- 1. What is the UK Woodland Carbon Registry?
- 2. Who can purchase Woodland Carbon Units?
- 3. Accounts
- 4. Projects
- 5. Carbon Units
- 6. Listing Pending Issuance Units
- 7. Transferring Units to a buyer
- 8. Converting Pending Issuance Units to verified Woodland Carbon Units
- 9. What if Pending Issuance Units are not verified on time?
- 10. Using verified Woodland Carbon Units
- 11. Offering Units for Sale
- 12. What happens if account-holder circumstances change?
- 13. Registry Fees from 01 July 2013
- 14. Flowchart summarising the project registration and carbon unit issuance process
The UK Woodland Carbon Registry, launched July 2013, ensures open and transparent project registration as well as Woodland Carbon Unit issuance, tracking and retirement. The service is provided by the Markit Registry. This is a major step forward in ensuring the integrity of carbon reductions generated by Woodland Carbon Code projects. The registry incorporates a range of services including:
- A project register: This replaces the register provided by the Forestry Commission and accommodates both single projects and groups of projects.
- A carbon unit register: This enables projects to issue units, transfer them to credit buyers, and for credit buyers to use/retire/report them once verified. This is a new feature that ensures the integrity of claims and purchases.
- A 'request for information' platform: This provides a facility for projects or brokers to 'offer for sale' any unused (unretired) units. This is a big step forward in helping project developers find carbon buyers in the marketplace.
NOTE that Markit Registry Standard Terms and Conditions (PDF, 0.78MB) apply for aspects not mentioned here.
The following individuals or organisations can purchase carbon from Woodland Carbon Code Projects:
- Individuals who wish to purchase verified Woodland Carbon Units to use (ie retire) in order to reduce their net emissions (Note: individuals can’t have an account – see below).
- Organisations that wish to purchase units in order to reduce their net emissions - either
- Pending Issuance Units to use (ie retire) after conversion to verified Woodland Carbon Units; or
- verified Woodland Carbon Units to use (ie retire) immediately or in the future
- Organisations (which we call 'Retail Aggregators') who would like to purchase verified Woodland Carbon Units to sell on to other companies or individuals for them to use (i.e. retire) to reduce their net emissions.
- Organisations (which we call ‘Brokers’) who would like to purchase Pending Issuance or verified Woodland Carbon Units in order to sell them on to another organisation. However, Brokers must be registered and authorised by the Financial Conduct Authority to carry out a regulated activity under the Financial Services and Markets Act 2000. See the Financial Services Register.
We support the development of an active woodland carbon market in which woodland carbon units are exchanged in a transparent and legitimate way. Consequently procedures are in place to prevent the mis-selling of woodland carbon units; for example, to prevent sales of carbon units to members of the general public for investment purposes (rather than for immediate use (ie retirement). Guidance has been provided by regulatory and industry bodies on the appropriate use of carbon credits and the prevention of abusive practices. See UK Financial Conduct Authority here and here and the International Emissions Trading Association/International Carbon Reduction and Offset Alliance.
There are two main types of accounts:
- Project developer accounts – for organisations/individuals that own or manage projects
- Buyer accounts – for organisations which buy carbon credits from WCC projects; this include includes
- corporate end user accounts for those who are ‘buying to use’ and;
- trading accounts for those who are ‘buying to sell on’.
Individuals cannot hold a buyer account. An individual can only buy verified Woodland Carbon Units to retire immediately – they could buy direct from the project developer or from someone with a trading account, who can ‘retire’ the units on their behalf making clear the reason (e.g. ‘Retired in 2016 on behalf of Mr Smith to compensate for his March 2016 London-New York flight’)
Small corporate buyers can use a subaccount of the project developer from whom they buy units. In order to accommodate very small purchases by corporate buyers (
Corporate end user accounts – The buyer cannot sell on credits or return them to a project developer once they have purchased them.
Trading accounts – The account holder needs to be regulated by the Financial Conduct Authority.
There is no cost for opening a project developer account. There is a £200/£400 cost to open a corporate end user or trading account (See Section 13).
All accounts will be public on the UK Woodland Carbon Registry.
Project details held on Markit Registry are similar to those previously held on the Forestry Commission registry. However, there are now more ‘status’ options to show where projects are in the process, and project developers are now responsible for making changes to their project record and updating its status Any changes are then double-checked by Forestry Commission/Markit before the changes go live.
The various project statuses and the documents required at each stage are outlined below:
- Draft - When the project developer has started to enter the project on the registry but not submitted it. (Details entered at this stage do not appear on the public registry).
- Under development – The project developer has entered the project details and uploaded the draft carbon calculations. The project is now ‘registered’ and will appear on the public view. However, carbon calculations remain private.
- Under Validation – The project developer has entered a contract with the validation body and has also uploaded a map of the site and draft PDD. (Draft documents remain private).
- Active (=Validated) – The project has been validated and the project developer has uploaded the final PDD, map, carbon calculations and Validation Statement (which will be public), and group agreement (which will remain private) if a group. Depending upon the project setup the project developer may also need to upload a document to show they own the right to the carbon units (a ‘proof of right’) or that they have the right to represent the landowner in the registry (a ‘communications agreement’). Standard content for these agreements is available from Markit or the Forestry Commission.
- Active (=Verified) – The project has undertaken a verification and the project developer has uploaded a monitoring report and a valid Verification Statement for that period.
There is no cost to register a project.
All projects will be shown on the public view of the UK Woodland Carbon Registry once they move from ‘Draft’ to the ‘Under Development’ stage. Project Documentation will be public unless indicated otherwise above.
The register includes two types of carbon units, which have different purposes:
- Pending Issuance Units (PIUs): The purpose of these units is to demonstrate the quantity (tonnes CO2) of potential future sequestration. PIU’s will help to keep track of up-front sales/purchases but they cannot be used/retired/reported.
- Woodland Carbon Units (WCUs): When a project is verified, PIU's which have been confirmed as sequestered will be converted to WCU's. These units can be considered as full carbon 'credits', and as such can be used/retired/reported.
PIUs and WCUs only exist in the UK Woodland Carbon Registry, and ownership can only be transferred between Markit account holders. Units are assigned a 'vintage', which is the time period in which they are anticipated to be delivered (PIUs) or were actually delivered (WCUs). Each unit is allocated a unique serial number.
All units, PIUs and WCUs, will be public on the UK Woodland Carbon Registry.
Once a project is validated, Pending Issuance Units will be listed, in time periods called vintages (see below), for the lifetime of the project. For groups of projects, units will normally be issued to each project within the group, rather than to the group as a whole.
Vintages are determined by the monitoring and verification schedule as set out in WCC guidance. The first vintage is 5 years from the carbon project start date (last date of planting) and subsequent vintages are in 10-yearly periods. There are special arrangements for older projects whose first verification is not 5 years after the start date.
The Forestry Commission owns an account called ‘WCC PIU Buffer’ and the buffer contribution for each project will be allocated to this account. The PIU buffer cannot be claimed from; it simply indicates the potential size of the Standard’s buffer account once these units are converted to verified units.
For example, a 100-year project, which will generate 50,000 tonnes of carbon dioxide over its lifetime, where the risk assessment has indicated 21% of units should be allocated to the buffer, might list PIUs as shown in Table 1.
|Total Units over project lifetime||50000||10500||39500|
Table 1: Allocation of units to vintages for a project which will sequester 50,000 units in total.
There is a cost to list Pending Issuance Units: Upon validation, the project developer is required to pay Markit 6 pence per unit to list PIUs for the lifetime of their project. Units are initially listed in the project developer’s account. The project only pays for units issued to the project (and not those issued and transferred to the buffer). In this case, 39,500 x 6p = £2,370. This 6p/unit cost can be added to the price of carbon units sold.
All issuances will be shown on the public view of the registry.
Pending Issuance Units cannot be sold to individuals.
This section refers to either Pending Issuance Units or verified Woodland Carbon Units. Sales of carbon units are conducted between the parties on a one-to-one basis, but once agreed, the project developer must transfer units to the buyer’s account. Both seller and buyer have to agree to the transfer before it can take place.
There is no cost to transfer units to a buyer.
All holdings will be shown on the public view of the registry.
When a project is verified at the end of a period/vintage, the number of Pending Issuance Units verified in the period / vintage will automatically be converted to verified Woodland Carbon Units once the Markit Operations checks all Monitoring and Verification reports are in place. This will occur both for PIUs originally allocated to the project (which may have already been sold on) as well as those allocated to the WCC PIU buffer account. Units are converted in serial number order (i.e. the first PIU issued in each vintage is the first to be converted). For clarity, conversion from PIU to WCU involves the cancellation of PIUs (from the account in which they are currently held), issuance of WCUs in the project developer’s account and the automatic transfer of the WCUs to the account which held the PIU.
This principle is fine where the actual verification indicates the same number of units as the prediction. However an approach for dealing with instances where the actual verification differs from the prediction is outlined below and is in line with the way most existing carbon markets would operate if a project over- or under-delivers within a given vintage:
Note: bear in mind the prediction / allocation of PIUs in Woodland Carbon Code projects is very conservative, so we hope that, if anything, projects are likely to over-deliver; the possibility that they would under-deliver is minimal unless poor management or unavoidable circumstances mean the project is failing for some reason.
For a given vintage, if verification confirms more units were delivered than allocated to PIUs: In proportion the additional units are allocated to the project and the WCU buffer (Table 2).
|PIUs (Prediction)||Actual Verification||Action||Cost of Transfer|
20 PIU Buffer units cancelled.
22 WCU Buffer units listed.
80 PIUs cancelled.
80 WCUs issued and transferred to carbon buyers if sold.
8 WCUs issued to the project developer.
|3 pence per unit for the 88 WCUs issued.|
Table 2: Conversion of PIUs to WCUs in the case of overdelivery
If verification confirms fewer units were delivered than allocated to PIUs: In proportion the fewer units are allocated to the project and the WCU buffer. PIUs not delivered are cancelled (Table 3).
|PIUs (Prediction)||Actual Verification||Action||Cost of Transfer|
20 PIU Buffer units cancelled.
18 WCU Buffer units issued.
80 PIUs cancelled.
72 WCUs issued and transferred to carbon buyers if sold. The first in serial number order.
8 PIUs - the last in serial number order - are not fulfilled. If sold, this is a contractual non-delivery of goods issue for the seller and buyer to resolve.
|3 pence per unit for the 72 WCUs issued.|
Table 3: Conversion of PIUs to WCUs in the case of underdelivery
Contracts between buyer and seller might need to be flexible about the amount delivered but not the timing, for example:
- Guaranteed (I’ll give you 100 units in year x. If it’s not from my project I’ll give you some from another WCC/other project) or
- Unit-contingent (I’ll give you about 100 units in year x +/- y%. Pay for what I deliver).
There is a cost associated with issuing Woodland Carbon Units: Project developers will pay Markit 3 pence per unit to convert WCUs upon verification. The number of WCUs issued will be charged. For example in Table 1, for the first vintage (1/4/2013-31/3/2018) 395 units converted at 3p/unit = £11.85. This 3p/unit cost can be added to the price of carbon units sold.
Pending issuance units shall be verified by the last date of a vintage period, unless there are extenuating circumstances for a delay which should be agreed with the Forestry Commission and Markit. Extensions might be granted if, for example:
- You demonstrate you’ve applied to the verifying bodies in good time but they are unable to process your validation before the deadline
- A verification suggests corrective actions but they cannot be completed before the deadline due to weather/time of year etc
- Projects which are geographically close are due to be verified in consecutive years and you would like to verify the two projects together
If a project developer has an agreed extension they must upload a signed Verification Extension Approval to the registry. Carbon units (both PIUs and WCUs) can be transferred as normal.
If you do not verify by the last date of the vintage period or any agreed extension:
- ALL remaining PIUs for the duration of the project are cancelled (those owned by the project, those sold and buffer units)
- Any unsold WCUs are automatically retired
- WCUs (sold and buffer) from previous vintages remain valid
- The project remains in the system and is marked ‘CANCELLED’
- No further units can be issued at any time.
- It is still possible for existing buyers sell on or retire WCUs held from previous vintages.
It is possible for a project developer to withdraw from the WCC and the registry before the end of the project duration in the following circumstance: If all units sold have been delivered as verified WCUs and only unsold PIUs remain. In this case, all WCUs will remain valid (both for the project and the buffer) and PIUs (unsold and buffer) will be cancelled. Future management must maintain the level of carbon stock that has been sold.
There is no cost to cancel PIUs/retire WCUs in any of the cases listed in 9.
NOTE: During 2014/15 we will be clarifying the verification process for Woodland Carbon Code projects. We will consider ways to encourage projects to maintain verification. We may, as a result, update this section of the ‘Registry Rules’.
Only verified Woodland Carbon Units can be used or reported to help compensate for a company’s or individual’s emissions. The WCC guidance on carbon statements and claims gives further information.
The process for representing the ‘use’ of a verified Woodland Carbon Unit in the registry is by ‘retiring’ (putting beyond use) the units you wish to use, and leaving a retirement remark as desired (e.g. ‘Retired in 2017 as compensation for 500 tCO2 of our 2016 emissions as detailed in our Annual Environmental Report 2017’).
All retirements will be shown on the public view of the registry.
Markit’s Request for Information (RFI) Platform is an additional avenue to liquidate credits; It is an anonymous online platform for the over-the-counter (OTC) environmental credits market that displays credits available for sale. The RFI Platform also allows buyers to display their interest in purchasing credits including indicative quantities and prices. These credits are searchable and viewable by registered participants. Upon expressing an interest in any credits ‘for sale’ or ‘wanted’, the buyer or seller can send an "Expression of Interest" to the counterparty. Introduction through the Markit RFI platform then enables the two parties to start discussions on the terms of a potential transaction.
Regarding the pricing of credits, it is the seller who decides the price and Markit does not provide any information / consultation.
There is no fee to use the Request for Information Platform which is accessible by anyone with a Markit Environmental Registry account.
Project Developers: If a project developer wishes to exit the business it is possible to transfer projects to another project developer or management organisation, sell or retire carbon units and then close their account. However, if a project developer abandons its account(s) with the UK Woodland Carbon Registry without arrangements for the ongoing management of units by another organisation (or its agreement with Markit is otherwise terminated) then;
- All PIUs listed for that project developer will be cancelled regardless of which account holders may be holding the PIUs at the time of cancellation
- Any WCUs still held by the project developer will be transferred to a ‘suspension’ account. If resolution of that account is not corrected within 5 years those credits will be retired
- Any WCUs already received by a buyer (in a subaccount or a corporate end-user account) will remain valid in the buyer’s account
- A buyer of WCUs who holds their units in a subaccount of the closed project developer account can have their account converted into a corporate end-user master account at zero cost.
Buyers: If a corporate end user or trading organisation is acquired by another organisation then it is possible to transfer units to the purchasing company’s account. However, if a Corporate End User or Trader who holds PIUs or WCUs abandons its account(s) with the UK Woodland Carbon Registry without arrangements for the ongoing management of its units (or its agreement with Markit is otherwise terminated), all PIUs or WCUs listed for that account holder will be put on hold until further instruction is received from the liquidator or administrator. If no instruction is received within 5 years, then any remaining PIUs will be cancelled and WCUs in the account will be retired.
This is a summary of the fees involved in using the registry. They are also detailed above in the relevant section. See full details of fees.
Costs for Project Developers:
Project developer costs have been kept to a minimum and it's FREE for a project developer to open an account on the registry.
Projects validated after 01 July 2014: the total fees payable are only 9p per unit over the project's lifetime. This is broken down into
- 6p per unit for listing of PIUs, payable at validation (This includes a 3p/unit WCC Levy which goes to the Forestry Commission to help fund the management costs of the Woodland Carbon Code)
- 3p per unit to convert PIUs to WCUs, payable at each verification for the units verified.
Costs for Credit buyers:
Credit buyers are required to pay a fee to create an account as follows:
If a carbon buyer purchases, or plans to purchase 500 units or more in total (from any project) then they open their own account at a cost of:
- £400 for larger businesses
- £200 for NGO's or smaller businesses (those with < 10 employees)
If a carbon buyer doesn't plan to purchase 500 units or more in total (from any project developer), then they can choose to have a 'subaccount' in their name, under the account of the project developer. This is FREE. However, if that carbon buyer subsequently buys more than 500 units in total, they must open their own account which will be charged as above.
Once a carbon buyer pays a one-off fee for an account it means they can:
- purchase carbon units (pending issuance or verified) from any WCC project (outwith the registry) and have them transferred to your account (on the registry)
- demonstrate use (i.e. retirement) of WCUs
- access the RFI platform (a 'for sale' and 'wanted' board) to see Woodland Carbon Units and other carbon credits available for purchase