How does the auction work?
The auction allows you, or your authorised agent on your behalf, to bid for funding to pay for future carbon credits, known as Woodland Carbon Units (WCUs), generated by establishing new woodlands on your land.
To do this you bid for the amount of money, per WCU, that you need to make your investment both financially viable and worthwhile. Lower bids are more likely to be successful!
Once you or your authorised agent have registered on the site you can enter the details of your project using the project identification number included in the application confirmation letter from the Forestry Commission. You cannot enter the auction without the PIN.
The auction will operate on a simple single-shot, sealed bid process. You will therefore be asked to provide your best offer of the price that you require in order to make your woodland creation project viable and worthwhile. Bids are in Pounds Sterling per Woodland Carbon Unit (£/tCO2). You can amend your bid at any time until the auction closes but you will not be able to see other bids.
In order to ensure that the auction is a competitive process the Forestry Commission has set a number of constraints for the auction budget, a reserve price and the maximum number of WCUs that it is willing to buy.
Please see the Guide to the Third Auction for further details on how the auction operates.
While successful bids at previous auctions are not a predictor of the success of future bids, to help address uncertainty in what still is a developing market, we have decided to share the average price paid per woodland carbon unit in the last two auctions. In the first auction, held earlier this year, the average price was £24.11 and 18 out of the 31 applications were successful. In the second auction in June, the average price was £19.71 and 27 out of 77 bids were successful. However this should not be taken as a firm indicator of acceptable bids in the third auction. It should be born in mind that the auction is a competitive process and lower bids are more likely to be successful.
How are the Estimated Bid and Total Bid values calculated?
The Estimated Bid and Total Bid values are estimates of how much money could be paid under WCaG if your bid is successful. The individual values are calculated based on the number of WCUs and the bid price adjusted for inflation at 2.2%.
However it is important to emphasise that in practice the actual inflation rate in future may differ from 2.2% and the final sale value of WCUs will be adjusted accordingly. Therefore, the actual amount of money paid over the life of the contract will be different from estimates provided. Under the terms of the WCaG contract the price bid at auction will be index-linked from the date that planting is completed and calculated using the Consumer Price Index for April of each year as published by the Office of National Statistics.
How will I know if my bid is successful?
Once the auction closes you will receive an email confirming whether or not your bid is successful.
Can I change my bid once I've submitted it?
Yes. When you enter your project details and bid price you have the option either save the bid or to submit it. Saving a bid allows you to return to it at a later time but does not formally submit it into the bidding process. Submitting the bid formally enters it into the bidding process.
Irrespective of whether you save or submit your bid, you can still amend or withdraw it at any time until the auction closes.
What am I bidding for?
You are bidding for a contract which gives you the option to sell to the government the carbon sequestered by your woodland until 31st March 2056. Under the contract the government will buy the WCUs every 5 or 10 years at the price agreed in the auction. The auction price is protected against inflation for the life of the contract.
Full details of the terms and conditions of the contract are available at gov.uk/guidance/woodland-carbon-guarantee.
Can I begin planting my woodland in advance of the auction?
No. If you start planting your woodland or carrying out other on-site work before you have received an offer of a Guarantee contract after a successful bid in an auction then your project will not be eligible for the auction or a WCaG contract.
Full details of the eligibility criteria are available at gov.uk/guidance/woodland-carbon-guarantee.
What happens after the auction?
After the auction closes you will be notified whether your bid has been successful.
If your bid has been successful the Forestry Commission will write to you making an offer of a WCaG contract that is conditional on the project being validated under the Woodland Carbon Code. Once you have accepted the offer you can begin to plant your woodland, after which you can have the project validated and then sign the contract.
It is important to note that projects will not be eligible for WCaG if you have started planting or other on-site work before you have received a formal offer of a WCaG contract after a successful bid in an auction.
When and how will I be paid?
Once your woodland is planted it will need to be validated under the Woodland Carbon Code (WCC).
As the woodland grows it will be verified through the WCC to confirm the amount of carbon that has been sequestered. Each verification will release a number of Woodland Carbon Units equal to the amount of CO2 that has been sequestered at that point. You then have the option every 5 or 10 years (as set out in your contract) to sell the sequestered carbon to the Government for the guaranteed price. You can also choose to sell the carbon on the open market rather than to the Government at any time.
Contracts will only cover carbon sequestered for the first 30-35 years of the woodland’s life. The actual contract length will be determined by the starting year with all contracts ending in 2055/6. WCUs produced after 2055/6 can be sold privately but will not be purchased by the Government under WCaG.
Payment will be made by the Forestry Commission into your nominated bank account.
Who can I contact if I have a problem?
If you have a problem using the online auction tool, please contact the Forestry Commission at
firstname.lastname@example.org or on 0300 067 4822.
620 Bristol Business Park
Bristol BS16 1EJ