Carbon Could Be the New Cash Crop After Brexit
(Bloomberg) -- Subsidies paid to U.K. farmers could be replaced after Brexit by cash from selling carbon credits, inducing more landowners to plant trees and protect marshlands that sequester greenhouse gases.
Carbon farming has gained traction alongside markets that put a price on pollution. It’s an agricultural technique that stores carbon dioxide emissions by regenerating soil and vegetation. Farmers can potentially get paid by switching to more Earth-friendly activities from destructive ones like cattle raising, which compound and accelerate climate change.
“Payments and subsidies will not come for just holding land anymore, or even for food productivity,” said Edward Hanrahan, the director of ClimateCare Ltd. Parliament is creating a new “direction of travel to pay farmers for ecosystem services,” he said.
U.K. farmers got 3.9 billion euros ($4.3 billion) in subsidies from the European Union last year which went to some 17.4 million hectares (43 million acres) of agriculture. Carbon-markets could help replace those payments once the country leaves the bloc while also supporting the U.K.’s ambitious target of becoming carbon neutral by mid-century, according to Hanrahan.
ClimateCare, once owned by JPMorgan Chase & Co., already provides carbon offsets. It creates and preserves woodlands for companies that want credits and is preparing to meet higher domestic demand. Aviva Plc and Linklaters are among the clients that have contracted ClimateCare to offset emissions.
The structure of the U.K.’s carbon market after Brexit is still open and whether credits are compulsory or voluntary will determine demand for the instruments, according to Hanrahan. Currently, factories, utilities and airlines are legally required to offset pollution. Slack demand has characterized carbon markets, most notably a United Nations program designed to promote clean-energy investment.
Other groups are also looking to tap potential carbon farming opportunities.
The National Trust, the charity that owns about 1.5% of the land in England, Wales and Northern Ireland, has sponsored research at its 5,500 hectares Wallington estate. It estimated that the land stores about 1.27 million metric tons of carbon dioxide, according to its report.
Though the charity concentrates on conservation “carbon is a crop in itself,” said its climate change adviser Keith Jones by phone.
It’s already happening across the Atlantic, where Boston-based Indigo Ag Inc. says U.S. farmers can get more than $15 per ton for the emissions sequestrated through regenerative farming practices. The company expects to capture as much as 3 tons of carbon dioxide an acre per year.
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