Carbon Contracts - Frequently Asked Questions - FAQs

1. Peatland Carbon Unit means a unit of peatland carbon - equivalent to one tonne of active CO2 emission reductions - as defined under the Peatland Code.

2. This will be included within the grant application form.

3. Yes, Carbon Contracts are designed to work in conjunction with grant funding, although they are also designed to be a tool by which to increase private finance and reduce the value of the grant applied for.

4. No, Carbon Contracts are calculated in conjunction with grant applications.

5. No, Carbon Contracts are a tool to increase private finance contributions so would not be applicable to any applications not contributing any additional funding.

6. There is an expectation that the contribution will be at least 20% of the capital costs of restoration. This does not include maintenance costs. This could be in the form of landowner equity or capital, community investment or external investor capital.

7. No, to be eligible for a Carbon Contract projects must be registered and managed under the IUCN UK Peatland Programme for Peatland Code and be able to provide the Peatland Code project number.

8. No. Each Carbon Contract will differ, and applicants are invited to propose a unit price that they feel is appropriate for their project whilst still maintaining the value for money criteria annotated in the calculator.

9. It will be the responsibility of the seller to ensure that the project is verified and managed according to the standards set out under the Peatland Code, and the number of PCUs  issued is recorded in the UK Land Carbon Registry. Failure to manage the peatland post restoration in accordance with the standards set out in the Peatland Code will result in the termination of the Carbon Contract. 

10. The time period in which the emission reductions have taken place.  For the Peatland Code, the delivery of carbon is predicted and verified in five or ten-yearly blocks, for example 2017-2027. Each time period is known as a vintage. Under the Carbon Contracts scheme, PCUs can be sold to the Scottish Government in Vintages 5, 15 and 25. This is therefore year 5, year 15 and year 25 of the project.

11. Yes. Under the Carbon Contract scheme, PCUs can be sold to the Scottish Government in Vintages 5, 15 and 25. This is therefore year 5, year 15 and year 25 of the project. This may include focusing on earlier Vintages where projects are seeking greater short-term income certainty or looking to support financing arrangements linked to earlier cashflows.

12. Up to the maximum number of units forecast by the Peatland Code carbon calculator for the relevant vintage, noting that only verified units will be eligible for purchase once the vintage matures. Where a small number of units are contracted and results in a disproportionately high unit price, this may be considered poor value for money.

13. This will be undertaken in writing to Scottish Government. The Carbon Contract can be cancelled at any time prior to any sales being made.

14. No. Applicants will not be under an obligation to sell their credits to Scottish Government when the relevant Vintage matures (time periods during which the underlying emissions reductions activities are expected to occur). However, they must inform Scottish Government no later than three  months prior to the end of the Supply Period.

15. Purchases will be carried out, and credits held, on behalf of the Scottish Government by an approved third-party organisation. 

16. The purchase price will be index-linked on an annual basis based on the 12-month rate Consumer Price Index in April of each year as published by the Office of National Statistics.

The contract will detail the agreed price at which Scottish Government will purchase peatland carbon credits and will note which PCU yield purchases will be made from. This allows the contract to be flexible.

17. Yes you can apply for a Carbon Contract through all Peatland ACTION delivery partners and should approach the relevant partner for further information.