Is ‘land restoration’ the next big swindle?

Readers may remember the furore over tree-planting in Caithness and Sutherland during the 1980s when individuals such as Terry Wogan and Shirley Porter bought swathes of land across the so-called “Flow Country” – the extensive deep peatlands that cover the borderlands of the two counties.

The drive to afforest this land was driven not by any objective goal to plant trees here but by a tax-avoidance scheme than enabled wealthy individuals to avoid significant amounts of income tax. Not being of any great value for agriculture, the land was cheap and the rewards to investors and the commercial companies involved were significant.

Forty years later, the trees are being removed, drainage ditches blocked up and the peatlands are being restored. As environmental mistakes go, this was a big one.

I was a student of forestry at the time. When the boss of Fountain Forestry gave us a lecture I remember asking why the government was encouraging tree-planting by rich people in London rather than using the money it was foregoing in tax to give grants to the crofters, farmers and landowners in Caithness and Sutherland so that that they could plant the forests. I don’t recall the answer but my Professor of Forestry approached me afterwards and advised me not to ask such political questions. It was at that moment I realised that land, money and power need more and not less scrutiny. I started asking more questions.

And so when Scottish Natural Heritage (SNH) announced last week a £2 billion private finance pilot to plant woodland in Scotland, I was sceptical of what it was seeking to achieve.

Put simply, Scotland and the rest of the world needs to restore nature, to recover degraded ecosystems and restore the health of our seas. In Scotland this means tackling damaged peatlands, restoring native forests and nursing our rivers and wetlands back to health. Amidst a global biodiversity and climate crisis, this work is vital. But it costs money. The question is how to pay for it.

SNH – or NatureScot as it calls itself these days – make much of the claim that there is a £20 billion finance gap between what government has committed to this task and what is needed. This figure is cited by government ministers with no critical engagement as to its accuracy. The figure comes from an organisation called the Green Finance Institute, a not-for-profit company wholly owned by the City of London Corporation which aims to develop opportunities for financial investment in a net-zero economy.

The pilot project was launched by SNH in partnership with Hampden and Co., Palladium and Lombard Odier Asset Management Europe, three private financial companies. The aim of the project is to “catalyse private investment” at “significant scale” to deliver “high integrity carbon investment” and “maximise the benefits for nature and communities”.

The Memorandum of Understanding outlines the roles of the partners and how the investment will be managed. The focus of the investment will be in the Scottish Borders and the Atlantic Rainforest (on the west coast of Scotland). The investors will obtain their financial return by the sale of carbon credits and this is where the whole story deserves far greater public scrutiny.

There is an urgent need to reduce carbon emissions and halt the warming of the planet. This has to be done both by reducing emissions from fossil fuels, land use, industry and transport and by increasing the sequestration of carbon by forests, wetlands and peatlands.

Of these two approaches, the far, far more significant one is the rapid reduction in emissions. Efforts to capture more carbon in forests for example is fine but it takes decades to achieve and studies have shown will only make a very modest contribution to global temperature rises.

However, many businesses have enthusiastically embraced the practice of offsetting which involves buying carbon credits derived from forests or other nature schemes that are projected to capture carbon and using those credits to offset their own carbon emissions. For big players such as airlines and fossil fuel companies, this has become the preferred route to reach net-zero as it is cheaper and easier and secures good public relations. How many times have you been invited to pay a bit extra when ordering goods and services over the internet to “offset” the associated emissions?

Carbon offsets allow polluting industries to avoid the hard work of reducing emissions. Moreover, Scotland’s land has a finite capacity for absorbing carbon and every tonne of carbon captured by trees and used to offset emissions is a tonne of carbon that is doing precisely nothing to reduce global temperatures. This begs the question of what role if any carbon offsetting should play in Scotland’s net-zero ambitions. Beyond a target to increase the woodland carbon market by 50% by 2025, there has been no examination of what this role should be.

This market is a voluntary market subject to no regulation and oversight and yet is now poised to drive significant private investment in land across Scotland. Financial corporations are already buying large tracts of land and concerns have been raised about inflated land prices, community benefits and how this carbon rush fits with the government’s land reform objectives.

Not only should we be cautious about entering the carbon offsetting game, we should also be more sceptical about claims of £20 billion finance gaps identified by organisations set up by the City of London Corporation!

In fact there are other ways of accelerating the restoration of nature that don’t depend on external capital from global investors. Existing landowners could be required to undertake defined minimum nature restoration projects. Restoring native forests could be accelerated by getting to grips with the over-grazing pressure from wild deer and managing sheep-farming differently. Forthcoming agricultural support could insist on nature restoration in return for receipt of public subsidy.

Above all, the returns from commercial forestry are already very lucrative. Banning carbon offsetting will have little impact on the expansion of forests across Scotland. Indeed, we should be supporting and rapidly expanding the industrial use of Scottish timber. Just this week, the Herald reported on a German company working with the Finnish timber industry to manufacture engineered timber wind turbines and blades, ending the carbon intensive use of steel. Those are tonnes of carbon captured by trees and then stored as wind turbines producing green energy.

Just as in the 1980s, when financial interests in London drove the afforestation of Caithness and Sutherland in an unregulated pursuit of short term financial gains for already wealthy individuals, the current mania for carbon offsetting and the gold rush being promoted and facilitated by Scottish Ministers and their nature agency is ill-thought through and potentially very damaging.

I am sure the current Scottish administration would not like to be compared to the Tory government of the 1980s but the afforestation of Caithness and Sutherland and today’s carbon markets share some worrying similarities. Both are driven by financial interests. Both pay scant regard for the interests of local communities and both are based on flawed policies.

At least the then Chancellor Nigel Lawson did act in 1988 to change the tax system driving the tree planting in the north of Scotland. By contrast, the Biodiversity Minister, Lorna Slater is actively promoting the City of London’s growing investment in Scotland. When will she realise that this is all rather misguided?

Readers may remember the furore over tree-planting in Caithness and Sutherland during the 1980s when individuals such as Terry Wogan and Shirley Porter bought swathes of land across the so-called “Flow Country” – the extensive deep peatlands that cover the borderlands of the two counties.

The drive to afforest this land was driven not by any objective goal to plant trees here but by a tax-avoidance scheme than enabled wealthy individuals to avoid significant amounts of income tax. Not being of any great value for agriculture, the land was cheap and the rewards to investors and the commercial companies involved were significant.

Forty years later, the trees are being removed, drainage ditches blocked up and the peatlands are being restored. As environmental mistakes go, this was a big one.

I was a student of forestry at the time. When the boss of Fountain Forestry gave us a lecture I remember asking why the government was encouraging tree-planting by rich people in London rather than using the money it was foregoing in tax to give grants to the crofters, farmers and landowners in Caithness and Sutherland so that that they could plant the forests. I don’t recall the answer but my Professor of Forestry approached me afterwards and advised me not to ask such political questions. It was at that moment I realised that land, money and power need more and not less scrutiny. I started asking more questions.

And so when Scottish Natural Heritage (SNH) announced last week a £2 billion private finance pilot to plant woodland in Scotland, I was sceptical of what it was seeking to achieve.

Put simply, Scotland and the rest of the world needs to restore nature, to recover degraded ecosystems and restore the health of our seas. In Scotland this means tackling damaged peatlands, restoring native forests and nursing our rivers and wetlands back to health. Amidst a global biodiversity and climate crisis, this work is vital. But it costs money. The question is how to pay for it.

SNH – or NatureScot as it calls itself these days – make much of the claim that there is a £20 billion finance gap between what government has committed to this task and what is needed. This figure is cited by government ministers with no critical engagement as to its accuracy. The figure comes from an organisation called the Green Finance Institute, a not-for-profit company wholly owned by the City of London Corporation which aims to develop opportunities for financial investment in a net-zero economy.

The pilot project was launched by SNH in partnership with Hampden and Co., Palladium and Lombard Odier Asset Management Europe, three private financial companies. The aim of the project is to “catalyse private investment” at “significant scale” to deliver “high integrity carbon investment” and “maximise the benefits for nature and communities”.

The Memorandum of Understanding outlines the roles of the partners and how the investment will be managed. The focus of the investment will be in the Scottish Borders and the Atlantic Rainforest (on the west coast of Scotland). The investors will obtain their financial return by the sale of carbon credits and this is where the whole story deserves far greater public scrutiny.

There is an urgent need to reduce carbon emissions and halt the warming of the planet. This has to be done both by reducing emissions from fossil fuels, land use, industry and transport and by increasing the sequestration of carbon by forests, wetlands and peatlands.

Of these two approaches, the far, far more significant one is the rapid reduction in emissions. Efforts to capture more carbon in forests for example is fine but it takes decades to achieve and studies have shown will only make a very modest contribution to global temperature rises.

However, many businesses have enthusiastically embraced the practice of offsetting which involves buying carbon credits derived from forests or other nature schemes that are projected to capture carbon and using those credits to offset their own carbon emissions. For big players such as airlines and fossil fuel companies, this has become the preferred route to reach net-zero as it is cheaper and easier and secures good public relations. How many times have you been invited to pay a bit extra when ordering goods and services over the internet to “offset” the associated emissions?

Carbon offsets allow polluting industries to avoid the hard work of reducing emissions. Moreover, Scotland’s land has a finite capacity for absorbing carbon and every tonne of carbon captured by trees and used to offset emissions is a tonne of carbon that is doing precisely nothing to reduce global temperatures. This begs the question of what role if any carbon offsetting should play in Scotland’s net-zero ambitions. Beyond a target to increase the woodland carbon market by 50% by 2025, there has been no examination of what this role should be.

This market is a voluntary market subject to no regulation and oversight and yet is now poised to drive significant private investment in land across Scotland. Financial corporations are already buying large tracts of land and concerns have been raised about inflated land prices, community benefits and how this carbon rush fits with the government’s land reform objectives.

Not only should we be cautious about entering the carbon offsetting game, we should also be more sceptical about claims of £20 billion finance gaps identified by organisations set up by the City of London Corporation!

In fact there are other ways of accelerating the restoration of nature that don’t depend on external capital from global investors. Existing landowners could be required to undertake defined minimum nature restoration projects. Restoring native forests could be accelerated by getting to grips with the over-grazing pressure from wild deer and managing sheep-farming differently. Forthcoming agricultural support could insist on nature restoration in return for receipt of public subsidy.

Above all, the returns from commercial forestry are already very lucrative. Banning carbon offsetting will have little impact on the expansion of forests across Scotland. Indeed, we should be supporting and rapidly expanding the industrial use of Scottish timber. Just this week, the Herald reported on a German company working with the Finnish timber industry to manufacture engineered timber wind turbines and blades, ending the carbon intensive use of steel. Those are tonnes of carbon captured by trees and then stored as wind turbines producing green energy.

Just as in the 1980s, when financial interests in London drove the afforestation of Caithness and Sutherland in an unregulated pursuit of short term financial gains for already wealthy individuals, the current mania for carbon offsetting and the gold rush being promoted and facilitated by Scottish Ministers and their nature agency is ill-thought through and potentially very damaging.

I am sure the current Scottish administration would not like to be compared to the Tory government of the 1980s but the afforestation of Caithness and Sutherland and today’s carbon markets share some worrying similarities. Both are driven by financial interests. Both pay scant regard for the interests of local communities and both are based on flawed policies.

At least the then Chancellor Nigel Lawson did act in 1988 to change the tax system driving the tree planting in the north of Scotland. By contrast, the Biodiversity Minister, Lorna Slater is actively promoting the City of London’s growing investment in Scotland. When will she realise that this is all rather misguided?