With the ever-increasing climate concern, corporate businesses are looking at various methods to offset their carbon.
What is the future for a Soil Carbon Code?
A Soil Carbon Code is being developed to encourage the open market trading of sequestered carbon. The aim is to create a universal method of calculating soil carbon sequestration, allowing consumers to have confidence in what they are purchasing but also validating how much of their emissions are being offset.
However, standards still vary around the UK, with some methods suggesting a hectare of land can sequester two tonnes of carbon each year whilst others suggest this could be as high as five tonnes a year per hectare.
DEFRA launched a nitrate trading platform for use by property developers in South Hampshire if their construction is likely to increase nitrogen loading on a particular site. Developers must ensure they put plans in place to prevent damage to the local environment otherwise planning will be refused. This is where landowners and farmers can provide ‘ecosystem services’ to help the developer directly or indirectly.
Direct methods of support include creating interceptor wetlands, which prevent runoff into waterways. Indirect methods may involve taking land out of high nitrogen use, such as not using fertiliser on nitrate leaching venerable fields. Whichever method is chosen, Natural England advises that the scheme should be in place for 80-120 years and is also in the same catchment as the development. The government has an online auction service where landowners can list what possible environmental improvement areas they have on their land and then developers can bid to use these nitrate improvements to offset and increase in nitrogen loading their site might cause. This scheme is currently being piloted in the Solent (Hampshire) catchment area, however it is likely it will expand to other areas around the UK.
Phosphate offsetting is another factor developers must consider. Before submitting a planning application, the developer must assess how much phosphate pollution will be produced and must put a plan in place to reduce the effects. If this isn’t possible, they will have to look to offset any net gain. Phosphate offsetting projects are similar to nitrate offsetting projects, with developers paying for landowners to take land out of production to reduce any runoff. This form of scheme is only being considered on the Somerset levels at the time of writing, however other pilot schemes are likely to be trailed across the UK in phosphate vulnerable zones.
The tax issues for eco systems services
There will be tax questions to be addressed for landowners looking to provide eco-systems services. The tax treatment of any payments received will be determined by the precise nature of what is being undertaken, equally what expenses can be offset will also be dictated by the facts. Also, where there is a major change in land use or management style, it is always important to understand whether this could have an impact on the inheritance tax reliefs available over that land. It may also be a good time to consider tax planning, such as passing the assets onto the next generation before the land value increases from the opportunities arising.
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