental social governance (ESG) as a new requirement on businesses presents huge opportunity for landowners considering forestry. ESG will be as normal in all businesses as audited accounts and health and safety requirements are today.
Possibly the best way for the forest industry to grasp this opportunity is the generation and trading of carbon on voluntary carbon markets.
The important point to note about voluntary carbon markets in general is that they are set up to incentivise activities that are an addition to what currently takes place.
There are a number of different voluntary carbon trading schemes, including the UK Woodland Carbon Code, which allow forest owners to trade carbon on a voluntary basis and for voluntary compliance purposes by businesses.
This has resulted in the trading of carbon on new afforestation projects in the UK, with substantial volumes being traded through dedicated carbon aggregation facilitators such as The Forest Canopy Foundation.
Carbon farming is highlighted in the EU Green Deal under the Farm to Fork strategy and the European Commission is examining ways of encouraging activities that remove carbon across sectors
The integrity of the development and verification of carbon offered for sale are crucial aspects in the ultimate market price achievable.
In many respects, such integrity and verification processes mirror the standards of the forest management certification and chain of custody certification, insofar as the value is only as strong as its weakest link.
Carbon farming is highlighted in the EU Green Deal under the Farm to Fork strategy and the European Commission is examining ways of encouraging activities that remove carbon across sectors.
In this regard, it is important to note that although individual groups of trees and hedgerows planted under agri schemes such as GLAS are important for biodiversity and do sequester carbon, they are not counted when calculating the carbon sequestered by the LULUCF regulation.
The wider agricultural industry may also want to note the results of Ireland’s National Forest Accounting Plan (NFAP) 2019, which reported a decline in the national forest sink and transition to a net emission for the period of 2034, 2036 and 2037.
These projections are based on an annual afforestation rate of 8,000ha, business as usual forest management practice and levels of harvest as specified in the COFORD All-Ireland Roundwood Forecast. Both harvesting and afforestation – 2,434ha in 2020 – are seriously underperforming due to the licence debacle.
The State does not have any property rights to carbon or other greenhouse gas sequestered by forests
The possibilities of the ESG sector for forestry have been obvious for a number of years. One of the most noticeable being Brown Thomas and Forestry Services Ltd collaboration on a native woodland scheme with funding from Cool Planet .
The State does not have any property rights to carbon or other greenhouse gas sequestered by forests, whether on lands held by the State or privately owned. It does, however, have to account for carbon as part of its international reporting requirements.
Forest owners and organisations can avail and develop carbon trading opportunities as long as they don’t affect Ireland’s international accounting and reporting requirements.
In effect, such a mix of private finance in the purchase of carbon and State aid in the form of grant and premium support is a mirror of the Woodland Environmental Fund currently operated by the Department.
The need for the agricultural sector to contribute to climate change mitigation, will result in afforestation being looked at in a different light by all stakeholders, especially farmers, as the true benefits of carbon trading emerge.
Paddy Bruton is managing director of Forestry Services Ltd and Euroforest Ireland.