Climate Solutions Scotland, Community Land or Big Finance
The public discourse between Community Land Scotland and Nature Scotland came to a head recently with the publication of a paper by Jon Hollingdale on Scotland’s interaction with private Green Finance and alternative approaches to funding the response to the climate crisis. It’s called ‘The Credibility Gap for Green Finance’.
In its foreword Ailsa Raeburn, chair of Community Land Scotland writes: “Jon Hollingdale’s paper came about due to his growing sense of unease at the widespread official acceptance of the Green Finance Institute (GFI) £20bn ‘finance gap for Scottish nature’ and the corresponding impact this is having upon the Scottish land market and our national response to the climate and biodiversity crises. In March 2023, the Scottish Government twice quoted the £20bn finance gap figure as justifying the need to ‘leverage responsible private finance’. We have seen how this rush for private finance is driving change in Scotland’s land market.”
“In fact recent research commissioned by the Scottish Land Commission has identified demand for land for forestry as being the key driver for the increase in Scottish land prices – and this was before the £2 billion deal arranged by NatureScot which has the potential to further overheat the market – even if it’s not for land purchase directly, it will help make land more valuable to those who own (and can sell) it).”
“The purpose of the GFI report seems clear. In their press release they state that ‘having identified the scale of investment needed, and where it is needed, we must now focus on unlocking barriers to the mobilisation of private finance into nature-positive projects and
businesses’. Jon Hollingdale’s work now fundamentally questions a substantial part of the evidence provided in the report published by GFI.”
So here we have two fundamentally clashing visions of how we deliver a radical response to the nature and climate crisis.
Back in March NatureScot and the Scottish Greens minister Lorna Slater announced that they had signed a deal with private financiers which would leverage up to £2bn in loans to help fund an expansion in new forestry and peatland restoration. They argued that the plan could plant 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.
But the figures and the perceived gap are based on estimates published in 2021 by the Green Finance Institute (GFI), a London-based think tank, 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. Hollingdale’s analysis challenges the whole premise of the report.
Willie McGhee, of the Forest Policy Group (FPG) has said:
“Jon’s paper highlights that a natural capital lens can depict Scotland’s land and environment as a speculative opportunity, a means to attract significant private capital and to maximise returns from altering land and changing the environment. This financial perspective has resulted in inflated land prices, is attracting opportunist investors, and has resulted in more remote absentee forest ownership … Unfortunately, governments are often drawn to the idea of using private capital to solve problems without fully considering the long-term consequences.”
Mind the Gap
At the heart of the division is the key document “The Finance Gap for UK Nature”, published in 2021 by the Green Finance Institute, a “forum for innovation in green finance” that is “backed by government, trusted by finance, and led by bankers” which uses their platform “to co-design financial instruments and mechanisms”.
The Community Land Scotland report is detailed and technical but here are a few highlights. The national total of the Finance Gap document is disaggregated across four nations, covering areas such as Clean Water, Protect Biodiversity, Reduce Flood Risk etc, (Table 1: Finance gap by outcome and location (2022-32) in £bn), which produces some curious effects and prompts some obvious questions:
- Why is the cost for water the same in Scotland as in England, given the discrepancy in population and the well-publicised water quality issues south of the border?
- Why are the costs for improving access and engagement in Scotland, Wales and Northern Ireland each £1bn, and all much more expensive per capita than England, which has almost 85% of the total UK population?
Hollingdale/CLS said the Green Finance Institute’s projections wrongly included the cost of buying the land needed to plant forests and resuscitate degraded peatlands. Instead he argued that most of those would be carried out by existing landowners.
As Severin Carrell reports (‘Reforesting Scotland doesn’t need multimillionaires, say campaigners‘): “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.”
Further, forestry, once established, attracts very generous tax advantages promoted heavily by forestry land agents in order to attract investors – these include relief from inheritance tax and the increase in timber value being free from Capital Gains Tax.
All of these lands in the week when The Ferret reported “Just two communities have applied to take neglected land into public ownership since the Scottish Government launched the initiative more than five years ago.”
Hollingdale concludes: “The urgency of the climate and biodiversity emergencies, and the need for rapid and far-reaching land use change cannot be denied. It is vital, however, that the search for solutions to difficult political questions does not lead to the abandonment of other commitments to community wealth building, land reform and just transition: the role of government is to provide the correct balance of regulations and incentives to ensure that land use serves the public interest across a range of policy areas.”
“Scrutiny of the underlying assumptions in the Green Finance Institute report demonstrates that the scale of the finance gap, at least in respect for woodland creation has been greatly exaggerated. Similarly, it is unclear whether there is demand for private loan finance on the scale envisaged by the NatureScot/Private Finance MoU.”There is a significant risk that an undue focus on extractive private investment solutions will further entrench the land ownership status quo, whilst distracting attention from alternative measures, including review and reform of existing mechanisms, which might be more effective at both delivering land use change and advancing wider land reform and community wealth agendas.”
This is a restrained take.
A Carbon Klondike
The dispute goes to the heart of how we see political change and how we step-up to the challenge of the climate and nature crisis. It goes to the heart of what we think land ‘is’ and what we think forests are for. There’s also a melancholy-reality that you can’t ‘resurrect forests’ at a time scale that matches our challenge, as the old saying goes “What’s the best time to plant a tree?” – “About fifty years ago”.
But is also a strategy that Mairi McFadyen took on earlier this year (“Just Listen to the Birdsong Now” – Possibilities for people and nature in community-owned woodland’):
“The question ‘who owns the land?’ – Ceist an Fhearainn in Gaelic – has taken on a renewed and profound sense of urgency in the context of climate crisis and ecological breakdown. Land is being bought and sold at an alarmingly rapid pace by private finance, in part to plant trees in a deeply flawed and hasty attempt to offset the carbon emissions of global business through carbon credits – ultimately no more than an accounting exercise, much easier than reducing emissions at their source.”
In response to the argument NatureScotland tried to navigate out of the dispute saying: “The report from CLS challenges some of the assumptions in the GFI report and we will leave it to GFI to comment on these. Land acquisition (the cost of which is reflected in the report from GFI) is not part of the model we are developing with our own investment partners. In that regard we agree that the £20bn figure may be an overestimate.”
But they also say: “It is clear that public funding alone cannot tackle the climate change and biodiversity crisis we currently face.”
The question is raised why are NatureScot – ie civil servants – making such an explicitly political statement? And a subjective one. The argument that there isn’t sufficient public money is a neoliberal one, and ducks the issue of using taxation to raise the necessary money.
There are 2,000 private jets registered in the UK, and a typical private jet can cost £20 million i.e. £40 billion tied up in luxury transport for the wealthy, alone. So the money is out there, and who better to provide it (from taxation) than those most responsible for the climate crisis, i.e. the high emitters? And the Scottish Government can’t get off the hook by blaming Westminster – their own Land Reform Review Group recommended in their 2014 report a number of devolved tax measures and the Scottish Government hasn’t progressed any of them.
NatureScot’s response continues: “Responsible, private finance is one, crucial way that we can meet Net Zero. That’s why we are working with the Scottish Government and others to help build a new market for values led, high integrity, private investment in Scotland’s nature that benefits Scotland’s people and communities.”
Is there such a thing as a market that is ‘values led’? Is luring private finance the way to restore nature?
As Alastair McIntosh writes in his report (‘The Cheviot, the Stag and the Black Black Carbon – Community Land Scotland‘):
“Scotland is already experiencing rapidly rising land values, apparently driven by a surfeit of global capital looking for safe havens. As a country we enjoy relative political stability and have little regulation, especially compared to other similar domains. Importantly for the intelligent long-term investor, we are also relatively insulated from near to medium term climate change, being mostly well above sea level and enjoying a cool temperate climate. Therefore, Scotland’s market advantages are numerous and these are easily capitalised. Agents are reporting record breaking prices. It’s a Klondike economy both driven by and to the benefit of speculative private investors. The market-making Green Finance Initiative Report, written by financiers, set an estimate of £20 billion for Scotland to meet its natural finance gap. The Scottish Government has relied on this Report which is thinly presented, unverified and contested. A Report which is driving public policy which, in turn is driving huge changes in the land market, ownership and use. A Report which gives credibility and justification for the ‘unicorn’ investors like Oxygen Conservation, rapidly expanding their footprint in Scotland to ‘prove that the natural environment can pay to protect and restore itself’.
As McIntosh concludes the ‘rewilding’ agenda reeks of neocolonialism, it: “shows evidence of justifying its urgency on grounds of climate change, but treats huge swathes of rural Scotland as a colonial ‘terra nullius’ requiring the helicoptering in of external experts to impose their own view of what the land should look like and be without considering working hand-in-hand with what communities, hammered by housing price rises, see as the equally important imperative of repeopling.”
The use of ‘external experts’ is at the heart of the problems laid out in Hollingdale’s report and it won’t really do for Nature Scotland to say ‘The Finance gap for UK nature’ report was produced by the Green Finance Institute (GFI) and questions about the report and the assumptions it contains should be directed to them” because that report is steering Scottish Government policy.
It would however be a mistake to see the Nature Scotland / GFI as an accounting error, it’s a worldview error. The economic system, power relations and values that brought you the climate catastrophe is incapable, by definition of resolving it. We’ve been fed a narrative about tackling climate change by politicians, business, media etc that everyone has just accepted. That capitalism will essentially continue unchanged, but will save the planet through ‘green’ business & ‘green’ growth. That offsets and magic green tech will enable us to carry on business as usual. That there is no other way. Now more and more are challenging these assumptions, recognising that elites are actually using the crisis to entrench their positions and preserve the current order.
A better way forward than quangos leveraging money into ‘new carbon markets’ and obscure offsetting schemes would be to radically overhaul the stalled and inadequate land-reform movement and inject money into extensive rural housing programmes and grants and jobs for community forestry on a scale we haven’t seen before.
[after publication we were contacted by a PR firm on behalf of the Green Finance Institute. We are happy to add the following comment from them… ]
Dr Rhian-Mari Thomas OBE, CEO of the Green Finance Institute said:
“The UK Finance Gap for Nature report, published almost two years ago, was the first attempt of its kind to understand the gap between public funding commitments for the UK’s nature goals and the estimated required spend. The addition of new data where it is robust is welcomed, but we also note that the limited data pool in 2021 meant the report was not able to reflect the cost of the compounded impact of climate change over the decade within a ‘business as usual’ environment. As new data emerges, we may find the finance gap is bigger than originally estimated.”
The report was developed using the best data available in July 2021, with the oversight of an independent, expert review board and acknowledgements throughout of the data challenges. A database of all underlying information was published alongside the report so that, as more data came to light, the assessment could be developed further by interested parties over time.”
“The Green Finance Institute is an independent, not-for-profit organisation that seeks to mobilise the capital required to tackle the climate and biodiversity crises. The report does not state a preference for the type of capital used to fill the gap and states clearly on page 3 that “required spending could be paid for by public, private, third sectors and/or investors.”
Read the Community Land Scotland report – and Nature Scotland’s response here: The Credibility Gap for Green Finance – Community Land Scotland