Insight: Scotland's great Net Zero land grab

When it first became clear that Scotland’s vast swathes of peatland - once considered a wasteland - could play a vital role in tackling climate change, there were high hopes Highland communities would reap the benefits.

“The Flow Country is an area which is rich in social and cultural history but it has had its trials and tribulations with capitalist forces going back hundreds of years," says Magnus Davidson, research associate with the Highlands and Islands University’s Environmental Research Institute. "There were sheep, then deer and grouse, then tax breaks for forestry.

“But then along came this idea that - with carbon code payments for ecosystem services and the Community Right to Buy legislation in place - those living close to its 400,000 hectares of blanket bog would have the ability to capitalise on the black gold beneath their feet."

But this is not what has happened. Instead, Scotland is now at the centre of a Net Zero land grab, with wealthy individuals - so-called Green Lairds - charities and large companies competing to profit from the commodification of climate change and the growth of a global carbon offsetting market.

The Kinrara Estate

These investors create peatland or forestry projects which sequester carbon from the atmosphere. The projects generate carbon credits which can be used to offset the owner’s emissions, or sold on to other polluters via emissions-trading schemes. With government subsidies and tax breaks available, estates in Scotland - where the sale of land is unregulated - are once again at a premium.

Last year, BrewDog bought Kinrara estate in Strathspey to create its "lost forest". Aviva and Standard Life are engaged in similar offsetting ventures in Glen Dye, Aberdeenshire, and Cairngorm National Park. Such ventures carry a veneer of environmental respectability. So too do the rewilding visions of the likes of Anders Povlsen, the Danish retail tycoon and biggest private landowner in Scotland.

But the Net Zero land grab is inflating the cost of estates and pricing out those local communities which were supposed to be at the heart of the Scottish government’s approach to land reform.

Last week, a report by the Scottish Land Commission (SLC) said the majority of Highland estates which changed hands last year had been sold off-market in "secret deals", with nearly half going to absentee landlords looking to buy for environmental reasons.

This picture taken on August 21, 2017 shows Bestseller CEO Anders Holch Povlsen during an event in Aarhus, Denmark. - The Bestseller company confirmed on April 22, 2019, that the Holch Povlsen couple lost three of their children in the attacks in Sri Lanka. The death toll from bomb blasts that ripped through churches and luxury hotels in Sri Lanka rose dramatically April 22 to 290 -- including dozens of foreigners -- as police announced new arrests over the country's worst attacks for more than a decade. (Photo by Tariq Mikkel Khan / Ritzau Scanpix / AFP) / Denmark OUT (Photo by TARIQ MIKKEL KHAN/Ritzau Scanpix/AFP via Getty Images)

An earlier report by Community Land Scotland (CLS) said the drive to plant carbon off-setting forests in the Highlands also risked widening inequalities in rural areas.

Davidson says once again communities are losing out. On the one hand, they are being denied the opportunity to bid for estates exchanged in secret. On the other, skyrocketing prices are making it impossible to compete for land sold on the open market.

“When you look at the figures, you can see how difficult it is,” Davidson says. “The average cost of an estate is now estimated at £8m but the amount available from the Scottish Land Fund to support community buy-outs is capped at £1m.

“This explains why we are seeing more buy-outs of things like village halls and pubs, where the cap has a real impact. But are the large-scale buy-outs of traditional estates like Assynt or islands like Ulva possible right now with the inflated market and the land fund cap? I would say not. This is a land grab in its truest sense. It is green capitalism at its worst”.

Anders Holch Povlsen and his wife Anne Holch Povlsen

The problem is partly fuelled by the Scottish government. In order to meet its own Net Zero targets, it is involved in tree-planting on a massive scale. Forestry and Land Scotland owns 8 per cent of the country for that purpose, but it also gives grants to private landowners. In addition the Scottish National Investment Bank has given £50m over five years to asset managers Gresham House for the creation of new woodland and forestry management.

Meanwhile, the Scottish Land Fund (SLF) is to be doubled from £10m to £20m. “You have this weird situation where the Scottish National Investment Bank owned by ministers is funding private companies to compete with their own state-owned forestry land,” Davidson says.

“And then you have communities looking to the SLF for help with asset transfer. So you are effectively using public money to fund communities to buy land in a publicly-funded inflated land market.

"The Scottish government is caught between a rock and a hard place. It needs to provide public money to help with this, but it has secondary consequences which are challenging to say the least.”

Andy Wightman

Some of these consequences fly in the face of the SNP’s own stated priorities. “If investors are making money from the climate change emergency, while communities are left behind, how does that tie into the idea of a ‘just transition’ to a net zero carbon economy?” asks Calum MacLeod, policy director for CLS.

"The Scottish government is very strong on 'community wealth building' too. It talks about not having extractive economies, keeping wealth in communities, having local supply chains, communities benefiting from natural capital and socially just use of land. How much of that is being undermined by what we are seeing in the unregulated and increasingly secretive rural land market?"

The issue of land reform remains on the political agenda. Earlier this month, the Register of Persons Holding a Controlled Interest in Land came into force. The register, required by the Land Reform (Scotland) Act 2016, is an attempt to increase transparency. Meanwhile Labour MSP Mercedes Villalba is introducing a Land Justice Bill which would establish a cap on land ownership .

The Scottish government has also promised a Land Reform Bill by the end of 2023. But, beyond a commitment to a public interest test, there is so far little information as to what it might contain.

MacLeod is also concerned about the timescale. “The end of 2023 is just the deadline to get the Bill to the first stage of the parliamentary process," he says. "But the land grab is happening so quickly. The opportunity to make a difference will have long passed by then.”

He says the Scottish government needs to consider urgent legislative measures to regulate off-market rural land sales. "It could legislate for a specific measure such as the banning of secret deals much more quickly through a one-line Bill. This would correct a significant market failure, given communities often don’t even know land is for sale until the deal is done."

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An uncontrolled market

The UK's unregulated market means Scottish estates are always in demand, according to veteran land reform campaigner Andy Wightman. “There are no controls,” he says. “Anyone from anywhere in the world can come and buy land here. It's attractive because the UK is seen as a safe, stable democracy and we are an English-speaking country. Scottish land is particularly sought-after because of the romantic cachet attached to it. Lay on top of that a new emerging wild west - an unregulated market in carbon credits - and we are seeing a sudden, stratospheric rise in cost.”

One of the things that sets carbon sequestration aside from previous land grabs is its aura of respectability. When lairds were clearing estates for sheep, or industrialists were using them as a playground for their rich friends, there was no disguising the capitalist forces at play.

The Net Zero Land Grab is different. The sale of estates for rewilding and carbon offsetting can be presented as individuals, charities and global corporations making a contribution to saving the planet. Some "rewilding" ventures are also having a positive environmental impact. Povlsen has transformed Glen Feshie in the Cairngorms from an “over-grazed pinewood to Scotland’s most exciting and celebrated forest recovery project."

Yet the whole notion of a carbon credit market is controversial. Some regard it as an exercise in conscience-salving, others as profiteering from the threat of annihilation. It poses many ethical questions. For example, should someone like Povlsen, who made his fortune through online fashion retailer Asos, be allowed to offset pollution created elsewhere by buying up large tracts of Scotland?

Also, while carbon trading is supposed to be used to offset unavoidable emissions, critics claim some companies view it as an easy alternative to adopting more eco-friendly practices. Davidson points to Waitrose, which has signed up to the Woodland Trust’s Woodland Carbon Code, allowing it to “compensate for tailpipe emissions”. But wouldn’t converting to electric vehicles be a better way to address those emissions?

The SLC’s report says companies’ Environmental, Social and Governance (ESG) goals may deliver benefits for communities. But Davidson says this is not always the case.

BrewDog’s purchase of Kinrara has attracted particular ire. It paid £8.8m for the 3,767 acres of land. That sum is more than three times what the land fetched when it was last sold in 2005. The company plans to plant trees to offset the carbon produced at its Ellon distillery and is said to have applied for up to £1.25m of grants and subsidies. But, it was accused of exaggerating the potential benefits of the scheme, claiming it would be capable of sequestering up to 550,000 tonnes of CO2 each year when the true figure is closer to one million tonnes over 100 years.

It also reportedly laid off gamekeepers and sold off their houses. The company previously said the houses in question were never available in the market under the previous ownership and those not used by the estate staff were let for holiday rental. It said the sale of surplus assets would make several properties available to the market for the first time for local buyers.

“I use this in lectures as an example of an ‘unjust transition’," Davidson says. “Imagine an oil and gas company came in and bought an oil and gas fabrication yard in the Highlands and made all the staff redundant and sold off all the tied housing. That would be talked about in the Holyrood debating chamber as soon as it happened. But when it takes place in the landed estate sector, many people don’t bat an eyelid.”

"What about other companies?" I ask. “An investor or pension fund like Standard Life might manage the estate in a benign manner with an interesting nod to ESG," he says. “But, even aside from the question of land value inflation, I’m not comfortable with the idea of having a pension fund as my landlord. I don’t want them directing economic control of the estate, especially given we have evidence of how transformational it can be when control and governance and ownership is transferred to communities.”

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A ‘lacklustre approach’

Most of those I speak to agree the SNP has been lacklustre in its approach to land reform.

Some believe the party has been constrained by a shift in the political leanings of the land-owning classes. “There is a possibility they see them as potential Yes voters, and haven’t wanted to rock the boat before a second referendum,” Davidson says. Others suggest most of those at the top of the party were born and brought up in the Central Belt, making them less sensitive to rural issues.

Wightman, a former Green MSP, worries about the current lack of expertise with many land reform heavyweights - such as Roseanna Cunningham - no longer in the parliament. On the plus side, the quasi-coalition with the Greens could inject new energy into proceedings.

So: given the Scottish government is committed to a land reform bill of some form or other, what should it include?

All three are in favour of a public interest test, though they are keen to see it extend beyond environmental concerns to encompass other issues such as positive engagement with local people.

In 2017, the Scottish government published a Land Rights and Responsibilities Statement, which includes a requirement to take sustainable development and the wellbeing of communities into consideration but its provisions are voluntary.

The proposed public interest test would apply to significant land transfers, with a presumption of a community right to buy if the test is failed. Ideally, there would also be a public interest test on existing land holdings. “Where the public interest test on existing land holdings is concerned, there could be a whole scale of interventions depending on the infraction, from a warning to the dividing up and selling off of the estate,” says MacLeod.

He and Davidson are also interested in the concept of a “fit and proper person test” similar to that which exists around the ownership of English football clubs. This has gained relevance as a result of the war in Ukraine because a number of Scottish estates are owned by Russian oligarchs. These include Vladimir Lisin, the majority shareholder and chair of Novolipetsk Steel whose 1340-hectare Aberuchill Estate in Perthshire was bought in 2005 for £6.8m and is owned by Forestborne Ltd, a company registered in the British Virgin islands. Evgeny Strzhalkovskiy, the son of a KGB colonel who served alongside Putin, acquired Knockdow House and 100 hectares of land in Argyll in 2017.

All three back the regulation of foreign land ownership, something that already happens in other countries, including Denmark. “If you said that to buy land in Scotland you had to live here, it would rule out Sheikh Mohammed bin Rashid al-Maktoum, [who owns a 63,000 acre estate at Inverinate in Wester Ross] and Povlsen,” Wightman says. “And what happens if people like that don’t enter the market? The price goes down.”

But they are at odds over the land cap. MacLeod and Davidson back a limit on the number of acres any one individual, organisation or corporation can own, but Wightman dismisses this as a “crude” approach. “How do you establish what the limit should be?” he asks. “One hundred acres in Lochaber has a very different value to 100 acres in Glasgow.”

Moreover, he says, some large landowners are making a positive impact. It doesn’t take long to establish he is ambivalent about Povlsen. He is an admirer of what the billionaire has done at Glen Feshie and yet he recognises the existing rules allow less benevolent landowners to buy up huge tracts in the same way. Others, including Davidson, feel that - whatever economic or cultural benefits Povlsen delivers (and those are contested) - he is using his money and influence to impose his particular vision on the Highlands on local communities.

Wightman is also frustrated by what he sees as the SNP's reliance on community buy-outs as an alternative to more radical reform.

While he agrees community buy-outs can be transformative, he believes they place an unfair burden on local people. “If your local primary school is providing an inadequate education, the government doesn’t suggest the community should run it,” he says. “If your police force isn’t catching criminals, it doesn’t suggest the community should run it, but when the land market doesn’t work, it says: ‘Well, you buy it, then.'

“This latest spike in land values is a product of structural issues. The emphasis on community buyouts implies it is up to the community to fix them. No, it isn't. Why should it be?”

Wightman says community buy-outs are organised in such a way that other bodies, such as social enterprises, which may be well-suited to taking over a particular asset, are shut out of the process.

“The only people who get privileged access to the market are community organisations," he says. "But in order to access money from the SLF the majority of the community must support the venture in a ballot.

“We are expecting everyone who lives in a place to organise themselves, participate and vote in a majority when there are local social enterprises, local businesses, local individuals and landowners who might be able to play a useful part. Why aren’t we giving them a bit of help in the market?

“The bottom line is, if a place is 90 per cent owned by local individuals, local businesses, social enterprises and local authorities, then on balance you will have better outcomes than if you decide to flog it off to the highest bidder.”

Wightman says even successful buy-outs are often born out of dysfunctionality “Take Eigg [which was bought by the community in 1997],” he says. “If Eigg had had secured tenancies, which it didn’t; if the pier had been owned and maintained by the council, which it wasn’t; if the farms had had proper leases, which they didn’t; if there had been council houses available, which there weren’t - in other words, if all the normal things you’d expect on the mainland had been in place - the people on Eigg wouldn’t have wanted to buy the island. They bought it because it was the only thing they could do to sort out the failings."

With this in mind, he believes there should be more consideration given to how an estate could be divided up, rather than forcing the community to buy it lock, stock and barrel.

“Blue sky thinking: there should be government intervention,” he says. “If a chunk of land comes up for sale, there should be some way in which they can say: ‘See that little strip down by the village: that should be available for people to build houses; see the river and the lochs: that should be available for anyone who wants to do a hydro scheme; see the farms and the crofts: they should be available for anyone who wants to be a new entrant into agriculture.’ In other words, there should be the kind of restructuring that would be normal in a failing business. That’s what we should aim for but we have never got anywhere near it.”

Ultimately, what everyone wants is greater diversification. “Those reports have shown us how bad things are; let’s act on it now,” says Davidson. “Any Bill will take a considerable amount of time to become law so we have to look at non-legislative approaches as well and to say: ‘How socially acceptable is this?’ We can’t compete with the bank balances of some of these individuals or organisations but we do hold a sway with the court of public perception and that can go a long way towards stymying some of this activity.”

At the same time, he is prepared to play the long game. “I am looking out over Caithness, over land which has been in the hands of the same families for hundreds of years,” he says. “It may be difficult to challenge that; it’s a slow and steady process. But I hope in another 200 years, my great great great great grandchildren will be looking out over a much more diversified landscape.”