A carbon revolution in the English countryside
27 January 2023 | Applicable law: England and Wales | 5 minute read
Blenheim Palace is one of the largest stately homes in England. With its Baroque style of architecture, gilded State Rooms, yew-tree maze and formal gardens landscaped by “Capability” Brown, the house has been designated a UNESCO World Heritage site. But it is best known as the birthplace and ancestral seat of Sir Winston Churchill, the “greatest Briton”.
Today, the wartime leader’s family are hopeful that the heritage property and its 12,000-acre estate will inspire the nation in the face of another global crisis: climate change.
“Carbon is a huge issue on the agenda at the moment. Everyone is thinking about it, what the solution might be and whether they can be part of it,” says Ed Jarron, a partner in Withers’ real estate team who works with many country estates.
The Blenheim Estate is leading the way, with an ambitious land strategy that aims to create the first carbon-negative estate. Its leaders have agreed ground-breaking partnerships with both public and private investment, managing almost 1,700 acres of grassland to support wildflowers, setting aside some 150 acres of arable land for farmland birds, and planting more than 250,000 trees on land which is unsuitable for food production.
According to Ed, smaller-scale conservation projects are springing up across the UK. “Each piece of land has its own nuances, but right now one very popular activity that individuals, estates and investors are jumping on is planting trees.”
Clients’ motivations for tree-planting vary. The Castle Howard estate, another well-known heritage property represented by Withers, planted 15,000 in 2022 as part of its woodland management plans. The firm’s real estate team also helped a philanthropist to establish the Heart of England forest, a tree-planting project covering 30,000 acres of woodland. Meanwhile, several financial services clients are gambling that the cost of carbon will rise significantly.
“The UK government has effectively underpinned the carbon market through the Woodland Carbon Code, which is one of several new measures announced since Brexit,” explains Bertie Hoskyns-Abrahall, a partner who leads Withers’ landed estates team.
“In simple terms, they have promised to buy carbon from landowners who plant trees, presumably hoping to kickstart a market where private entities will pay more. And there are financial clients who will speculate on that market. We act for one hedge fund founder who is buying up rural property because he speculates that the carbon could end up being worth more than the land.”
The UK government is not alone in its efforts to back tree planting at state level. China accounts for more than a quarter of the world’s new green areas. The Biden administration has announced plans to plant a billion trees over the next decade, while the European Union aims to plant 3 billion before 2030.
However, the Withers team sound a note of caution when it comes to individuals committing to carbon incentive schemes.1 “The volatility in food and energy prices since the war in Ukraine began is making the market a lot more challenging,” says David Holland, a partner in the real estate team. “With a lack of legal framework around the UK carbon code, and government policy in a state of flux, people need to weigh the risks very carefully before they buy or sell land, or change their business model in response to what could turn out to be a gold rush.”
Another area where Withers is seeing mixed results is in rural properties being given over to renewables projects. Over the past year Blenheim has begun construction of a 7MW solar array designed to take the Palace off grid, produced electricity from its rooftops, and invested in 'vehicle to grid’ technology. Next, it hopes to produce enough power for all the homes in Oxfordshire with a nationally significant solar park that, if consented, will come online in 2027.
Several other clients have dedicated land to anaerobic digestion (AD). Farmers are particularly well placed to run AD processes, which convert farming and food waste and other organic matter into biogas that can be used to generate electricity and heat, or even power vehicles. 2
Managing it, however, is “a full-time job”, says David. And when things go wrong, they go very wrong. The firm acted in litigation on behalf of one AD operator who had been delivered the wrong additives, which ended up compromising the entire system. The operator had had to buy additional feedstock and was obliged to sue to recoup his costs.
Many landowners are preferring not to put all their eggs in one basket until they have more clarity, both in terms of government policy and in terms of carbon solutions themselves. Instead, many are mixing traditional land uses such as farming with smaller, incentivised projects relating to renewable energy, carbon sequestration and biodiversity.