Land reform campaigners have challenged claims that Scotland has to rely on multimillionaires spending up to £2bn on new forests and peatlands to rescue the country from the climate crisis.
An analysis by Community Land Scotland accuses NatureScot, the conservation agency, of using crude and unsubstantiated figures to call for a big increase in private funding to reforest the Highlands and uplands.
NatureScot and the Scottish Greens minister Lorna Slater announced in March that they had signed a deal with private financiers to leverage up to £2bn in loans over the next decade to help fund an expansion in new forestry and peatland restoration.
They argued that investment could plant 185,000 hectares (457,000 acres) of woodland to store about 28m tonnes of CO2 over the next 30 years – a figure equivalent to half Scotland’s annual CO2 emissions.
To the alarm of conservation groups and land reformers, the deal will involve a small private bank in Edinburgh and two investment firms, Palladium and Lombard Odier, which hope to profit from their loans by selling carbon credits based on the carbon sequestrated by the new woodlands and restored peatland.
The private bank, Hampden, said it was unlikely to reveal the identities of its clients who invest in these funds. The memorandum of understanding it signed with NatureScot has detailed clauses requiring secrecy on the projects’ finances.
NatureScot officials are adamant these investments will be carefully designed, in collaboration with local people, in consultation with the land reform agency the Scottish Land Commission, and in strict accordance with a charter on “high integrity” carbon investments released by the Scottish government.
Brendan Turvey, NatureScot’s low carbon manager, said the scale of the challenge to fund the peatland and woodland restoration was so great it was akin to “a national emergency”.
“We’ve no option but to embrace new financial models to meet these targets. There’s not enough public money, full stop, to deliver all the things we need to do to get to net zero,” he said. “We need to act now if these are to help us get to net zero by 2045.”
One study estimated the cost of restoring all Scotland’s damaged peatlands, which release carbon as they dry out and degrade, was between £3bn and £4bn over the next 10 years. NatureScot had only been given £250m to do so. Scotland was also far off hitting a target to plant 20,000 hectares of new woodland every year.
“We have not moved at the pace we need to move at: as the reality of climate change has become more obvious, we’re now trying to pick up the pace,” Turvey said.
The analysis for Community Land Scotland by Jon Hollingdale, a forestry consultant, said in reality it would reinforce Scotland’s highly unequal land ownership patterns and enrich existing land owners, while undermining the case for better use of subsidies and taxation to fund nature restoration.
Ailsa Raeburn, the chair of Community Land Scotland, said private finance may have a role to play but said it was essential “we understand any upsides and the downsides to utilising large scale private finance and, in an unregulated environment, we guard against a rush to monetise Scotland’s natural assets which risks leaving its people and communities behind”.
NatureScot’s green finance figures are based on estimates published in October 2021 by the Green Finance Institute (GFI), a London-based thinktank, that the UK faces a “green finance gap” of between £44bn and £97bn on all nature investments over the next decade, if it intends to reach net zero by 2050.
The GFI report said that was the gap between how much the UK’s central and devolved governments plan to spend on forestry, peatland restoration and rewilding, compared with the amount actually needed to reach their forestry and peatland restoration targets. The central estimate, it said, was a finance gap of £56bn for the UK as a whole.
For Scotland, that gap was estimated by GFI to be about £20bn – a figure cited repeatedly by NatureScot and Slater in their official announcements, and since embraced by landowners’ organisations.
The agency said in March its pilot projects would focus on a proposed collaborative reforestation project in the Scottish Borders known as the Wild Heart expansion project, beginning in spring 2023, and an as yet unspecified project to restore remnants of the Atlantic rainforest on Scotland’s west coast. Turvey said those projects would test whether this finance model was viable.
NatureScot had to correct the memorandum of understanding after wrongly claiming the Scottish Land Commission, which is an independent body, was on the oversight board. And its timetables are already slipping. There is no agreement yet between NatureScot and the Wild Heart project to leverage the £200m to £300m in private financing the agency said is available for spending there.
Hollingdale said the figures used by GFI and NatureScot to justify that £20bn and the £2bn private finance target were based on a series of faulty assumptions. He said GFI’s estimates wrongly included the cost of buying the land needed to plant forests and resuscitate degraded peatlands.
Most of those would be carried out by existing landowners, he said. If investors bought land specifically for carbon sequestration, that land would be a financial asset, not a cost. He estimated that if buying the land was taken out of the equation, the actual finance gap for woodland would be roughly 30% of the figure given by GFI – a gap which could be met by government subsidies.
NatureScot’s statement in March that the £2bn investment would store 28m tonnes of carbon were also deeply flawed, according to Hollingdale. To reach that figure within 30 years would require a large amount of planting in the next few years, because broadleaf trees take decades to store CO2 in significant amounts.
Rhian-Mari Thomas, GFI’s chief executive, said its 2021 report was the first attempt to quantify the finance gap, using “best estimates”. She added: “We naturally welcome third-party efforts to build on the data and contribute to this important body of work.”
• This article was amended on 19 August 2023. The proposed reforestation project in the Scottish Borders is not known as the Wild Heart Borders forest trust, as stated in an earlier version; it is the Wild Heart expansion project, which would involve the Borders Forest Trust. It was further amended on 20 August 2023: the central estimate for the “green finance gap” is £56bn, not £56m.
