UK Nature Carbon, Made Clear Knowledge share series
We are entering a new era of nature carbon investment. Corporate climate strategy is shifting from short-term offsetting to long-term investment in natural capital. There is now a strong focus on securing nature restoration projects with strong co-benefits, such as restored ecosystems and resilient landscapes, alongside carbon removal. In this article, we explore two different ways that companies can acquire nature carbon credits.
The South Downs Woodland Project, co-developed by the South Downs National Park, National Parks Partnerships and Palladium under the Revere collaboration, exemplifies this evolution. As one of England’s largest woodland creation initiatives, it will establish up to 1,000 hectares of native woodland across sites owned by multiple farmers, with the potential to sequester 200,000 tonnes of CO₂ by 2056.
As businesses seek to meet their net zero commitments, the decision is becoming less about whether to proceed and more about how best to acquire the credits they need. Two mechanisms dominate: Upfront Finance and Forward Purchase Agreements (FPAs). Each delivers verified carbon credits, but with different implications for capital deployment, risk and strategic value.
The decision for businesses is becoming less about whether to proceed and more about how best to acquire the credits they need.
Understanding the main carbon buying models
Option 1. Upfront Finance: enabling supply
Upfront Finance provides capital from carbon buyers to the project developers at the point of project readiness, enabling delivery after years of careful planning. For woodland creation, upfront finance allows project developers to cover establishment costs, including land preparation, tree planting and tree protection measures. Buyers secure future carbon credits at current prices, issued over time either as Pending Issuance Units (PIUs) or Woodland Carbon Units (WCUs) as verification milestones are met.
Key characteristics:
- Capital deployed at the point of project delivery
- Credits delivered as PIUs or WCUs over time
- Advantageous pricing reflects avoidance of need for third party investment and early-stage risk
- Direct role in enabling project delivery
- Strong co-development positioning.
Upfront financing positions businesses as early participants in building natural capital assets. It has the strategic advantage of demonstrating proactive climate investment but requires significant early capital commitment.
This approach suits organisations with capital available to deploy now, in order to secure a supply of credits in the future.
Option 2. Forward Purchase Agreement (FPA): securing supply
Forward Purchase Agreements allow buyers to commit to purchasing credits at an agreed point in the future and at a fixed price, with payment triggered only once credits are verified. In this scenario, third party investment is likely to be required to provide capital for project delivery. This pushes up the price of the carbon credits because the third-party investor requires financial as well as environmental returns. This is the model used by large-scale buyers such as those within the Symbiosis Coalition, who have a pressing need for high volumes of credits and the ability to commit future funding at scale towards credit acquisition.
Key characteristics:
- Deferred payment structure
- Lower exposure to risks of early stages of project delivery such as poor tree establishment
- Price certainty over time, but higher pricing due to inflation and factoring in third-party investor returns
- Matches credit supply to net-zero timelines
- Transactional in nature, limited or no involvement in project development.
FPAs are designed for predictability, aligning procurement with verified outcomes rather than project initiation. However, buyers need to be aware that they will have limited or no influence on project outcomes and reduced differentiation in sustainability positioning. They are also likely to pay a higher price per unit.
FPAs are best suited to organisations prioritising certainty and scalability, without the need for upfront payment.
Why the difference matters
The distinction between these models is not the end-product, but the role capital plays in generating it. The choice determines whether an organisation primarily enables supply or secures it.
The distinction between these models is not the end-product, but the role capital plays in generating it. The choice determines whether an organisation primarily enables supply or secures it.
| Aspect of model | Upfront Finance | Forward Purchase Agreement |
| Timing of payment | Immediate (pre-verification) | At or after verification |
| Risk profile | Higher (payment before execution and verification) | Lower (pay on delivery) |
| Price | Secured at today’s levels | Fixed future pricing (incl. investor return) |
| Impact | Enables project creation | Secures future supply |
| Corporate positioning | Co-creator, early leader | Buyer |
| Accounting treatment | Typically capital expenditure, pre-payment | Typically operational expenditure, payment at delivery |
| Buyer motivation | Leadership, innovation, cost control | Compliance |
A strategic blend?
Organisations can adopt a portfolio approach, combining both nature carbon buying methods to balance impact and financial control.
For example, a company could opt for:
- 30% upfront finance to support new project development
- 70% FPAs to secure verified future credits.
This approach enables early impact while maintaining budget discipline and delivery assurance.
Integrity and co-benefits
Mechanism choice does not replace the need for high-quality underlying projects. Credibility depends on robust standards, transparent accounting, and measurable outcomes.
In the South Downs Woodland Carbon Project, this includes:
- Verification under the Woodland Carbon Code
- Conservative carbon estimates with risk buffers
- No double counting or competing revenue claims.
Beyond carbon, the project delivers additional value through biodiversity enhancement, landscape connectivity and diversified farm incomes. These co-benefits strengthen the business case by aligning climate action with broader environmental and community priorities to create a compelling narrative for use with customers and stakeholder.
Conclusion
The transition to a net-zero economy will not be achieved through transactional offsetting alone. It requires transformative partnerships between business and nature.
Whether through Upfront Finance or Forward Purchase Agreements, the key is that businesses commit to providing funding that will enable woodland planting projects to start today. Trees take time to grow and decades to start removing carbon at scale. Every agreement made now is not just commercially astute – it will pay nature and climate dividends in decades to come.
The South Downs Woodland Project offers partners the opportunity to explore both funding pathways. It is ready to begin, with verified methodologies, engaged landowners, and provides a blueprint for scaling nature recovery across the UK’s protected landscapes.
By choosing the right mechanism – or combining both – businesses can kick-start vital nature and climate projects, build business resilience and help to regenerate the natural systems that underpin our economy.
This insight article is by Revere, a UK National Parks and Palladium collaboration that scales nature-based solutions across the UK National Parks.
To find out more contact
ross.powell@thepalladiumgroup.com or lisa.sensier@nationalparks.co.uk
