Scotland Natural Capital Market Framework: Who benefits?

Iain Black

The Scottish Government launched its Natural Capital Market Framework this week to encourage billions of pounds in investment it says are needed to regenerate Scotland's forests and peatlands. This framework provides a mechanism for organisations to purchase carbon credits to offset their greenhouse gas emissions. While this sounds reasonable and required, it was launched at the Nature Finance UK conference in London, sponsored by global property agents Knight Frank. Which tells you much about who this framework is designed to benefit.

In emergencies you have to accept suboptimal decision making, so perhaps we should accept that encouraging private investment to capture Scotland’s land is necessary here?  Well no, the carbon credit model upon which it relies is highly contested. The polluters charter it creates is environmentally (and therefore economically and socially) reckless and the companies for whom this approach has been written are advised that they should not use the carbon credits it produces.  It is hard to see therefore how the Scottish Government and it’s ‘Private Capital Investment in Natural Capital Team’ justify what they have created. 

The Need to Rebuild Natural Capital
Taking a step back, we desperately need to renew our degraded ecosystems, stop the ongoing collapse of biodiversity and regenerate our carbon sinks (systems that absorb and lock away carbon- forests, peatlands, oceans). That takes money, though there is significant debate as to how much.  A recognised approach to encourage businesses to stop destroying ecosystems is for governments to stop letting them calculate in financial terms the benefits that nature provides us.  This is called Natural Capital.  An example is the financial benefit to fruit growers of maintaining a healthy bee population.  However as discussed by Prof Gretchen Daly, one of the pioneers of this approach, there are clear dangers from aggressively monetising the work of nature.

Carbon credits?
Carbon credits fall under this warning. These work by taking natural processes that lock away carbon (e.g., tree growth), calculating the amount stored, and creating credits sold to companies wanting to offset their emissions. If they buy an amount equal to the emissions they create, they can claim to be ‘Net Zero’. You can imagine how attractive this idea is rather than actually stopping polluting practices. There is a vibrant carbon credit industry that essentially sells permission for business-as-usual approaches to addressing the climate and biodiversity crises. Whether carbon credits (and the broader market for Carbon Offsets) that underpins the Scottish Government's approach are legitimate tools for reducing greenhouse gas levels and rebuilding biodiversity is deeply contested. I recommend the work of Carbon Brief to provide a detailed overview of how they are being used, the questionable greenhouse capturing effects, and the abuses to indigenous rights.  To this, add the long list of examples where individuals and companies driven by greed and status have subverted and corrupted financial and other markets.

Existing emissions not new ones
You cannot get around these observations, as the framework tries to do by allowing only robust credits to be sold—here they choose the Woodland Carbon Code and the Peatland Code. Regardless of how good the credit is the framework fails to address a consequence of the state of our environment, which tells us daily we have already put too much pollution into the atmosphere.

We have surpassed safe operating limits for six of Earth's nine planetary systems—the systems that support life on this planet. The first responsibility for those countries, companies, and individuals who have caused and benefitted from this must be to repair these systems. For the greenhouse effect (one of the breached systems), this means focussing on regenerating and protecting carbon sinks to draw down the greenhouse gases already in the atmosphere not granting permission for new pollution. The Natural Capital Markets Framework is therefore based on the false premise that it is environmentally responsible for companies to invest and bank credits against new emissions. Instead, if it were to have legitimacy it would create credits to pay off the debts of past emissions and alleviate the financial burden these are causing us all.

Rejection by the market:
This brings us to another issue that undermines this framework. Probably the most influential organisation guiding business in how to set net zero targets, the Science Based Target Initiative (SBTI) explicitly excludes the use of carbon credits. To date over 6,500 businesses, including some of the world's largest, have set and publicised targets based on SBTI's advice. SBTI’s view on carbon credits includes: “treating carbon credits as fungible with other sources, sinks, or reductions of emissions is inadvisable, illogical, or damaging to global mitigation goals.” This is from a body that navigates the politics of being funded by the World Resource Institute and the We Mean Business Coalition, being associated with the most respected group of Earth scientists and having a permanent UN advisor on its Board. These tensions came to a head recently when it tried to change policy and allow companies to use carbon credits to achieve their goals. This prompted a staff revolt (see SBTI-rows-back-on-carbon-credits). Their advice to organisations seeking to set a Net Zero target remains: ‘The use of carbon credits must not be counted as emission reductions toward the progress of companies’ near-or long-term science-based targets. This means that companies cannot purchase carbon credits as a substitute for emission reductions.’

Another big land question
So far, this critique has not even explored the fact that this framework expressly sets out to sell off Scotland’s land and resources to benefit the wealthy, and lead to land being annexed from common good. It is a framework that expressly looks to put our natural assets into the hands of people whose main agenda is to make more money and do it by creating more pollution. It is another example of the gap between the Scottish Government’s progressive words and its regressive actions.   This is not to say there are good intentions in here, including around integrated land use, attempted protections from concentrated land ownership and warm words about land reform and community benefit.  It is just that these will be fatally undermined by the instruments used and the core assumptions underpinning the approach.

Summary
So, who benefits from this framework? We cannot be confident that it’s the planet or biodiversity. It almost certainly is not the people of Scotland. It is unlikely to be benefits many of the business whose money the Scottish government wants. This framework is a charter for the further exploitation of Scotland’s land and by extension Scotland’s people.

The centrist paradigm used by those creating this framework ensures that the policies used to solve problems of its own making will further reduce trust in our institutions, disconnects us from democratic structures and makes us poorer. Poorer both in terms of our access to nature but also by not being able to share in economic benefits from our land. In microcosm this is the sort of policy that contributes to our crises of confidence in democracies, undermines our beliefs that incumbent parties can solve the problems that matter to us most, and opens the door as they fail to stop the allure of right-wing populism.