Net zero targets and carbon markets

The race to net zero is firmly on. This month the Financial Times reported that nearly half of the FTSE 100’s constituents have set net-zero targets. Pressure is growing on food supply chains to rise to the net zero challenge. Sainsbury’s just brought its net zero target forward by five years to 2035, matching the date targeted by Waitrose and Tesco, just to mention a few of the UK’s major supermarkets.

The key aim of net zero emissions is to limit warming to 1.5 degrees Celsius, as targeted by the Paris Agreement and recommendations by the Intergovernmental Panel on Climate Change (IPCC). In practice, net zero means reducing carbon emissions as far as possible across all activities, and balancing what’s left with sequestration – the process of capturing and storing carbon dioxide from the atmosphere.

While the impacts of climate change make for largely depressing reading, this is one aspect which can provide new opportunities for many CLA members. Carbon is stored in all organic matter – so natural habitats such as soils, trees, peatlands and saltmarshes can all absorb carbon. This means that landowners are in the unique position of being able to sequester carbon as part of their businesses, and with it enter a new, potentially lucrative market: voluntary carbon offset markets.

For the many businesses with net zero commitments, once they have reduced their emissions to as low as possible, they will need to balance their remaining unavoidable emissions by purchasing carbon credits. These credits can represent carbon which has been avoided elsewhere, carbon which has been removed via new technologies, or – key for the land use sector – carbon which has been sequestered via nature-based solutions.

For certain habitats, there are standards which can be followed such as the Woodland Carbon Code and the Peatland Code. But for others, these are still in development. This means new markets for nature-based carbon are expected to open up in the coming years. Indeed, it is estimated that 65-85% of growth in carbon markets will be supplied by nature-based solutions.

As with any emerging market, there are some complexities which need to be navigated, but the first step is pretty clear: create a carbon account.

In very simple terms, you need to measure the carbon your operations are emitting, and that which you are removing via nature-based sequestration.

Once you have your baseline, you can look for ways to reduce emissions and increase sequestration, thereby creating a net zero business, and selling any surplus on the voluntary carbon market to enable other businesses to offset their emissions as part of their net zero strategies.

As the saying goes, knowledge is power, so get soil sampling and start tracking carbon!

For more information, see our Guidance Note on Carbon Markets for Landowners, available to CLA members.