If the answer to Scotland's climate goals is private finance, then we are asking the wrong question
The Synthesis Report published by the Intergovernmental Panel on Climate Change (IPCC) earlier this month makes for grim reading. It concludes that limiting global warming to between 1.5 and two degrees involves rapid, deep and, in most cases, immediate greenhouse gas emission reductions. Limiting the global rise to 1.5 degrees is still possible, but only just and only if we act urgently to reduce emissions.
The challenges of reaching net zero demand a laser-like focus on reducing emissions fast. The other side of the net-zero calculus is capturing carbon from the atmosphere using natural methods such as afforestation or restoring wetlands and peatlands, and technological methods such as carbon capture and storage. The risk for policy makers is being seduced by apparent solutions that, ultimately, do little or nothing to reduce emissions. These include unproven technical fixes and also the current boom in carbon offsetting.
Carbon offsetting involves emitters acquiring credits from carbon sequestration projects to offset their own emissions. Not only will this have virtually no impact in the short and medium term, it is a huge distraction from doing what is effective in the immediate term – deep, rapid and immediate cuts in greenhouse gas emissions.
All of which makes the latest initiative by Scotland’s nature agency, NatureScot, all the more bizarre. On 1 March, it announced a £2bn private finance pilot designed to secure landscape scale restoration of native woodlands. It is claimed that this £2bn of investment could create around 185,000 hectares of native woodland and sequester 28 million tCO2e over the next 30 years.
It is the latest step in an unquestioning commitment to private finance to restore nature. At the Net Zero, Energy and Transport Committee on 14 March, government minister Lorna Slater claimed that the need for private finance for nature restoration is unquestioned, that there is absolute consensus on the question, and that the finance gap is £20bn.
There is a consensus on the need for private finance but there is in fact no consensus on how it should be deployed, on the role of carbon offsetting or on whether the so-called finance gap (the difference between money already committed by governments and what is deemed necessary to achieve net zero) is in fact £20bn.
This figure is frequently 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 and run by bankers which aims to develop opportunities for financial investment in a net-zero economy.
The pilot project was launched by NatureScot 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”.
Scotland’s land has a finite capacity for absorbing carbon and every tonne captured by trees and used to offset emissions is a tonne of carbon that is doing precisely nothing to reduce global temperatures. The 28 million tonnes of CO2e predicted to be sequestered will simply facilitate 28 million tonnes of CO2e emissions by the purchasers of the credits and contribute nothing to Scotland’s net-zero balance sheet.
As far as I can tell, there has been no analysis of the role that carbon offsetting should play in Scotland’s net-zero ambitions. 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 corporation 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.
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 the receipt of public subsidy.
And because the financial returns from forestry are already very lucrative, banning carbon offsetting will have little impact on the expansion of commercial forests across Scotland.
Indeed, we should be supporting and rapidly expanding the industrial use of Scottish timber such as through the technology developed by Swedish company Modvion, which is working with the Finnish timber industry to manufacture engineered timber wind turbines and end the carbon-intensive use of steel. Those will be tonnes of carbon captured by trees and then stored as wind turbines producing green energy – a far better use of financial investment than carbon offsets.
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, potentially very damaging, and being promoted and developed with no scrutiny as to the potential negative impacts nor of the impact on Scotland’s net-zero targets.
If the answer to Scotland’s climate goals is to seek the involvement of City of London financiers, then we are almost certainly asking the wrong question.