Farmers and landowners are being offered £10m to help create new woodlands as part of the third auction of the Woodland Carbon Guarantee.
The scheme gives land managers in England the option to sell Woodland Carbon Units to the government at a guaranteed price protected against inflation.
The previous auction helped stimulate 1,517 hectares of tree planting, according to Defra and the Forestry Commission.
The deadline to apply is 11 October, and the next auction will take place online between 26 October to 1 November.
New tree planting projects are eligible for long-term payments for the amount of carbon a new woodland will store, providing new income for farmers.
Successful bidders will be offered the option to sell woodland carbon in the form of Woodland Carbon Units - a financial value given to each tonne of carbon stored - to the government over 35 years at a guaranteed price protected against inflation.
This announcement follows the second auction which closed in June 2020 and saw 27 contracts offered by the Forestry Commission.
Sir William Worsley, Chair of the Forestry Commission, said the 'pioneering scheme' could be 'perfect' for farmers.
“Results from the second auction show the scheme is growing in its success, providing more land managers with long-term income support for creating new woodland.
“I strongly encourage anyone thinking about planting to sign up ahead of the next auction in October.”
The average price of bids accepted in the second auction was £19.71 per woodland carbon unit.
The government manifesto commits to increase planting across the UK to 30,000 hectares per year by 2025.