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

By:   []

Date: 2021-12

How will COP26 be remembered by future historians? Whether it is regarded as a global triumph or a disastrous failure, one thing is clear: the conference will go down in history as the moment the global economy officially entered the Age of Net Zero.

More than 130 countries, including China, the US and those in the European Union (EU), have now pledged to achieve net-zero emissions by 2050 or shortly after. Hundreds of multinational companies, including British Airways, Mars, Unilever, Shell and BP, have followed suit. Meanwhile, the Glasgow Financial Alliance for Net Zero, a coalition of more than 450 banks, insurers and investors that represent $130trn in total assets, has also made the pledge.

While these commitments fall far short of what is needed to limit global temperature rises to 1.5°C, they will still have significant repercussions for the way that economies operate – and in whose interest. From energy to transport, the transition towards net zero will likely involve a degree of economic restructuring. However, few sectors face as much disruption as rural land markets.

The carbon-offsetting gold rush

In order to meet net-zero targets, two different levers can be pulled: emissions can be reduced directly or they can be ‘offset’ with measures to remove carbon from the air at some point in the future. Unsurprisingly, many governments and businesses view the latter as the more appealing option, as it avoids the difficult task of curbing emissions, which underpins the profitability of many of the world's largest industries.

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Although there is much hype around the promise of impressive Negative Emissions' Technologies (NETs), such as carbon capture and storage, to date the only proven NET is the restoration of forests, peatlands and other natural carbon sinks. In order to scale up investment in ‘nature-based solutions’ many governments are embracing the so-called ‘natural capital’ approach to conservation, which involves assigning monetary valuations to natural assets such as forests and then enabling investors to extract financial returns for managing these assets sustainably.

In the case of carbon emissions, the approach enables those who invest in projects that will sequester carbon from the atmosphere to claim carbon credits (or carbon ‘offsets’), which can either be ‘netted off’ against the owner’s emissions, or sold on to other emitters via emissions-trading schemes. Carbon credits are typically awarded for practices such as planting trees, halting deforestation and adopting certain soil-management techniques, and therefore have the potential to create substantial new revenue streams for landowners.

In practice, carbon credits turn negative carbon emissions into a tradable financial asset that can be bought and sold on global markets. This means that instead of taking steps to reduce their emissions, companies can simply buy carbon credits generated elsewhere in the world to ‘offset’ them. As a result, some critics have referred to carbon credits as a 'get out of jail free card’ for companies who want to greenwash their polluting activities.

Emissions trading is not new – various schemes for doing so have been around for more than three decades. Many initially targeted the environmentally conscious individual, often linking offsets to the protection of fragile ecosystems in developing countries. But over the past decade, a number of large-scale emissions-trading schemes have been established or expanded upon, including the United Nations’ REDD+ program, the Kyoto Protocol’s Clean Development Mechanism and the EU’s Emissions Trading System. To date, however, these schemes have largely failed to reduce emissions on the scale that was envisaged.
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