Financing natural capital

Transcription

1 Financing natural capital Woodland Carbon Code Conservation in the 21 st century, 25 November 2015 Dr. Pat Snowdon MICFOR, Economics & Climate Change, Corporate & Forestry Support, FC

2 Context Policy - finance for woodland creation new business models & mechanisms payments for ecosystem services financial instruments new business models valuing & accounting for natural capital Business new outlooks & motivations Instead of measuring the destruction of nature as a economic gain, we need to address its stewardship as an economic opportunity (Aldersgate Group)

3 Woodland Carbon Code Ensure high standards in UK forest carbon market Clarity and transparency to bolster market confidence Rigorous scientific basis increase private investment in woodland creation similar principles to VCS, GS Covers woodland creation only & carbon within a woodland >200 projects registered to date c6mtco 2 over lifetime forestry.gov.uk/carboncode

4 Governance iema Institute of Environmental Management & Assessment WCC Advisory Board UKWAS UK Woodland Assurance Standard WCC Executive Board forestry.gov.uk/carboncode

5 Requirements UK Forestry Standard + Additionality Legal : Financial : Barrier Permanence Forestry Act, Buffer (15-40% of project carbon) Predict and monitor carbon sequestration Baseline : Leakage : Project benefit Management plan, incl. risk assessment Certification Validation Verification + 5 and then every 10 years forestry.gov.uk/carboncode

6 State of voluntary carbon markets Value transacted by project type

7 Main actors Land managers Why? Income stream Intermediaries Who? Project developers/ agents Certification bodies UKAS Markit Carbon offset cos. Forestry Commission Why? Investors CSR compliance with regulations ecosystem impacts on business (cost saving, risk, opportunity)

8 Who Buys? UK-based corporates to compensate for their UKbased emissions Around 50% of (pre-issuance) units sold upfront already Retail: Waitrose, M&S, Sofa.com Paper/Printers: Premier Paper Transport: Stagecoach(Bus), Taxi, Chauffeur Travel: Eurocamp Fuel Distribution/Cards: BWOC, All Star Cards Financial: Green Investment Bank Venues: Edinburgh Int. Conference Centre forestry.gov.uk/carboncode

9 Income and use

10 How much carbon and?

11 Impacts of carbon finance on investment returns NPV without carbon finance NPV with carbon finance Comments Assumptions Productive Upland Forest in Northern Britain 1,138/ha 1,487/ha 50 year single rotation conifer, thinning revenues from year 18, felling revenues at year 50 Native Lowland Woodland in Southern Britain -2,905/ha -1,363/ha Thinning revenues from year 40 Carbon price = 3/tCO2 Conifers: YC12 Broadleaves: YC6 Discount rate: 3.5% Exclude income foregone & farmland premium

12 10 x 3ha native woodlands forestry.gov.uk/carboncode

13 BWOC Since 2010 with Forest Carbon The right thing to do for a fuel distribution company Bought carbon from 8 projects in UK Have bought over 43,000 carbon units Includes a productive forestry project Why? Brand Improvement & Publicity Helps win public sector supply contracts Attracts interest from Fuel Card Customers Increases visibility within parent company (BWOC used as case study on managing/mitigating carbon emissions) forestry.gov.uk/carboncode

14 What have we learnt? Successes Science Leadership Resources (staff, policy) Challenges Cost vs. robustness Marketing (to investors, landowners & others) Carbon accounting practices & perceptions A clear and measurable product Carbon market prices Partnership (expertise) Infrastructure (e.g. carbon registry, FR carbon models, metrics) Acceptance (landowners, carbon sector, investors) Adaptability

15 Next steps Complete small woods scheme pilot Verified credits available from 2016 Evidence on wider social and environmental benefits Potential for wider PES scheme? Potential collaboration in the land-use and/or carbon sectors

16 THANKS FOR LISTENING