A DAMPENER has been thrown over the market for land being bought up for forestry, in the form of tighter rules for assessing a tree-planting projects' eligibility for carbon credits.

Previously, a forestry project's owners could include the purchase cost of the land in the calculation of whether or not it needed carbon credits to be viable – a detail that fuelled runaway prices for land, as investors could always rely on the carbon credits to recoup over-the-score land bids.

Recognising this market distortion, not least because farming bodies have been ringing increasingly strident alarm bells about the amount of agricultural land being devoured by corporate tree-planting, Scottish Forestry has moved to strengthen the Woodland Carbon Code with revised 'additionality' tests.

By 'additionality', what Scottish Forestry means is 'does this project need carbon credits to be viable?' Tree planting projects that are commercially viable without carbon credits will happen anyway, so it is only those projects that depend on the carbon payments that can be properly regarded as providing truly 'additional' carbon sequestration.

But if the only reason a project needs access to carbon cash is to balance the upfront cost of paying over the market value for land, that additionality calculation becomes invalid. This is why Scottish Forestry has changed the rules to remove the actual land price paid from each project's viability calculation, which must now instead be based on the land's value for whatever else it might be used for apart from forestry – which in the case of Scottish hill ground, very much brings the value of sheep farming back into the sums.

NFU Scotland president Martin Kennedy welcomed the change: “For many months, NFUS has been raising with Scottish Government its deep concerns about the impact that non-agricultural investment in land for planting purely to secure carbon credits and greenwash businesses was having.

“Those concerns were justified recently when the Scottish Land Commission published its Rural Land Market Insights Report and highlighted a 31% increase in Scottish land values driven, in large part, by a significant increase in the number of non-farming investors. That has taken the price of land well beyond the reach of most agricultural businesses and almost all new entrants. This may be a short-term gold rush driven by a bet on future carbon values but there is a real risk that the effects are long lasting, not least in our ability to address the current food security crisis," said Mr Kennedy.

“These changes to the carbon code seek to ensure that commercial, large-scale forestry projects are justified by timber production and timber markets rather than supporting those businesses looking to recoup land investment costs through carbon credits. Long term timber production for timber products is absolutely justifiable," he stressed. "However, timber production that takes out food producing land for either the failings of other industries to address their own emissions reduction, or to burn as biomass, makes absolutely no sense at all from a climate change mitigation point of view."

Environment Minister Màiri McAllan commented: “In the last two years over 500 new projects in Scotland have registered with the Woodland Carbon Code, a fourfold increase.

“It is natural for carbon standards to evolve as carbon markets develop. Tougher new tests under the Woodland Carbon Code will provide added assurance to investors, land managers and the public that carbon credits are reliable, credible and crucially, additional in our journey to Net Zero.

Read more: Farming v Forestry: Time to go back to the 'facts' on planting

“The new tests will also encourage species diversity in woodlands, bringing benefits for biodiversity. Strengthened additionality criteria will weed out woodland creation schemes that would be financially viable without carbon credits. This keeps the woodland carbon market in Scotland robust and credible.”

With this financial brake now being applied to the tree-planting bandwagon, farmers' leaders have made it clear that they do not see this as the end of the story, not least as science finally gets to grips with the carbon sequestration abilities of permanent pasture, which some researchers believe might actually be superior to newly-planted trees in terms of the amount of carbon captured, and the security of its storage thereafter. In a drying world, upright stands of trees will always carry a greater risk of releasing their carbon in a fire than an extensively grazed pasture ever will.

Mr Kennedy added: “The debate around carbon is intensifying and NFU Scotland is preparing its submission to the UK Government’s current consultation on Developing the UK emissions trading scheme (UK ETS) which examines the use of carbon calculators, the role of carbon sequestration, and how a carbon trading market for agriculture could work as part of a wider framework for emissions trading."