FCo Rural Estates Newsletter Spring 2022 - Flipbook - Page 12
4 – Carbon capture on farms
James Maxwell
Rural estates face a growing number of schemes in which the delivery
of environmentally beneficial land management practices will be
harnessed to generate carbon credits or biodiversity tokens for sale.
These range from woodland creation to increase tree carbon storage,
to changes in farming practices that improve carbon storage in the soil.
But the way in which the interests of different stakeholders intersect in
farmland means careful thought must be given to the ability to enter
into such schemes and the implications of doing so.
Tenancy agreements
Tenants will often find they have to open up discussions with their landlord before
entering into such schemes, as there may be a variety of provisions within their tenancies
that impede them from doing so.
•
Reservations: farm tenancies will commonly reserve timber to the landlord, but sometimes
also the right to plant new trees. The right to install renewables apparatus may be reserved.
•
Tenant’s covenants: user and alterations covenants may also be relevant, as can
provisions requiring particular farming practices. Remember that many modern form
tenancies include a clause requiring a landlord to consent to a tenant entering into
environmental or other schemes that place limitations or positive obligations on the
farming operations on a holding.
•
Termination: carbon credit schemes require commitment for a defined duration, so
the term of a tenancy (and a landlord’s right to break the term) will be pertinent to a
tenant’s ability to commit to a scheme.
Agricultural tenancies come in many shapes and sizes and contain a tremendous variety
of potentially relevant provisions. A tenant is as likely to be farming under a 60-year-old
Agricultural Holdings Act tenancy as a modern farm business tenancy. Each tenancy will
give rise to a different legal context for a proposed environmental scheme. Landlords
and tenants therefore need to consider the terms of each tenancy agreement carefully.
Through constructive dialogue landlords and tenants should be able to find ways forward
that are mutually economically attractive as well environmentally beneficial.
Other stakeholders
Owner-occupiers may also need to consider the interests of other (often overlooked)
parties before committing to environmental schemes.
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Other owners: if it is not just your name on the title, do you have the consent of
other owners?
•
Neighbouring landowners: do they have the benefit of restrictive covenants that
could prevent the installation of renewables apparatus? Are there other rights (such
as sporting rights) that may limit your plans?
•
Mortgagees: is the bank’s consent required for a change of use or physical alterations
to the land?
•
Farm partnerships: do you have the agreement of your fellow farm partners to enter
into a scheme?
•
Contract farming agreements: are you certain that the delivery of the specific
farming practices required by a scheme lie in your gift (and not the discretion of the
contract farmer)?
Rural Estates Newsletter
Spring 2022