HM Insights

Climate solutions bring opportunity and tensions for rural Scotland

The call to act on climate change grows ever louder as we approach COP26 in Glasgow in November this year. With the farming sector responsible for nearly a quarter of Scotland's annual greenhouse gas emissions, rural businesses are among those required to take the most radical action of any industry.

A vast amount of work has already been done by rural and farming businesses to diversify and embrace nature-based climate change solutions but there remains a huge amount of work still to be done as we grasp the increasing importance of land use solutions, natural capital and prioritising a green recovery coming out of the pandemic and into a new relationship with the EU.

There are also unresolved tensions as the various climate change priorities compete for space in rural Scotland.

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New woodland planting

Some land-use based solutions, such as new woodland planting, support the twin goals of controlling greenhouse gas emissions and enhancing carbon sequestration. Grant schemes provide financial assistance for new woodland planting which is seen as a key component to achieving net zero targets.

It is estimated that 30,000 hectares of new woodland needs to be planted in the UK annually. Currently, only around 10,000 hectares of new woodland is planted although Scotland leads the UK nations on this measure and has increased its annual woodland planting target to 12,000ha. this year, rising to 15,000ha. by 2025. Crucially, planting targets across the UK must be met this decade if the target of net zero is to be delivered on schedule.

Expanding forests also delivers an important commercial natural resource, namely timber.

There has always been a timber market in the UK but in recent years we are seeing new entrants ranging from large foreign income funds to smaller investors. There is increased interest in commercial woodland crops but also in native woodlands and prices have been rising at an astonishing rate.

Similarly, farm land prices (particularly hill farms) are also increasing, with prices often being driven by the availability of new woodland planting grants as farm land is converted to forestry.

Peatland restoration

In good condition, peatlands actively remove and store carbon (in addition to a range of other biodiversity benefits). Globally, peatland covers around 3-4% of the world's surface but stores the equivalent of 75% of atmospheric carbon. In Scotland, peatlands comprise more than 20% of the land cover, storing 25 times more carbon than all of the vegetation in the UK.

Peatlands are a precious resource. However, when degraded, they can be a net emitter of carbon. Worryingly, only 20% of peatlands in the UK remain in a near-natural state. New peat layers accumulate at an excruciatingly slow pace so the UK Peatland Strategy is focused on the restoration of existing peat bogs. Restoring the UK's peatlands has been estimated to cost anywhere from £8bn to £22bn but the carbon benefits are projected to outweigh the cost by five to ten times.

Carbon credits

There is an opportunity for farms or businesses to use carbon storage or offsetting from woodland planting and peatland restoration to create new income streams by selling 'carbon units' to third parties.

The updated and expanded UK Land Carbon Registry - which enables organisations to off-set their residual emissions - was re-launched in November last year and now includes peatland restoration credits under the Peatland Code in addition to verified carbon credits under the Woodland Carbon Code.

Both Codes provide assurance standards and to date over 250 woodland projects have been verified with 24 peatland projects either validated or under development.

Carbon credits traded on the UK Land Carbon Registry cannot currently be used outside the UK, nor can the Registry be used in conjunction with other international carbon offsetting legislation or schemes. It is anticipated that this will change in future.

Agriculture

Agriculture remains a key feature of Scotland's economy and the ongoing COVID pandemic has heightened the importance of food security. 

Agriculture does, however, actively contribute to the release of greenhouse gases. The majority of farm emissions come from livestock in the form of methane - and while there are limits to what can be done in that regard, there remains a focus on emission reduction with research into animal feeds, methane capture and breeding for low emission livestock.

Farming also contributes nearly 70% of harmful nitrous oxide emitted in Scotland so limiting its release from slurry and nitrogen-based inorganic fertilisers must be a key target for the agricultural sector.

Other aspects of farming contribute to CO2 emissions but steps can and are being taken to mitigate this by improving machinery efficiencies, soil health and carbon storage and by increased use of agro-forestry and energy crops.

Renewable energy

As with all sectors, rural and farming businesses can look to expand their use of renewable energy by replacing petrol/diesel vehicles with electric vehicles, ensuring all equipment is up-to-date and energy efficient and by assessing the energy efficiency of farm buildings and stores.

Rural businesses and farms are also uniquely placed to contribute to the production of renewable energy by installing wind turbines, hydro schemes, solar panels or ground source heat pumps or even an anaerobic digester to use methane as fuel for electricity or heat.

The level of investment required to implement some of these changes to farming practices or to expand into renewable energy means that availability of funding will be critical to what is achievable. Now that the UK has transitioned out of the EU we are likely to see a move away from CAP to country-based schemes with an environmental emphasis.

Tensions among climate solutions

There are inevitably conflicts among climate change priorities as food production, forestry, peatland restoration, bio-energy, feedstock production, renewable energy, bio-diversity and habitat restoration all compete for space in rural Scotland. 

Onshore windfarm projects frequently encounter regulatory challenges, particularly with the increasing importance of natural capital, but this can be resolved to some extent by compensatory planting required for any trees felled. Wind farm projects on peatland were historically challenging but we are now seeing windfarm developments which actively restore peatland.

The UK has also had a slightly uncomfortable relationship between peatlands and forestry with vast tracts of woodland having been planted on peatland in the past. Steps are now being taken across the UK to remediate this.

Conversely, there remains significant tension between farming and forestry with the ongoing conflict between food security and timber production and, more recently, carbon sequestration. This is likely to continue as more hills farms are converted to forestry although solutions may be found through increased agro-forestry and greater farming efficiencies.

Another conflict emerges in the rising trend towards 'rewilding' in terms of flora and fauna. Some campaigners and community groups are dedicated to leaving landscapes in an unmanaged state to improve biodiversity. Large scale rewilding may reduce land available for farming, forestry activities and renewable energy development but the rewilding debate is a whole different topic …

Conclusion

Any steps taken by rural and farming businesses to reduce emissions now will pay dividends in the future and there is an opportunity to get ahead of the curve on diversification and realising new environmentally friendly income streams. Tensions do, however, continue to arise in terms of land use.

In the Update to the Climate Change Plan, the Scottish Government expressly recognised that "determining the optimal mix of land use involves a complex set of interlinked considerations and goals that are at times in tension". Research on land use and tenure, and also on landowner and land manager motivations, has been commissioned to better inform this debate and help shape future legislation.

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If you wish to discuss any of the issues raised in this article, please do not hesitate to contact our Rural team.

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