Scotland is on the global frontlines of The Great Net-Zero Land Grab

But now, the global embrace of net-zero targets has turbocharged investor interest in offsetting around the world. At COP26, new rules were agreed to establish a unified international carbon market, and analysts expect carbon trading to see exponential growth in the coming years. According to the Institute of International Finance, the market for carbon credits could be worth $100bn by 2050 – up from about $300m in 2018.

In other words, carbon offsetting is becoming big business. And corporate and financial investors are quickly realising that profiting from this modern gold rush requires one thing above all else: access to land – and lots of it. As a result, global investment in rural land markets is soaring, with billionaires, banks and investment funds all adding swathes of land to their investment portfolios. However, few places are attracting as much interest as Scotland.

The rise of the ‘Green Lairds’

Scotland’s attractiveness as a destination for investors seeking to enhance their land portfolio is closely intertwined with its politics, history and geography. Most obviously, Scotland has a large rural land area: 98% of the country’s landmass is classified as either ‘remote rural’ or ‘accessible rural’. One-fifth of the country is peatlands, which, as natural carbon sinks, hold the equivalent of 140 years of Scotland’s carbon emissions. More than eight in every ten Scots live in the 2% of the landmass that is urbanised.

Significantly, however, ownership of this land is highly concentrated. As with the UK as a whole, the archaic patterns of land ownership that were in other nations swept aside by revolution and revolt survive largely intact in Scotland to this day. Despite multiple waves of land-reform legislation following the creation of the devolved Scottish Parliament in 1999, it has been estimated that just 432 individuals own 50% of Scotland's privately held land.

Land markets across the UK also remain notoriously lightly regulated, meaning that anyone in the world can buy land with little scrutiny. As a 2020 report comparing rural land markets around the world noted: “The UK has no restrictions on inward investment and is among the few developed markets not to have some form of government involvement when buying.” Together with a tax regime that highly favours investment in land and property, these factors mean that large amounts of land can be acquired relatively quickly, with few questions asked.

Scotland’s ambitious net-zero targets are also helping to spark investor interest. The Scottish government has committed to reaching net zero by 2045 – five years earlier than the UK. The government has also introduced a range of grants for landowners to encourage afforestation, helping to create a particularly favourable political context for carbon offsetting.

As a result, the rural land market in Scotland is booming. According to Savills, last year was “an extraordinary year for the Scottish estate market” with a 98% increase in buyers registering to purchase rural property. Funds chasing Scottish rural property increased by 20%, from just over £4bn in 2019 to £5bn in 2020. Around half of the estates were sold privately, without ever coming to the open market. Analysts expect demand to continue rising in the years ahead.

Some companies are purchasing land with the explicit aim of offsetting their own emissions. The craft beer brewer, Brewdog, for example, has purchased over 9,000 acres of land in the Cairngorms in a bid to reduce its carbon footprint. Similarly, oil giant Shell has invested £5m in extending the Glengarry forest in the Highlands, with the aim of planting or regenerating one million trees over five years. The company will use the carbon sequestered by the forest to offset emissions from its fossil fuel activities.

But private investment funds and asset managers have also become increasingly active in Scotland's land market, lured by the prospect of generating and selling carbon credits. Over the past 12 months, several new, dedicated rural-investment funds have entered the Scottish market to compete alongside larger, more established investors from across Europe and beyond. One of the newest entrants is the Real Wild Estates Company, which aims to “provide investors with access to large UK landscapes of 1,000+ acres which are suitable for nature restoration with viable natural capital potential”. According to one of its co-founders, the company’s mission to “make nature pay by delivering sustainable business returns” is “already passing muster with farmers, forestry, landowners and the City [of London] alike”.

It’s not just private finance that is putting up cash: public finance is being lured into the market too. This year, the Scottish National Investment Bank, Scotland’s state-owned development bank, which opened its doors in November 2020, invested £50m in a new forestry fund established by London-based asset manager Gresham House. The bank’s investment – its largest to date – will help fund tree planting on estates in Scotland, with the aim of sequestering 1.2 million tonnes of CO2 over the next 20 years.

A green transition for whom?

At first glance, this flurry of private and public money into nature restoration in Scotland might seem worthy of celebration. After all, the Committee on Climate Change (CCC) is clear that meeting Scotland’s target of reaching net zero by 2045 will require planting at least 18,000 hectares of trees and restoring 20,000 hectares of peatland per year by 2024-25. In addition to delivering carbon-offsetting benefits, the CCC believes this will deliver a wide range of other benefits, including improved water filtration and enhanced biodiversity.

According to critics, however, enabling companies to offset their emissions in this way amounts to little more than greenwashing on an industrial scale. The fact is, they argue, there is simply not enough land in the world to offset global emissions, so allowing companies to boost their green credentials by investing in carbon offsets acts as a dangerous diversion from the immediate need to reduce emissions. According to Oxfam, for just four oil and gas producers (Shell, BP, Total and ENI) to meet their net-zero pledges by carbon offsetting, they would require an area of land twice the size of the UK for tree planting. If the entire global energy sector was to set similar net-zero targets, an area of land nearly the size of the Amazon rainforest would be needed, equivalent to a third of all farmland worldwide – which would risk pushing millions deeper into food poverty. It is for these reasons that Greta Thunberg has described offsetting as “a dangerous climate lie”.

But beyond the mathematical impossibilities, at the heart of the controversy around carbon offsetting are issues of power and democratic control. Behind the flowery rhetoric about ecology and sustainability, there are growing concerns that the rapid growth in land purchases for carbon offsetting will push up land prices and rents, displacing local communities while exacerbating an already highly financialised land market. In many cases, this appears to be an explicit part of the business model. The prospectus of the fund that received £50m of investment from the Scottish National Investment Bank promises that “rising land values continue to drive returns”. The tax advantages are an explicit part of the pitch, with the company highlighting how “under current taxation laws in the UK, commercial forestry has the added incentive of being a highly tax-efficient investment”.

The rapid growth in land purchases may push up prices and rents, displacing local communities

Meanwhile, the Real Wild Estates Company’s own financial projections show that most of the returns generated will come from a more traditional source: rising rental income. In other words: there is a risk that the carbon-offsetting boom will amount to little more than landlord plundering dressed up in eco-friendly clothing.

The financial exploitation of the Scottish highlands is nothing new: for centuries they have been a playground for Britain’s rich and powerful. But while previous generations of estate buyers claimed they were attracted to Scotland’s land due to its natural beauty or sporting potential, it has, in practice, always been intimately linked to consolidating wealth and power. Today’s new generation of eco-investors are not that different: while the rhetoric may have changed, the economic logic remains the same: land is to be managed with the aim of maximising financial returns for wealthy investors, with precious little concern for the impact on the people that actually live there. It is little wonder that carbon offsetting has been described as ‘Wall Street’s favourite climate solution’.

Companies like Real Wild Estates maintain that their activities will create new jobs for rural communities. But locals fear that the arrival of a new wave of ‘Green Lairds’ has familiar echoes of the Highland Clearances, which saw thousands of tenants forcibly removed from estates to make way for more economically profitable sheep farming during the 18th and 19th centuries.

As Peter Peacock, a former Highlands and Islands MSP and veteran land reform campaigner, recently put it:

As a result, the Scottish government is coming under growing pressure to act.

A community-led approach to nature restoration

The fact that restoring the ecologically barren landscapes in Scotland is widely accepted as a critical priority is a welcome step forward. But as Albert Einstein reportedly said: “We cannot solve our problems with the same thinking we used when we created them.” Addressing the environmental crisis using the same economic logic that destroyed it in the first place risks repeating the mistakes of the past. So what might an alternative look like?

The concept of a ‘just transition’ to a sustainable society centres around the importance of giving those directly affected by climate change a proportionate degree of voice and control. As the Scottish government’s own Just Transition Commission recently noted, “part of ensuring a just transition must be about making sure the benefits of investment in carbon sequestration are felt as widely as possible”. Structuring the benefits of ecological restoration so heavily in favour of businesses and investors is clearly incompatible with this goal.

Thankfully, however, we don’t need to rely on unproven technologies or yet-to-be-invented solutions to set out a different path: viable alternatives already exist. The Land Reform Act of 2003 introduced the Community Right to Buy in Scotland, which empowered local communities by giving them the first option to buy land when it was put up for sale. To date it is estimated that around 560,000 acres (or 2.9% of the total land area of Scotland) have been taken into community ownership. Despite this relatively small footprint, many of these communities have pioneered innovative and inclusive approaches to tackling the climate emergency.

As highlighted in a recent report by Community Land Scotland, rural and urban community owners across Scotland have taken the lead in managing woodlands, peatlands and green spaces; generating renewable energy to address local electricity needs; improving household energy efficiency to reduce fuel poverty; and promoting access to healthy and affordable local food produce. Unlike absentee or corporate landowners, community land-owning bodies enjoy a strong level of local trust, enabling them to take a holistic approach to climate action that combines reducing emissions with delivering wider social benefits to the area.

Community ownership is not an untested, novel idea – it is a proven alternative to extractive green capitalism that can be dramatically scaled up and rolled out across the country. There are, of course, serious barriers to this course of action: local communities will never be able to match the spending power of investors in the City of London. Steps must therefore be taken to provide greater state support to scale up community ownership and prevent a market free-for-all in Scotland’s most precious asset.

As a nation that is on the frontline of The Great Net-Zero Land Grab, Scotland stands at a crossroads: it can either fuel a new era of extractive eco-capitalism or it can pioneer the transition to a more democratic, just and sustainable future.