Scottish carbon credits and “carbon capitalism”


As pressure mounts to tackle climate change, companies like Shell, Barclays, Thales and FleetCor are turning to Scottish carbon credits to offset emissions. But critics say this market system is the root of “carbon capitalism” in the country.

Carbon credits are one of the main solutions companies can use to tackle the climate crisis.

Proponents of this program argue that the credits attract private investment in nature-based restoration projects by valuing emission reductions. But opponents have claimed the credits are a “false solution” to the climate crisis.

Scotland attracts carbon credit developers because of its vast rural area for tree planting.

The country also has a loosely regulated land market and generous government subsidies for the forest and peatland projects that produce the credits.

Scottish carbon credits

The previous United Nations Climate Change Conference (COP26) was held in Glasgow from October to November 2021. Article 6 which governs the structure of carbon credits was at the top of every country’s agenda during the COP26.

In the UK, the Woodland Carbon Code (WCC) – administered by Scottish government agency Scottish Forestry – sets design and management requirements for voluntary carbon sequestration. The Code allows for independent registration and verification of tree planting projects.

  • Verified wood carbon units are a type of credit that a company can use to voluntarily offset emissions in accordance with UK government guidelines on demonstrating carbon neutrality.

But they cannot use the credits in international carbon reduction mechanisms like the EU emissions trading scheme.

The Scottish Government encourages the use of Scottish land to create carbon credits. It is committed to combating the harmful effects of the scale and concentration of land ownership.

The government also sees private investment as a catalyst for combating climate change and restoring nature.

The other carbon credit scheme in use in Scotland is the Peatland Code. It covers peatland restoration projects that generate credits.

Some land reform experts have said the demand for carbon credits is contributing to rising land prices across the country, causing an unfair land market. Land values ​​would have jumped by 61% in 2021 alone due to demand from forestry investors.

The graph below shows the main producers of carbon credits in Scotland. Scottish Woodlands, based in Edinburgh, tops the list.

Source: The Ferret

Main buyers of carbon credits in Scotland

About 560,000 credits produced by Scottish projects have been sold to date. Each credit represents one tonne of CO2 avoided or eliminated by a wooded or peatland project.

According to an analysis, the biggest buyer of Scottish carbon credits is FleetCor, a US company selling fuel cards to the transport sector. He bought about 390,000 creditswhich represent more than half of the credits sold so far by forestry projects.

  • Other major buyers of credit are banks, insurance companies and large investors. Together they bought approx. 30,000 credits to offset their operations in the UK.

One of them is Barclays which has invested ~£100 billion in oil and gas companies since the Paris Agreement.

Baillie Gifford, who has invested in fossil fuels and owns a large stake in a major oil producer, is also on the list of buyers.

Oil giant Shell, which has invested billions of dollars in carbon removal projects, bought 635 credits from forestry projects alone. This small amount is used to offset a small portion of its emissions from a driver rewards program.

Two arms manufacturers are also opting for credits to offset their unavoidable emissions.

One is Thales, a manufacturer of unmanned drones, which purchased 2,735 carbon credits.

The other arms company that ranks among the top 20 buyers of Scottish carbon credits is Babcock. He used the credits to offset emissions from a fleet of non-combat vehicles he manages for the UK Ministry of Defence.

  • Scottish carbon projects will absorb a total of around 14 million tonnes of CO2 over their lifetime.

This equates to the same amount of carbon credits, including units that are not yet sold in the market.

The figure is too low compared to the country’s total emissions from the source in 2020 – 40 million tons.

Moreover, it represents only 1% of Shell’s emissions alone in a year. But this requires more land area than the 3 largest Scottish cities combined.

The controversy surrounding the credits

Environmentalists have called carbon credits a false solution to the climate crisis. Indeed, some projects can take decades to deliver the reductions promised by a carbon offset.

Add to that the fact to their claim that planting trees does not provide permanent CO2 capture and storage. When trees die or burn, the carbon they store is released into the atmosphere.

Offsets also require a huge amount of land to reduce global emissions.

  • If we want to achieve net zero emissions just by planting trees, it requires an area 5 times larger than India.

Finally, the evolution of the land market with the explosion in prices makes it more difficult for small land buyers to raise enough capital. A researcher said that:

“The average price last year for a Highland estate, those bought for carbon offsetting, rose to £8.8m, an 87% increase on the previous year. Seven has sold for over £10million… This demand is driven by increased government support for environmental measures and increased interest from buyers from businesses with large balance sheets.

For others, buying credits can be used as an excuse to avoid stricter measures to reduce emissions from a company’s internal operations.

While for a former Scottish official, the carbon credit market highlights the inequality of wealth in the country. Indeed, the more Scottish carbon credits international companies buy, the fewer are left for the country’s own offsetting needs.

But carbon credits are not inherently bad and the world needs them as a tool to avoid/reduce emissions. And while their actual environmental benefits may seem dubious, the global market for carbon credits will explode by 2050.

  • He is expected to be worth $100 billion in the UK alone.

This projection translates into a massive increase in demand for Scottish land for compensation purposes by large private investors.

According to landowners who generate Scottish carbon credits, private investment in carbon projects has led to:

“significant land use change” and were “not a lucrative business in the short term”.

For the former chief executive of the Scottish Environmental Protection Agency, carbon sequestration was always intended to offset hard-to-manage emissions as Scotland approaches net zero in 2045.

This summer Scottish Ministers will consult on a wide range of proposals for the Government’s ambitious new Land Reform Bill which will be introduced by the end of 2023.

Scottish Land Commission chairman Andrew Thin said:

“How land is owned and used is key to addressing the climate emergency, contributing to a thriving economy and supporting communities. It is great to see the government launching the consultation on the next land reform bill. It includes a series of potential measures to ensure that the benefits of the land are shared by all.

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