Green Finance inquiry
30 January 2018
UK Forestry is one of the best ‘green’ investments available.
The Environmental Audit Committee launched a Green Finance inquiry to scrutinise the Government’s strategy to develop ‘world leading Green Finance capabilities’. The Committee is interested in how investment in longer-term sustainable development can be incentivised across the economy.
1. Forests capture carbon: The UK has one of the lowest levels of forest cover in Europe, 13%, compared with an average of almost 40% in the rest of Europe. Increasing woodland cover has been identified by the Committee on Climate Change as one of the best ways to reduce carbon emissions.
2. UK forests enhance natural capital: All modern UK forestry is regulated to the UK Forestry Standard, one of the best forestry standards in the world. This ensures that:
o No commercial forestry is planted on important environmental sites, including SSSI’s, deep peat, or ancient woodland.
o Every forestry unit includes no more than 75% productive crop, with the remainder managed for biodiversity and including a proportion of open space and native woodland.
o The forest unit is designed to improve the quality of soil and water, reducing soil erosion, reducing flooding, restoring rivers to a more natural state, and creating new wildlife areas such as riparian habitats and wetlands.
o Timber is planted in blocks so that, as trees are harvested, the forest develops a diverse age structure. At harvesting, standing and fallen deadwood is left on site for fungi, invertebrates, mosses, and the wildlife supported by them such as Woodpeckers. Over several cycles of harvesting and replanting, what began as a new ‘plantation’ matures into a rich wildlife habitat. The Biodiversity in Planted Forests report (Forestry Commission 2003) identified a higher number of species living in spruce plantations than in oak. Wildlife and Countryside Link have highlighted the benefits of managing broadleaf woodland for woodfuel, to increase biodiversity as well as provide an income.
o The forest unit is designed to enhance the appearance of the landscape and improve public amenity.
3. Timber replaces damaging alternatives: Increasing the amount of timber in construction can replace carbon-hungry materials. Globally, cement manufacture is one of the biggest anthropogenic emitters of CO2. New timber technologies like Cross-Laminated Timber mean that UK-grown timber could replace almost all of the brick, steel or concrete currently used in construction. Timber can provide an environmentally-friendly alternative to polluting materials in many other ordinary products. For example, the supermarket Iceland has committed to replacing all its plastic packaging with paper-based alternatives by 2023: all of this will have begun life as a tree growing in a forest.
4. The UK is over-reliant on global forests: At present, the UK imports around 80% of its timber, and is the second biggest net importer of timber in the world, after China. Growing more UK timber would not only have great economic benefits, it would reduce our impact on global forests which are under increasing pressure of over-exploitation as timber demand grows.
5. Harvesting timber to use wood products such as construction locks up carbon for many more years while new trees grow in their place. Every cubic metre of wood built into a house locks up a tonne of carbon.
6. Forestry is profitable: A ‘green investment’ is of little value if its returns are too uncertain to attract funding. Average annual returns from forestry during the past 23 years have been 9%, and the price of timber is unlikely to fall in the foreseeable future. In the long term, WWF estimates that demand for timber will treble by 2050. Unless we make the green investment now, we will be both unable to benefit from that demand, and are at risk of increasing our environmental impact and facing reduced standards of living as global timber resources run short.
Why does forestry need to be recognised as a ‘green investment’?
Although the investment is strong and the environmental standards are world-class, it has become increasingly difficult over the past 30 years to gain permission to create new productive forest.
Because of the long-term nature of forestry, trees planted in the mid-twentieth century on inappropriate sites (such as on peat bog or ancient woodland) are still standing as a reminder of mistakes of the past, although most of this timber is now being harvested and the forest ‘restructured’ to the UK Forestry Standard, or in some cases removed altogether.
This means that in England and Wales, the area of productive forestry has considerably diminished. But the caution and opposition of public bodies and NGO’s mean that all applications to plant new forests risk considerable delay, cost, and potentially cancellation. The result is that investors are hesitant to back a forestry project.
It is difficult for farmers to plant forest on their land, as the long gap between investment and return creates a cash-flow problem for their business.
Recognising forestry as a Green Investment would send a message to regulators and the public that a forest has multiple environmental benefits, and would help to raise investor confidence. It could also make it easier for farmers to seek green finance to help them over the 35-year establishment period of a forest, at which point it will become a profitable harvest for their business.