The 'Green Economy' is a phrase that those involved in the rural sector will have heard with increasing frequency in recent years. The term can cover a multitude of activities, initiatives and land uses, and is defined by the UK Environment Programme as follows: "low carbon, resource efficient and socially inclusive. In a green economy, growth and employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of bio-diversity and eco-system services."
Here we examine two of the ways the green economy impacts and provides opportunities for those in the rural sector in Scotland.
Renewable Energy
Renewable energy is an important part of the green economy, and over the past two decades there has been a growth in the type and number of renewable energy projects taking place on rural land. This was initially driven by hydro schemes and windfarms, and more recently there has been a new wave of onshore windfarm opportunities as developers find ways to take forward projects within a subsidy-free regime. This is expected to continue over the next few years, and in future there is likely to be an increased focus on the re-powering of existing windfarm projects as infrastructure comes to the end of its natural life, and planning consents expire.
In addition, we have clearly seen opportunities in biomass, solar and more recently battery storage. Battery storage can be developed either as part of larger renewable energy scheme or as a standalone scheme, and as these are essentially operated within storage containers which are less visible and environmentally intrusive than other renewables projects, proposed schemes are likely to be less contentious, and can be developed and operated with minimal disruption to ongoing farm or estate activity.
It is worth noting that land suitable for any renewable energy project, even battery storage, can, in the right location, be extremely valuable, and anyone approached by a developer for a potential project should take specialist professional advice before agreeing terms.
Tree Planting
The planting, management and harvesting of commercial forestry is a key part of the green economy and one that is aligned with Scottish Government priorities. The ambitious targets set by the Scottish Government for creation of new woodland are supported by planting grants, and it is recognised that a variety in size and type of project is required in order to the meet the target, including large scale native woodland plantations and farm scale projects. Farmers can benefit from undertaking tree planting schemes that aim to make best use of their poorer quality land, facilitate farming on other land and provide some timber income at a future date.
In the last few years we have also witnessed a huge growth in interest in carbon sequestration as an additional income stream for woodland creation projects. The Woodland Carbon Code, which is administered by the government agency Scottish Forestry, provides guidance for woodland carbon projects, but essentially the carbon that is sequestrated from the atmosphere by a qualifying woodland scheme is measured and converted into woodland carbon units. These units are then sold to an organisation that has a legal requirement or otherwise desires to offset their carbon emissions.
The woodland carbon units are only issued once the trees have grown in a way that carbon sequestration can be demonstrated, but there is an option for the landowner carrying out the project to sell the pending issuance units, which is essentially a promise to sequester carbon in the future. Choosing this option does however mean that the applicant must ensure the trees do in fact grow in a way that sequesters the relevant carbon, and purchasers of the pending issuance units will look to protect this obligation, often by means of a standard security over the land. Also due to recent clarification in the additionality rules, the Woodland Carbon Code is generally now only considered suitable for native woodland schemes, which due to the type of tree that needs to grow to sequester sufficient carbon you could be looking at an agreement duration of up to 100 years. Careful consideration should therefore be given prior to taking on such obligations.
Can agricultural tenants carry out tree planting and share in carbon sequestration income? Currently, the rules of the Code do not align well with the law of agricultural tenancies, and due to risks and potential costs involved in taking forward a scheme, a separate commercial agreement between the landlord and tenant may be required. However, the recent Land Reform consultation refers to a potential new type of lease called a 'Land Use Tenancy', which it is anticipated may allow an agricultural tenant to carry out the scheme and share in the carbon sequestration income.
Indeed, the consultation on Land Reform also refers to ways in which the community and the country might benefit from natural capital projects and share in carbon income. For information on the Consultation please see our recent blogs on our land reform hub.
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