Who is currently involved in the Green Finance Initiative?
The current steering group of the GFI is made up of North Highland Initiative, Highlands and Islands Enterprise, Highland Council, RSPB Scotland, University of Highlands and Islands, NatureScot and the Landscape Finance Lab.
Why is a Scottish Charitable Incorporated Organisation (SCIO) structure being implemented?
SCIO structures support non-profits and charities to carry out business functions, which means it allows us to hold property, employ people, raise large-scale finance and enter into contracts in its own name. These activities carry a certain amount of risk. With a SCIO, the liability of the organisation to third parties is limited to the total amount of the members’ guarantees. This gives protection to those running the organisation and its members in most cases. The Green Finance Initiative SCIO will be a not-for-profit holding company to raise funds for peat restoration and provide a central resource for advice, management and financing of peat restoration. Ultimately, it will help support community development goals, create high quality jobs, support local businesses, and grow green jobs across the area.
The structure of the SCIO-with-SPVs enables us to streamline administration, coordination and management tasks associated with restoration across the Flow Country, therefore reducing expenditure and offering value for money for landscape scale restoration. The model is replicable and scalable and may be able to help achieve transformational restoration at scale beyond the Flow Country to the natural capital pipeline in Scotland and beyond.
Who manages the SCIO?
The SCIO will likely consist of a Board of Trustees that represent key interests from across the Flow Country and will have the right skills and expertise to guide the charity to deliver on the goals of landscape scale restoration.
The proposed SCIO structure demonstrates our thinking in this space and showcases our attention to communities, regenerative local businesses, sustainable tourism, and having the right governance structure to ensure profits accrued from investments, ecosystem services and carbon credits are locally beneficial by having the pathways to reinvest this money into local community projects.
As the SCIO or its SPVs will not be landowners, we will have to develop a suite of different legal agreements for different land ownership scenarios and are working with legal teams to advise accordingly; we are also aware of the ongoing work by the Scottish Government in this area, and our consultation process will also help us shape the offer.
Most importantly, our SCIO structure is intended to create real benefits that flow directly to communities and support their programmes for capacity building, resilience, education and other social benefits.
How will you ensure the SCIO stays community-led in the longer term?
The SCIO’s constitution will outline what community benefit projects will benefit from the revenues. The aim is for the financial benefits that accrue from carbon prices and ecosystem services to be looped back into our community for our united benefits.
What determines a community benefit project?
The Scottish Government's Interim Principles for Responsible Investment in Natural Capital states 'Investment that delivers public, private and community benefit', i.e.:
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Investment in and use of Scotland’s natural capital should create benefits that are shared between public, private and community interests, contributing to a just transition.
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Current investment and future increases in land and ecosystem services value should benefit local communities.
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Investment and management decisions should support Community Wealth Building by reinvesting value in local economies to their long-term benefit
How can peatland restoration create green jobs?
Peatland restoration offers multiple avenues for creating green jobs. Some will be directly related to the restoration efforts and restoration supply chain - for example peatland restoration officers, or testing and monitoring jobs. The FCGFI is working in close partnership with Focus North which is integrating skills-needs into the supply chain development for all of this activity. Creating a pipeline of peatland restoration projects offers increased visibility and planning horizons. Providing long-term contract stability or visibility of opportunities will increase investment in training and apprenticeships, capacity, and equipment.
In addition, restoration can offer opportunities for developing ‘spin out’ industries and markets associated with restoration and regenerative practices , e.g. biochar and paludiculture, eco-tourism, ‘carbon-neutral’ game, or regenerative agriculture products.
What is the expected carbon credit price?
Carbon credits will be generated at a price that we anticipate will be higher than the market average because we will be able to demonstrate biodiversity and social benefits in addition to carbon storage, hence ‘carbon+ credits’. For a break-even scenario (not considering other financial sources and transactional and capital costs in 5 years) for areas changing from drained to modified peat land, we are still in the process of calculating the carbon credits price for this initial project period. Carbon credits can be sold in advance but used only when verified.
Is it only about carbon credits?
Other potential bankable and/or carbon financed activities are:
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Native woodland plantations in riparian areas
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River restoration for salmon
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Joint tourism promotion through building brand and partnering with local producers e.g. North Coast 500
What kind of restoration activities will be funded?
Taking an example from on-the-ground restoration activities funded by the Peatland ACTION Project. Activities include installation of peat dams in man-made ditches to increase water levels, allowing the peat-building mosses, called sphagnum, to re-establish. It also supports more novel techniques, such as peat hag re-vegetating by using the surrounding vegetation to stabilise the bare eroding peat.
There are no geographical restrictions or target areas for Peatland ACTION funding (which is managed by NatureScot), however before applying, applicants should read their guidance to check whether their proposed restoration activities meet the fund’s outcome and eligibility requirements. The SCIO will also fund additional activities based on results from the consultation and further work with stakeholders.
What are the benefits for small-scale crofters and farmers?
Peatland restoration offers several significant benefits, both for the environment and for human societies. Here are some key advantages:
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Climate change mitigation: Peatlands are excellent carbon sinks, storing large amounts of carbon dioxide (CO2) in their deep layers of organic matter. When degraded or drained, peatlands can become significant sources of greenhouse gas emissions. By restoring peatlands, we can prevent further carbon loss and promote carbon sequestration, thereby helping to mitigate climate change.
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Biodiversity conservation: Peatlands are unique ecosystems that support a wide variety of plant and animal species, many of which are specifically adapted to these wetland environments. Restoring degraded peatlands helps to preserve and enhance biodiversity by providing habitat for specialised and endangered species, including rare plants, birds, insects, and amphibians.
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Water regulation and quality: Peatlands act as natural water filters, purifying water as it passes through their layers. They also play a crucial role in regulating water flow by storing and slowly releasing water over time, which helps to reduce the risk of flooding during heavy rainfall and maintain water availability during dry periods. Peatland restoration can help improve water quality by reducing sediment and nutrient runoff, thereby benefiting downstream ecosystems and human communities.
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Improved fire prevention: Peatlands have a high water content, making them naturally resistant to fires. However, when peatlands become degraded and dry out, they become highly flammable, leading to devastating peat fires that release massive amounts of CO2 into the atmosphere. Restoring peatlands helps to prevent and reduce the risk of peat fires, protecting both the environment and human communities.
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Economic benefits: Peatland restoration projects can generate economic benefits by creating jobs, particularly in rural areas where peatlands are often located. Restoration activities, such as re-wetting, re-vegetation, and monitoring, require skilled labour and can contribute to local economies. Furthermore, restored peatlands can provide opportunities for eco-tourism and recreational activities, attracting visitors and generating revenue.
By restoring degraded peatlands, we can reap these benefits and contribute to a more sustainable and resilient future, addressing climate change, conserving biodiversity, improving water resources, and promoting social well-being.
For small-scale farmers and crofters engaging in landscape scale peatland restoration at the early pilot stages, the restoration can generate Carbon Units under the Peatland Code. The Peatland Code is a voluntary certification standard for UK peatland projects wishing to market the climate benefits of peatland restoration and provides assurances to voluntary carbon market buyers that the climate benefits being sold are real, quantifiable, additional, and permanent.
Units can be sold once the project has been independently validated to individuals and organisations who want to make claims about the carbon footprint of their activities. It is expected that farmers and crofters will need to retain some of these carbon units for their own use.
Pilot projects will be able to input into the ethical guidelines and partnership policy which will restrict the types of organisation that can purchase these units, what they can do with the units, and what they can claim about the units.
How could this initiative benefit me more, over undertaking peatland restoration myself on my land?
By taking part in “landscape scale” peatland restoration with the Green Finance Initiative you can benefit from economies of scale. Individual peatland projects are often too small for carbon purchasers or investors, by grouping projects together you can access these organisations. Additionally you can achieve greater momentum for tackling challenges that individual landowners, crofters and farmers face.
How much will it cost per hectare to restore?
An economic study underway to understand the potential in the region and also the costs related to this.
If you have any other questions regarding the Flow Country Green Finance Initiative which are not answered here, please email us at flowcountry@north-highlands.co.uk.