Introduced under the Kyoto Protocol in 1997, carbon credits are a scheme designed to funnel money into environmental projects in the name of offsetting. These credits have now taken on a much more considerable role in ESG finance with the creation of the Voluntary Carbon Market (VCM), which operates as a private market for companies and individuals seeking to offset their carbon emissions via carbon credits. The development of this method of offsetting has also spawned many other variations on ‘credits,’ such as regulations focusing on increasing biodiversity.

The Biodiversity Net Gain (BNG) legislation, introduced by the UK government in early 2024, operates similarly to carbon credits but within a regulatory framework, making it a statutory requirement for new developments to achieve a net 10% biodiversity gain. This can be accomplished by offsetting the negative impacts with BNG credits, much like how the VCM operates. In both cases, 9Trees has decided against producing carbon credits and BNG units for various reasons.

The main reasoning is that 9Trees wishes to focus on the quality of tree plantings it offers, along with many of the co-benefits it seeks to build into its forests and woodlands, such as habitat restoration and enhanced biodiversity. Furthermore, the connection between the entity funding the offset and the offset itself is a crucial aspect of what 9Trees offers, as the opportunity to visit the tree one has funded is unique to 9Trees compared with carbon credits and BNG units.

One of the main benefits of large offsetting schemes is that they allow projects to operate on a much more ambitious scale. Currently, 9Trees works with small-scale, altruistic landowners; by interacting with these schemes, there is potential for larger amounts of funding to be channelled towards initiatives like 9Trees, which can have a significant positive impact. This represents one of the main motivating factors for 9Trees to begin producing carbon credits and BNG units.

The increased appetite among companies to invest in ESG schemes means that high-quality offsets, such as those 9Trees is capable of producing, are in high demand. This would set 9Trees apart from other project developers. Its expertise in combining offsets with other vital benefits would create credits and units that fulfil multiple ESG goals, not just carbon offsetting. As long as there is a sustained focus on maintaining 9Trees as an ethical company (a key factor in its success), there is potential for substantial growth via carbon credits and BNG units.

However, although there remain challenges with both these schemes, 9Trees has the values and skills to address some of them, confirming that the products it offers will have higher integrity than others available today. If any landowners or companies would like to participate in 9Trees’ pilot study into carbon credits and BNG units, please do not hesitate to get in touch. It is an incredibly exciting opportunity for all involved.

What are Carbon Credits, and how do they operate?

For a carbon credit to become valid, it must be verified by an independent company. These verifiers come in many forms, such as Verra and Gold Standard, each using different methodologies for different types of credits. As 9Trees is principally concerned with credits generated from woodland, the most suitable verifier is the Woodland Carbon Code (WCC), established by Forestry England.

This is a government-backed scheme endorsed by ICROA, providing high-integrity credits from UK woodlands. The organisation partners with others, such as the Soil Association and Organic Farmers and Growers, to guarantee a rigorous verification process. This is extremely important, as the credits 9Trees aims to produce should be entirely trustworthy; using the correct verifiers is therefore vital.

What is the process of the Woodland Carbon Code?

Projects on the WCC do not produce carbon credits as soon as they start planning their woodlands. Instead, there is a process of transformation to reflect how trees sequester carbon. To facilitate this, the WCC has created two types of credits: Pending Issuance Units (PIUs) and Woodland Carbon Units (WCUs).

PIUs are a promise to sequester carbon; these cannot be used in carbon accounting for companies and are assigned a vintage year, which is when they are transferred into a Woodland Carbon Unit.

A WCU reflects confirmed carbon sequestration; these can be used in carbon accounting and offsetting when sold to external buyers. Companies can purchase both PIUs and WCUs, but they serve different purposes: PIUs are intended for future planned offsets once they reach their vintage, while WCUs are used for immediate offsetting. The price also differs, as PIUs are expected to be cheaper than WCUs, reflecting the uncertainty associated with credits that have not yet reached their vintage.

To be eligible to create carbon credits through the WCC, projects must follow its criteria to confirm all initiatives meet the same thresholds. First, the project must be registered before work starts on-site to guarantee the calculation process is accurate. Once registered, a project must meet other standards, such as permanent land use change to woodland, conformity with forestry standards, the Forestry Act, and EIA regulations, and must demonstrate both legal and financial additionality. To prove additionality, the WCC provides two tests, which confirm the planned woodland would not have been created without the WCC due to legal or financial constraints.

Once these principles have been followed, projects must adhere to a verification plan that assesses the planting at least every ten years and confirms alignment with the project’s initial calculations and management plan. Once all these steps have been completed and verified, the project developer is free to sell their PIUs or WCUs as they deem appropriate. This can be visualised in the following short timeline:

Year 0 – Registration and initial carbon calculation
Within year 3 – Start work, project design document, validation and issue PIUs
Year 5 – Project progress report, verification, start converting PIUs into WCUs
Year 15 – Project progress report, verification (at least every 10 years), converting PIUs into WCUs
Year 15+ - PIUs still converted into WCUs, with verification continuing

Various ethical and practical issues have so far held 9Trees back from producing carbon credits. These include concerns such as greenwashing and a lack of integrity in credit production, and that is why 9Trees has endeavoured to keep its values central to how it creates woodlands for carbon offsetting. Including a high level of biodiversity and preserving a strong connection to those funding the offsets, 9Trees has developed a product with far higher integrity than many carbon credits.

However, these are precisely the reasons why 9Trees could create WCC credits with such integrity. One way 9Trees aims to participate in the WCC is as a project developer, which would involve partnering with a landowner to produce carbon credits. This would allow 9Trees’ projects to be scaled in size while also channelling funds to landowners, such as farmers, who crucially need support. It would combine 9Trees’ expertise in woodland creation with the production of high-integrity credits that provide multiple co-benefits.

These co-benefits could include additional biodiversity or other ESG elements, while the credits would allow companies to include 9Trees’ work in their verified carbon accounting, rather than merely in their ESG funding budgets. Preserving the values that make 9Trees’ current work so special would remain the most important aspect of its involvement in the WCC. Without this ethical approach, the value of carbon markets would be significantly diminished. Approaching carbon credits from an ethical perspective allows for a more holistic approach to offsetting, rather than the reductive methods often criticised in conventional carbon credits.

One of the main criticisms levelled against carbon credits is that they are often disconnected from the companies that fund them. This disconnection enables greenwashing, as companies may purchase credits for marketing purposes rather than genuinely offsetting emissions. To combat this, 9Trees seeks a constant connection between the project and its funders through initiatives such as nature days or team planting days.

Supporters who visit the projects they have helped fund develop a much stronger connection to the impact they are making. If 9Trees were to begin producing carbon credits, maintaining this connection would be vital, with this potentially achieved by partnering with companies that share the mission of 9Trees. Bespoke carbon credits could be created with specific co-benefits if a partner company is particularly passionate about certain issues.

This approach allows the connection between projects and funding to remain intact, making greenwashing far less likely. 9Trees would need to identify a suitable partner willing to join a pilot programme to produce carbon credits, which would enable the WCUs to be included in the partner’s carbon accounting and offsetting.

While there are many potential benefits to initial WCC projects, 9Trees must also confirm that its credits maintain the high value it aims to achieve. Therefore, the initial pilot projects will adopt a cautious and measured approach, focusing on establishing the right methodology. However, if any landowners or companies are interested in partnering with 9Trees for this pilot project, 9Trees would be delighted to hear from them. More information will be provided at the end of the blog.

What are BNG Units and how do they operate?

As previously mentioned, BNG is a government scheme requiring real estate developers to increase biodiversity by 10%. This became a statutory legal requirement in 2024, making it compulsory for companies to comply with the legislation. This net gain can be achieved in two hierarchical ways: first, through on-site improvements; second, through off-site projects that compensate for lost biodiversity.

If a project developer cannot achieve the necessary biodiversity on-site, they must purchase statutory credits sold by the UK government, which are priced significantly higher than off-site units. These biodiversity gains must then be maintained for at least 30 years. Off-site units are usually purchased from third-party BNG project developers who convert land into areas rich in biodiversity to meet BNG quotas. This is where 9Trees aims to position itself, using its extensive woodland knowledge to create high-quality BNG units that developers can use to meet their biodiversity targets.

BNG credits are generated by creating or enhancing natural habitats. These credits are then sold to developers seeking to offset the environmental impacts of their projects. Several factors are considered to determine the number of BNG credits a project can produce:

Habitat type: The type of habitat being developed is key. Habitats such as peatlands or wetlands are more valuable, scoring higher due to their biodiversity richness. The distinctiveness of the habitat is rated on a scale from 0 to 8, with 8 representing the most unique and valuable ecosystems.
Habitat condition: The quality or condition of the habitat is another crucial factor. A healthier, more biodiverse habitat scores higher on a scale from 0 to 3, with 3 indicating optimal conditions.
Habitat size: The area of the habitat also contributes to the calculation; the larger the area, the more BNG units it can generate.
Strategic significance: Some habitats are of particular importance due to their role in supporting specific species of plants or animals. If a habitat holds local significance, a multiplier of either 1.15 or 1.1 is applied to the BNG calculation.

These four values (habitat type, condition, size, and significance) are multiplied to calculate the number of BNG credits a project can generate. This process can be carried out using the BNG Metric Tool, which simplifies the calculation.

Spatial Multiplier

Developers are encouraged to purchase BNG credits that are close to their development sites. This local focus helps avoid issues similar to those associated with carbon credits, where offsets can be purchased globally without benefiting the local environment. If a developer buys BNG credits within the same Local Planning Authority (LPA) or National Character Area (NCA), no penalty is applied.

If credits are purchased in an adjacent area, a 1.5× multiplier is applied. Purchasing credits nationally carries a 2× multiplier, making the process more costly. This creates an opportunity for BNG projects located near areas with high development potential, as these credits are likely to be in greater demand.

To produce BNG credits, developers must:

Plan habitat creation or enhancement: Before starting work, a baseline biodiversity assessment must be recorded to measure future improvements.
Use the BNG Metric tool: This helps calculate the number of BNG credits a project can generate.
Register the project: Once calculated, the project and its credits must be registered. Developers may begin work before selling the credits or wait until they are sold, depending on their risk tolerance.

Costs for Landowners

Landowners looking to participate in the BNG market face several costs, including:

Habitat creation or restoration
30 years of management commitments
Remediation if the habitat is damaged
Regular assessments by ecologists

Landowners must also complete certain legal documents, such as an agent authorisation form (if applicable), land registry entries, biodiversity metric spreadsheets and an S106 agreement, which legally binds the landowner to deliver the habitat improvements.

Registration costs for a BNG project are currently £639, with an additional £45 fee for each development. These costs can be offset by entering a profit-share agreement with a third party, such as 9Trees, in exchange for a portion of the revenue generated from BNG credits.

The value of BNG credits is currently variable, with estimates ranging from £20,000 to £100,000 per credit. The price depends on the rarity and quality of the habitat being restored or created. DEFRA estimates that the BNG market could reach between £135 million and £274 million annually.

Landowners do not need to undertake any habitat work until a credit is sold. Once a credit is purchased, work on the site must begin within 12 months, reducing the risk of investing in unsold BNG credits.

How 9Trees aims to be a part of this

Biodiversity has been a critical focus throughout the projects that 9Trees has completed. Drawing on this knowledge and experience, 9Trees is well placed to partner with landowners to produce BNG units. These units would be created in a bespoke manner for project developers who require off-site BNG credits, following a process similar to that used for producing carbon credits.

Using 9Trees’ expertise in woodland creation, each BNG project would be designed to maximise biodiversity outcomes while meeting the legal and ecological standards required by the scheme. This approach confirms the resulting credits are of high quality, providing genuine environmental benefits for developers and their projects. In addition, 9Trees’ hands-on approach allows for a strong connection between the landowner, the project, and the developer, maintaining transparency and integrity in the BNG process.

How can you get involved?

Both WCC credits and BNG units present exciting opportunities for 9Trees. These initiatives will be approached cautiously to guarantee that the company’s values and identity are preserved. Consequently, the pilot programmes for both schemes will be rolled out gradually. Landowners with previously used land that could be converted into woodland and are interested in these schemes should contact 9Trees for an initial discussion.

The first stages of these projects are critical, so input from landowners on how 9Trees can best partner with them is essential. Any preferences regarding aspects of the project that landowners would like 9Trees to manage or adjust can be agreed upon before submitting the initial stages to the WCC or DEFRA for BNG units.

Companies that have explored funding carbon credits but hesitated due to ethical concerns may find this a suitable opportunity to support a project without those objections. 9Trees will seek a partner company to purchase the credits generated from the first project, allowing input on any additional benefits they would like the woodland to provide.

Project developers seeking off-site BNG units may also find this opportunity suitable, as bespoke BNG units can be tailored to meet the requirements of specific projects. This may include considerations such as the Local Planning Authority in which the units are created.

In all cases, the connection to the projects will remain central. Ethics and transparency are fundamental to decision-making regarding these initiatives, making 9Trees an ideal partner for producing high-integrity credits and units. Interested parties are invited to contact 9Trees to begin initial discussions.

By Harry Leeds, Researcher

Carbon Credits, Without the Greenwash: 9Trees’ Ethical Approach