Natural capital refers to the world’s stocks of natural assets, such as soil, water, biodiversity and forests, that provide essential benefits to society and the economy. In this article, we provide practical advice to land managers on woodland carbon.
Woodlands sequester carbon alongside wider environmental benefits such as cleaner air, enhanced biodiversity, improved water quality and natural flood management. In the UK, woodland creation can also generate carbon credits for sale under the Woodland Carbon Code (WCC), offering farmers and landowners an opportunity to diversify income while contributing to national climate and biodiversity targets.
NCA’s Woodland Carbon Work
At NCA, we have been working with the Environmental Farmers Group (EFG) through a Defra-funded project to assess how woodland carbon can operate as a credible income stream without undermining productive agriculture. Together with Zulu Ecosystems, a science-driven company specialising in woodland and ecosystem restoration, we tested the full project cycle under the WCC, covering land suitability, carbon modelling, funding routes, tax and legal implications, and potential credit sales.
The work included:
- Assessing over 500 hectares of potential woodland creation across 21 farm businesses.
- Modelling more than 250,000 tonnes of potential CO₂ capture over the next 100 years from woodland created (this is the equivalent to Waitrose’s annual combined Scope 1, 2 and 3 emissions).
- Exploring aggregation models through the WCC to reduce costs for smaller projects.
- Engaging with regulators, verifiers, buyers, tax and legal experts to understand risks and opportunities.
Case Study: Scoping a Woodland Carbon Project
To illustrate what scoping a woodland carbon project looks like in practice, here’s an example from work with one EFG Member farm, a 200-hectare mixed farm in the Test & Itchen catchment.
Figure 1
The process began with a desktop assessment of land use and soil data to identify parcels best suited for woodland creation (Figure 1). In this case the Member suggested 30 hectares of potential sites for woodland creation.
Figure 2
Available grant schemes were then overlaid to show which parts of the site could attract the most support, helping the farmer understand how public funding could reduce establishment costs (Figure 2).
Figure 3
Carbon modelling estimated the volume of Pending Issuance Units (PIUs) that could be generated as claimable carbon sequestration, giving the farmer a clear picture of potential long-term income streams (Figure 3). The farm could therefore generate 14,000-18,000 carbon units for sale on a 30-hectare site over a 100-year project cycle.
By visualising the opportunities through maps and estimating carbon credit generation and project costs, farmers can see both the environmental and financial potential of woodland creation before committing to planting.
Key Findings for Woodland Carbon
- Cashflow
Woodland carbon projects require significant upfront investment, while income from credits often arrives years later. Grants, advance sale of carbon units, or other financing options are essential to bridge the cashflow gap.
- Carbon Pricing & Sale Strategy
The current average price of carbon (around £30/tonne) does not make woodland as attractive as other land uses at present. However, the price of carbon is forecast to increase, so registering a project now is advantageous, allowing for flexibility in the timing of when to sell credits.
- Grants are Essential
Schemes such as the England Woodland Creation Offer (EWCO) make projects viable by covering planting and maintenance costs, particularly where the price of carbon is lower.
- Land Use Trade-offs
Woodland creation requires long-term land use change (40–100 years). Success depends on choosing marginal or less productive land and weighing alternative habitat options and natural capital opportunities such as Biodiversity Net Gain.
Why This Matters
As the UK voluntary carbon market develops, standards will tighten, and buyers will expect greater transparency. NCA is focused on helping land managers design projects that are both compliant and attractive to the market and ensuring that buyers are sourcing high integrity UK carbon units that also support food production and nature.
Woodland carbon is an emerging natural capital market that offers:
- A viable method for enabling woodland planting.
- Diversified income streams for landowners.
- A structured route to engage with carbon buyers.
- Practical contributions to climate and biodiversity targets.
If you’d like to discuss how woodland carbon could fit into your land strategy or are interested in purchasing carbon credits, please contact the NCA team.
Useful links
The Woodland Carbon Code | Woodland Carbon Code
Author: Hamish Drake, Project Manager, Natural Capital Advisory