Is there a rationale for admitting the Woodland Carbon Code (WCC) into the UK Emissions Trading Scheme (UK ETS)? How would admitting the WCC into the UK-ETS affect the pricing of WCC-verified carbon units (WCUs)? What would be the impact of the price discovery for WCU in afforestation and carbon sequestration?
The research assesses the price impact of admitting the WCC into the UK-ETS on WCUs, examining its correlation with afforestation, land values, national tree planting goals, and its impact on regional carbon sequestration. The inclusion of WCC into the UK-ETS is expected to
significantly increase the price of WCUs versus current prices, attracting greater levels of investment into UK afforestation projects more quickly and enabling the UK’s Government to come closer to achieving its climate and net zero ambitions. This paper also delves into the WCC, and the UK-ETS, and presents best practices from New Zealand’s carbon markets, as well as exploring the latter’s correlation with other regional markets such as the EU ETS. The resulting policy paper suggests recommendations addressed to policymakers, regulators, investors, and other regional carbon markets.