Landowners are on the frontline of tackling Scotland’s response to the climate emergency, building a cleaner future and a greener economy.
From tree planting and peatland restoration to renewable energy and the innovations being made to reduce emissions in agriculture and create more affordable and efficient homes, the importance of rural action and enterprise in the drive toward net zero is immense.
Undoubtedly, many people will have a view on whether estates, farmers and crofters get the credit they deserve for the remarkable work that’s ongoing. Balancing the demands of natural capital, food security and housing / amenity land for communities is not easy. There are frustrations over what may be perceived as a lack of political understanding about issues on the ground and the need to tackle the uncertainties that the sector faces.
What is certain, however, is that to reach net zero, the power and potential of the countryside needs to be recognised and properly harnessed.
While not without their challenges - particularly when it comes to the use of productive farmland - the diversification options for many are huge.
And, with the need for action urgent, the temptation may be to simply jump straight in. But full and considered legal advice is critical.
It is clear that many of our clients are taking a more cautious approach when it comes to carbon credits. That’s understandable, given the long-term nature of investments. Woodland, for example, could be a 50 to 70-year project. You need to ensure you get everything right.
Likewise with renewable energy. While landowners are likely to be working with energy developers, the complex economics of wind farms mean that it takes, on average, 5 to 10 years for these projects to start making money.
With those levels of commitment - the fact that they more often than not involve working with third parties, their implications on eligibility for support schemes, succession planning and so much more - the deals surrounding diversification projects of any kind need to be carefully structured.
For example, what agreements need to be put in place regarding access? And who is responsible for any infrastructure needed? You don’t want to find yourself in a situation where you cannot work as you need to with livestock or lose access to certain areas.
If investing in forestry, what happens in the event of storm damage? Who is responsible for managing that and what might need to be place in terms of contingencies if the weather hampers your harvest, and therefore your income?
The Peatland Code has made peatland restoration attractive, with the Scottish Government planning to spend £250m in restoration up until 2030.
Corporates seeking to offset their carbon emissions are keen to invest quickly. But the legal agreements surrounding them need to be right for you and your enterprise, something we are increasingly working with specialist land agent colleagues to ensure.
Together, we are looking at all the implications.
For example, landowners may be presented with agreements with investors, exposing them to onerous obligations, which could tie them and their successors to managing land as forestry to the exclusion of other development for in excess of 100 years.
What could that mean for your business?
And what might you need to consider in the community if the actions you are considering might change the physical landscape or lead to more heavy machines on rural roads?
The future success of many rural enterprises may well depend upon the role they play in a greener future. But, unless diversification is supported by well-considered and structured legal safeguards, they may not bring you the return you hope for.
Leanne Gordon is a Director in our Rural Services team.
This article was published in LandBusiness magazine on 12 June 2023.
