Meeting of the Parliament 20 September 2023
In opening the debate, Rhoda Grant referred to the revealing social research report, “Mobilising private investment in natural capital”, which was recently published by the Scottish Government. It confirms everything that she has said about private finance, with its focus on investment in carbon markets and peatland restoration and potentially links in forestry, too. The theory is that, if we plant more trees and restore our peatlands, they will generate large amounts of carbon credits to sell on the open market, paying for green investment and providing a good profit margin.
However, the report makes it clear that the carbon price is nowhere near enough for private investors and that that position is unlikely to change any time soon. The report suggests that public finance should underwrite the risk of the carbon price continuing to fall short, with a minimum of 30 years of public underwriting probably needed but a 50-year commitment perhaps being better. That is a massive commitment.
The report recommends that the grants currently offered to restore peatland be stopped in order to underwrite the future costs of private investment. However, that would result in an increase in the amount of money that would need to be spent from the Scottish Government’s budget. There would have to be, say, a £25 million contingent liability or budget requirement for cash guarantees of well over £1 billion over the suggested 50-year period. There is no free lunch here.
The social research report helpfully goes on to provide instructions on how we could release private finance with a contracts for difference approach. Let us not go there—as we have seen in the past week, that could fail spectacularly. We get dependent on private finance, and then it simply stops delivering until more taxpayer-funded guarantees are offered. What has happened is a timely warning to the Scottish Government.
Let us look at the alternatives for tackling our nature and biodiversity challenges. Rhoda Grant talked about the regulatory changes that we could make—I will add to those ideas. What about refocusing the work of the devolved Crown Estate Scotland? If it had a much clearer climate change challenge focus, it would benefit our communities now, through land purchases, future land holdings and the use of the proceeds from the sales of sea bed leases. Likewise, what more could Forestry and Land Scotland do? Unlike the SNP and Green Government, we would explore all the options for action, not just private green finance.
I want to finish on what needs to happen now. Liam McArthur made the point that we should not underspend our existing budget and that we should make that money work for our communities now. How will the Scottish Government support our rural communities now—our crofters, our farmers and our landowners—in playing a part in the just transition that we urgently need to create jobs and address our climate and biodiversity crisis? Critically, how will it spend the money that is budgeted to create benefits and tackle our climate emergency? On today of all days, the Scottish Government needs not just to talk a good game, but to deliver in practice for all our communities.
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