The Scottish Land Commission ("SLC") published a new protocol on responsible natural capital and carbon management earlier this month.

The protocol - part of a series published by SLC to help deliver the Scottish Government's Land Rights and Responsibilities Statement ("LRRS") which we reported on previously - is designed to encourage a responsible, climate-conscious approach to owning and managing land.

Hamish Trench, chief executive of the SLC highlights that the aim of the protocol is to make progress with meeting Scotland's net zero targets while benefitting communities, landowners and businesses fairly, without waiting for regulation of the market or new legislation.

Net zero targets

Scotland's ambitious climate change plan commits to reducing emissions by 75% by 2030 and to net zero by 2045. These targets have driven up investment in carbon and natural capital, which in turn has contributed to rising land values.

Natural capital and carbon management

Natural capital includes stocks of natural assets which include geology, soil, air, water and all living things - and it can be renewable or non-renewable. Carbon management is a process used to capture carbon or reduce carbon emissions, using either natural or artificial processes. The protocol deals with natural processes in relation to land, such as woodland creation and peatland restoration. Projects like these can generate tradeable carbon credits which can be used to offset carbon emissions.

Carbon credits

Carbon credits are verified ‘units’ of carbon, the ownership and use of which are recorded in the UK Land Carbon Registry. Each unit is one tonne of carbon dioxide which has been sequestered or prevented from entering the atmosphere.

The Woodland Carbon Code is the voluntary standard for woodland creation projects in the UK and this sits alongside the Peatland Code for peatland projects. Projects such as afforestation or peatland restoration can be registered, validated and verified under the relevant code. The Woodland Carbon Code and the Peatland Code are currently the only codes recorded on the UK Land Carbon Registry, but others are in development, including the UK Farm Soil Carbon Code.

Protocol – expectations

The protocol sets out voluntary expectations in relation to investing in, owning and managing natural capital. It applies to landowners and managers, their advisers and relevant organisations.

The protocol states that actions to avoid, reduce or mitigate carbon emissions should not be replaced by investment in carbon management to offset emissions. First and foremost, action should be taken to reduce emissions as close to zero as possible.

It also contains two different types of expectations – firstly, requirements which the SLC expect to be followed unless they conflict with a legal duty, and secondly, recommendations which are considered good practice but the SLC recognises that other approaches may be effective.

The expectations fall into three categories: (1) community engagement and benefit, (2) ownership and tenure, and (3) environmental.

Community engagement and benefit

These expectations are very general in content. The requirements include managing land in a way that recognises multiple benefits, and working with communities to identify opportunity to share the benefits from the management of natural capital and carbon. The protocol also recommends that consideration be given to establishing a community benefit fund to provide direct financial returns to local communities.

Ownership and tenure

These expectations relate to structure of governance and relationship with tenants of land. The requirements include that the transfer of rights in carbon or natural capital should be open and transparent, using the UK Land Carbon Registry if appropriate. Landowners are to consider the impact of carbon management projects on tenants and, where there is a joint venture proposed, there is to be an "appropriate" sharing of risk, responsibilities and costs.

Environmental

These expectations relate to the environmental benefit associated with natural capital and carbon. The requirements include that existing natural capital should be protected and enhanced alongside carbon management activities, with surveys carried out to establish baselines and monitoring systems put in place to record environmental and biodiversity gains. Once more, collaboration with neighbours and others is encouraged in the interests of a consistent approach which delivers benefits across landscapes.

The bigger picture

The protocol is just once piece of the bigger land reform puzzle and is expected to be implemented alongside the SLC's earlier protocols: ‘Community Engagement in Decisions Relating to Land’; ‘Transparency of Ownership and Land Use Decision-Making’; ‘Diversification of Ownership and Tenure’; and Good Stewardship of Land’.

At the same time, consultation is ongoing in relation to a new Land Reform Bill which is to be introduced by the end of 2022. We will be reporting on the natural capital aspects of the consultation - Land Reform in a Net Zero Nation – shortly.

Contributors

Ros James

Associate

Chloe Wales

Senior Associate

Kate McLeish

Partner