Rhaiddiw y Llywodraeth Cymru yn y ddechrau'r drosol Cynidol Cymru ar y Cynidol Cymru. Y First Item on the Agender yng Nghymru yn ddegwyddig i'r ddegwyddig 4, 5, 6, 7, i'r prif. Item 4 yn ei ddegwyddiant o'r diolch, mae'n gweld sydd yn gweithio'r ddegwyddiant o'r ddegwyddiant ffynans yng nghymru. Item 6 yn ei ddegwyddiant i'r ddegwyddiant i'r ddegwyddiant i'r ddegwyddiant Automated Vehicles Bill. Item 6 is the consideration of correspondence relating to the proposed national outcomes. Item 7 is to consider a draft call for views on land reform. Scotland Bill—do we agree to take all these items in private? We are agreed. We can move on to a gender item 2, which is an evidence session on natural capital finance in Scotland. For our first panel, I'm very pleased to welcome Stewart Greenwood, partner for the Rural Property and Business from Shepard and Wedderburn, Joel Paterson, the head of natural capitals Scotland for Strutton-Parker, Stephen Young, the director of policy for Scottish land under states, and Oli Hughes, who is the managing director of forestry, I think, for Gresham House. Oli, thank you very much for joining us and agreeing to do so at slightly the last minute. It is going to be an interesting session and I know members will have lots of questions. The temptation is for witnesses to want to answer every single question as nice as that may be to you. It's not possible for me because it means I cut out some of the committee members, which then causes a disagreement afterwards, which I have to resolve. So if you agree with somebody and what somebody said, you don't need to say any more, but if you want to come in, try and catch my eye or the questioners I will try and bring you in, and I will try not to cut you off. Before we go into this session, I just want to make a declaration and remind members of my register of interest in that I'm a member of a family farming partnership. We farm 500 acres of land, which I own in Spacide, and we're tenant farmers for another 500 in Spacide. I would probably say at this stage that I haven't invested in natural capital because I don't understand it. Maybe all will become clearer today. The first questions are from Bob Doris. I think that members will be learning cover some of this. What levels of activity are there in natural capital finance in Scotland? What impact does that have on land use? There was a supply engine way to roll together for time constraints, so I don't have to come back in twice with that. The impact is having on land use, but it's also been interesting for anyone watching this session to get an idea of the organisation that represents interest in the sector, to give a context to your evidence. Maybe Mr Greenwood could start on that. I think that starting with our interest is probably easiest. I'm a lawyer by profession. We act for landowners, investors and project developers on any side of natural capital projects. I've probably been doing this since about 2018. On levels of activity, I think that some players, some larger players are reasonably active, but broader activity is relatively subdued. That has probably tailed off a little bit more in the last couple of years because those larger funds and players that were active are sort of hitting capacity or hitting saturation with the units and projects that they've been undertaking. That's been my experience. Okay, thank you. Maybe we'll just go along a bit. This is Mr Patterson's same question to herself. That's right. Yes, so I am the head of natural capital in Scotland for Strutton Parker, and our role is as a land management adviser. So our typical clients would be landowners, but we also have, through our parent company, connections with the commercial and investors who are looking to get into the natural capital space. In practical terms, we also help landowners and investors to take forward projects, whether that's in woodland creation or peatland restoration. That can be for a variety of reasons, not simply just for the carbon capture element of it. In terms of levels of activity in natural capital, we have definitely seen an increase in that over the last few years, and no doubt that is part driven by the expansion of the carbon markets for peatland and woodland carbon. So that is definitely, in terms of work being done on the ground, we are seeing more of that. We are still far behind our targets in terms of the amount of peatland restoration and woodland creation that we have set as a nation and need to hit our net zero targets. In terms of the trading of carbon credits and that sort of thing, we are still seeing relatively limited activity in that space. So where those carbon credits or the precursor, which is PIUs, are being generated, there haven't been big volumes of transactions on those in the market so far. Okay, thank you, Mr Young. Thank you, Stephen Young, from Scottish Land and Estates. We are a membership organisation for land managers across Scotland. They have all kinds of shapes and sizes. We have private landowners, corporate landowners, community groups, and we've also got tenants and crofters and all sorts. I would agree with Joe that he's saying that there's a lot of activity around it and a lot of interest in it. We've seen a lot of peatland restoration and planting of trees but the actual natural capital market, as in the actual physical trade of the carbon credits or the pending issuance units, is really low level. Part of that is because of the lack of understanding of the long-term impacts of the market, the long-term risks, the long-term requirements and contingent liabilities that are there. In terms of activity, yes, but the actual physical sales of things is really low and I don't think that there's a lot of money actually changing hands yet but certainly it's of interest to all land managers across the country. Is the trend as upwards still all very relatively modest? The trend is upwards in terms of general quantity of planting. Annual planting targets were still not hitting, annual peatland restoration targets were nowhere near hitting in terms of trading carbon or my apologies. I was talking about investment because we're looking at those different outcomes, we're looking at how we leverage in, if you like, finance to do some of this environmental work and the trend appears to be up but I don't want to ask someone else's question later on, convener. The trend appears to be up but it's still relatively modest in terms of yeah, that's fair to say. Okay, thank you. Apologies for cutting you off, Mr Young. Mr Hughes. Good morning and apologies I cannot be with you but just title frames didn't enable it but just by background I'm the MD of our Forestry Division at Gresham House. We are a specialist asset management business based in the UK. We have been actively investing in forestry on behalf of a wide array of clients over the last 30 years in Scotland, England, Wales, Ireland. We managed somewhere in the region of two billion pounds sterling of land and forestry assets. Just to be absolutely clear, we are managers. We often get misrepresented as being owners so we're a fund management business and act on behalf of a wide array of clients so pension funds. We even have a Scottish National Investment Bank of invested in one of our funds so we act on behalf of those investors just to be clear. We have been actively supporting the development of natural capital and land use. The broader definition of natural capital is worth just teasing out here. Clearly within this meeting there's a cold focus on carbon and on biodiversity. We would also include all things nature based within natural capital so that would be timber and the use of that natural capital resource but we've been investing in these assets for some period of time. Over the last two to three years we have probably planted somewhere in the region of 5,000 hectares of new planting forestry in Scotland alone across a wide array of different forms from commercial plantation forestry to more native broadleaf forestry. We have been active participants in the carbon markets through the Woodland carbon code principally through timber through forestry assets but also to some smaller extent through through peatland. Just to echo the statement so far the market is still very very small voluntary carbon globally still remains a very small market compared to compliance markets under EU ETS and other wider ETS schemes. We are seeing that trajectory grow with greater demand for carbon and carbon opportunity but at the same time the market is very nascent and still remains frankly quite risky for investors to invest with a purpose of long-term stable outcome and all of these markets are very long-term markets and I think it should be understood that the nature of these markets and the fact that they are still relatively nascent is something that should be taken into account for their appetite and for growth but the trajectory is positive. That's helpful because I was looking there and I can see that modest numbers that we're hearing in evidence but in terms of Woodland it's trebled in four years so it would appear to an outsider that looks like significant growth but still relatively modest perhaps and tells us what we have to do. Can I move on to my next question and not everyone might need to answer this one I think that set the scene so it's helpful to get everyone to come in. We're keen to know what's motivating different actors to engage in there, what's making investors get involved, that kind of thing for example land managers to develop and certify projects and what's motivating investors and buyers on the market side so I feel like what's getting those investors involved in land managers to come to table and play games what are the driving factors in relation to that so there will be a couple of witnesses what to see if we can get some of that information on the record. Mr Mark Patterson is nodding at me so I suspect he wants to come in here. I can do and I think there's probably no one single answer I think there's a range of motivations for a range of different actors you know I think from the land loaner side you know the opportunity to enter into natural capital markets be that woodland carbon peatland carbon you know but by diversity units whatever it might be you know it is an opportunity potentially to diversify revenue from from land and particularly land that otherwise you know traditionally might have had you know relatively low productive capacity in terms of you know agricultural output and that sort of thing on and there's also motivations from from many of landowners to you know to do their bit to help contribute towards the climate and biodiversity you know solving those those problems on the investors side there is again a number of motivations one of which is you know a lot of these investors or people that they act on behalf of have made net zero commitments and offsetting is a part of that along with crucially the decarbonisation of their activities first and foremost but some of them are moving sort of relatively early to invest in this space so that when they are ready to you know offset they can they are able to do that the other thing is you know undoubtedly is seeking out a potential for for return and you know we're seeing some investing in this space early on being the early adopters in the hope that you know carbon prices might rise in the future and therefore they will either save on having to buy them later on you know at a higher price or that they can then potentially sell them on to others in the future and you know and make a better return on their early investment it's always dangerous to ask a question where I'm not not quite clear of the context of it when you mentioned return Mr Patterson is there a yield on that can you quantify the percentage terms would five percent be an impressive yield financially for investment what are we looking at because I get that investors may also want to do the right thing but there's a financial imperative there as well do you want to make money there is an element of that you know these investment investors and investment firms you know they do have a judiciary duty to you know make some some element of return you know from their from their clients clients money or their own money in terms of return I don't think that there's a necessarily you know a specific rate each case will be different and there's perhaps others here who might be better placed to answer that question in terms of what I've seen and it's put in the paper around mobilising investment in natural capital that's produced by the Scottish Government you know looked as though that might be sort of you know looking for a five percent return in in short term or you know perhaps five even fifteen percent for you know for longer term returns okay thank you and Mr Gilwant. Just a build on what Joel said we're just looking on the other side that's some of the drivers for investment there so there are other things as well timber market's been really strong as well so the actual away from the actual capital the market carbon markets timber has actually been really strong as well and we've also seen you know it's a time of uncertainty whenever that happens tangible assets land gold that sort of thing do tend to strengthen and we have seen that kind of uncertainty in recession and the other thing tied into this that we can't get away from in terms of planting trees and things is that agriculture's not been overly attractive recently so therefore that change in land use has become probably an easier motivation for that so it's probably opened opened different doors as well so there's two sides to that what's bringing people in and what's the push and what's the pull basically. Diversification I think Mr Patterson was talking about of revenues. Does any witness have anything additional to add that's not already on the... Just before I bring Ollie in because he's raised his hand I just maybe help me to understand this I appreciate it was a few years ago since I was surveyor but upland hill land used to change price at about £1,500 an acre if you were lucky if it was if it had planted potential and then what was it two years ago I was hearing prices of £14,000 an acre £20,000 an acre maybe Gresham house was paying less or maybe they were paying more but I hear the markets dropped off and if you put that into context for grade two arable dirt you were probably talking about four and a half to five thousand pounds an acre maximum so there was a huge bubble um Ollie say you're going to get five percent on £14,000 an acre hectare sorry I should say um so so if you look at the the core drivers of of private capital which would be predominantly the pension fund sector and the insurance fund sector well they will have incentivising carbon and climate challenges ultimately they will all require a baseline return on their investment and at the current time that is around over a long-term patient investment of 20 to 25 years a target return of seven to eight percent so this is not a significant return expectation that return is made up usually of a proportion of capital growth within the underlying value and a cash yield from either the sale of timber or the the realisation or sale of carbon so just so we clear that that is the expectation number one number two is these investments that we manage and that we are looking after are very very long term uh the rotation of trees the the cycle of carbon lock up our funds are around 20 to 25 years and so consequently while yes there have been capital appreciations what we have to look at is that return over that very long term period of time so so it's not something that can you can you know set you know the the numbers that we were just referring to well yes there was that spike in price what we have seen is is that's been aligned with the long-term expectation of timber value and the long-term realisation of that timber value and that that return is going to be expected to be delivered over a 35 year period so it's it's a combination of of all of those those different factors hopefully that makes sense okay i'm going to let monica come in very briefly um i'm going to try and ask you to target it to one person i'm just conscious of timings yeah i'm eager to oblige can you register brief question for ollie hues i'm just keen to know mr hues what percentage of tree planting carried out by the greciam house one in scotland is native species so within within all of our planting schemes we look to combine and we follow the uk for a standard than uk woodland assurance standard so within our schemes we will adhere to optimising the the output of each forest and every forest has to follow those guidelines so you brought broadly i would say somewhere in the region of 60 percent of our forestry is is is put down to productive forestry in a in a variety of different usually conifer species then around 20 percent will come in in the form of broadleaf native broadleaf and then the remainder will be open ground and an area for biodiversity so if you look across our funds that would be the broad breakout of of asset thank you douglas i think you've got some questions staying on the theme of investment so we're really looking to ask in what are the investment models and length of contract involved for land managers and do they differ significantly between peatland and forestry and in terms of project risks how are these managed and how are they sort of shared between the the various actors that are taking part maybe i'll ask steven that first of all i think it's our contracts it might be better with the some of the risks i mean the risks do you lie between usually developer of the project and the landowner and all of these things you are in very long-term contract agreements there and there is a you know a potential clawback as well things go wrong so you've got that kind of you've got to manage that risk and there's also the risk of the land valuation as well if you've sold carbon credits off the land then you risk devaluing the land potentially as well because you've still got the liability of managing the land but you don't have the asset of the of the credits that you have there so it's generally either developer or landowner depending on how they've structured that and how they want to do so but it is a it's a balance to your risk and reward in terms of the actual contracts probably in terms of duration we often see woodland contracts up to 99 years peatland tends to sit around the 50 year mark although it can vary slightly in terms of risks and what steven's already referred to we all know the woodland carbon code offer it's a buffer where it keeps back a percentage of the units from each project against sort of unforeseeable loss events and we are seeing project developers and landowners also privately structure their own buffers outside of that in case anything goes wrong and that can also act as a hedge for landowners because as has been said if you sell all units up front you're extracting your value and leaving the risk period whereas keeping a percentage back helps to maintain some of that value and also hedge against future increase in carbon values as well okay anybody else want to add any sorry sorry guys at one point so even beyond the length of the contract particularly in woodland there is a permanence required so it cannot revert back to agricultural land or any other land use is a permanent land use change okay and in the terms of land reform is that seen as a risk that could potentially harm this market or is that not really seen as a risk at this point i think i think it is a risk in terms of the scale of delivery in terms of how people perceive land in scotland and whether they can whether they have the freedom to to kind of get out of the market if they want to is one of the big things and also coming in the fact that things are changing creates uncertainties therefore they're maybe less likely to invest in scotland so until we see it actually play out it's not all clear but certainly the the signals we are getting from some people is that it creates uncertainty and that will reduce investment okay maybe i asked mr hughes in terms of investment you mentioned scotland national investment bank is is made an investment to gresham house was that investment was that to leveraging funds from elsewhere or how was that sort of investment structured so to be clear we launched a fund which was focused around a forestation and the planting of new trees in scotland the the way the the structure of support for forestry is is that there are as you're aware grants for planting but then there are no further additional values for investment in for return until those trees start to deliver timber in 35 years time so it's a very very long-term investment and we worked alongside the Scottish National Investment Bank to invest in our fund to support and catalyze bringing in institutional capital to support investment in the a forestation sector to support the Scottish government's target planting targets and we have gone we believe over the last two years a long way towards supporting that through the planting of those those those hectares that that that i mentioned before so that is an investment in the fund for the period of time on behalf of snib to deliver a return but its key measure was to to catalyze the fund and the investment under that new a forestation structure thank you that's that's very helpful next question was around obviously the Scottish government have set out ambitions to support the growth of natural capital finance approaches in terms of you know the Scottish government's ambitions realistic around this do you think they can actually achieve what they intend to to do is that to me i would ask joel first of all yet no problem i think it is ambitious but you know i think it's needed there's no doubt about the climate and biodiversity crisis that we are in i know that there's some debate around the amount of private finance that's needed to be levered in but there is there is definitely a role for private finance to to come into this space and to help meet those targets and you know without putting too much burden on on on the public funds but you know which are already fairly stretched i think i see the role of government in as you know setting the guide rails that allows private finance to to come into this space and really help scale it up and really setting out what what it what it expects in terms of responsible private investment and and also help you know using public funds in a way that you know helps to sort of oil the wheels so to speak to help bring bring more of the private finance into this space but do you think the Scottish Government will actually achieve their targets you think they'll be able to get all the private finance that they need you think they'll be able to attract that or is it i think there's obviously various mechanisms being looked at to help do that and it's quite early to say you know how that's going to play out and and what methods might work and what might not i think they've made good strides in terms of you know setting their ambitions and what they want to see from from private finance in that sector but i think more needs to be done to help try and set out you know perhaps different models or ways of levering in the private finance and you know we're at the very very early stages of that so it's hard to tell what what effect that's going to have okay and be asked to undyled anything Stephen briefly so go to Ollie first and then Stephen just just just my comment on this is that i think that there is a a lot of expectation all being piled into one outcome and i think there needs to be a careful separation of of expectation from a climate perspective from a nature perspective and from a productive land use perspective and i think if you put all of those into one pot it's very hard to make the same bits of land do all of those things at the same time so i think we've got to be careful that we don't put all of this expectation into one and that we separate them out and carbon and biodiversity and and sustainable production of fiber and material for the future are all separate important targets and they need to be targeted separately because i think if you put them together that there is going to be a difficulty to reach those goals or any of them Ben did you want to come in brief i think as i mentioned you we are missing targets currently but i think the appetite is there and it's possible to catch up and do some of that but we need really clear long-term signals we can't change chop and change year to year every five years land management has always been a really long-term game and it's even more important when we're talking about forestry and biodiversity what is required and where Scottish Government has been good is in terms of that pump priming at the start because it's a long-term business there's a high capital requirement at the start we need to get over that to allow us to then move forward from there so that's what's required there but we need to think long-term and that's on even taking finance out of this if you think about contractor availability to do all the work think of nursery stock to plant all the trees they need a long lead in time so we have to be really consistent in what we're doing and be really clear and focused on where we want to go on that sorry is the Scottish Government not set that out in terms of their ambitions or is there still something missing i think the ambitions are there i think some of the polish levers under that could be better and could be stronger and more more consistent okay thank you um Stuart just before we leave this you said that the contracts were for 99 years and for 50 years i think um is there any business in this in this world that knows where they are going to be in 10 years time let alone 90 in nine years time i mean i genuinely ask the question if you take money now for something that's going to have obligation for 99 years to carry out whatever's required which you don't know might be different in 10 years 20 30 40 years time so it completely sterilises the land if you've taken the money out of it because you've got a 99 year obligation i mean how is that a risk that anyone apart from a massive pension fund would be in a position to take it does if you take all the money up front and try to sell all your units but the units are typically released in five or 15 year vintages as the scheme progresses so it is possible to structure so that you take the money as and when or the units are released and therefore the flow isn't taking it all out on day one yeah but you're suggesting that each vintage then reaches maturity um which which it might not do and then it whoever ends up with the land and there's merigo round of land sales ends up with all the obligations on it and and if i was going to buy something with obligations on which i couldn't necessarily quantify i wouldn't be paying very much for it you're absolutely correct which is why a number would keep units back so that the rest some value but otherwise as you say you could be taking on land that is solely encumbered by obligations to administer a scheme where someone else has taken all the carbon sounds a bit like a ponzi scheme to me but anyway maybe i've got it wrong monica i think you've got some questions sorry it was mark sorry i'll cut you out park i'll put it right yeah um i'm struggling to see at the moment how the huge amount of wealth and benefits that will be generated by these markets will be shared with you know small-scale community projects with tenant farmers with with crofters how are you making sure that these schemes are accessible and that those types of landowners are fully involved in realising and benefiting from these schemes so can i start with with a panel that's here to start with stewart i think there's a real challenge for crofters and tenant farmers in particular because they're subject to frankly well outdated legislative regimes which didn't have carbon or natural capital in mind and that is stifling the ability to affect investments where it's croff land or land that's subject to agricultural holding so i think to try and open that up there really needs to be a look at what can be done on the legislation side to try and better facilitate or to create mechanisms to allow that investment to happen because at the moment that's a real challenge could that be through the land reform act it could be okay job i would agree with with what's been said there i think there's definitely you know work needs to be done to particularly for crofters and for farm tenants and as to how they can engage in these markets and i know that there is there are some initiatives that are looking at that currently you know but but they're not they're not quite there yet the woodland and peatland carbon codes through their various iterations and certainly you know the latest version of the peatland code made you know quite a big step in terms of requiring community engagement around these projects and certainly the Scottish land commission fed into that in terms of how that should be done and how that should be handled so there is some regulation in there that requires them to do that and i think they're just in terms of you know and in the market you know albeit in its infancy there is some you know incentive for you know sellers of carbon units to consider the social impacts of their projects and and how that can add value into you know to the community and generally that we're seeing you know slightly higher prices paid for you know what could be considered you know better quality higher integrity you know carbon credits for example that can demonstrably show that they have you know used use local contractors within within their projects they've engaged with the community they use it for you know educational purposes that that sort of thing generally back buyers of of these sorts of credits are willing to pay a bit more over and above just the carbon value for those types of credits so there is a feature of that already in the market. Just starting off on on crofting there are some crofting projects which have gone ahead they can be quite tricky because you need the agreement of everyone on the grazing committee to do that and the landlord and it can lead to reduction in grazing and things so it needs everyone pooling in the same direction today and then they need to work out the risk and reward amongst that as well so that can be done and it has been done one of the kind of difficulties is that because of such long-term agreements it ultimately falls back on the landlord if it goes wrong as the landowner is the one that it falls on so they carry the majority of the risk and how that works and also some people looking for standard securities over land as well so it's how that risk is balanced in terms of agricultural holdings tenancies there's stuff that can be done now that doesn't need more legislation so there can be some things done there are areas of freedom of contract where you can do that the land management tenancy would would allow that and I think is structured really to try and do that as I say there is there's ways of doing that now under different contract situations and sometimes over legislation can prevent things rather you know sometimes more legislation doesn't mean lead to better outcome sometimes having that freedom of contract allows two parties to work together to deliver it because in that setting neither the landowner or the tenant can enter that market unilaterally they have to go together so that it's really a case of getting around the table and sorting out where that risk and reward lies and I need that that agreement between the two so there are ways of doing that just 10s of community wealth building sorry I'm rambling on a wee bit here but community wealth building as a whole as well someone we're speaking to the land commission and other groups about there one of the difficulties is as we've touched on today is that community wealth building seems to be currently based around cash payments rather than kind of in kind so and this type of market there's very little cash at the beginning that tends to come later on so it's how you deliver a benefit at the precise point where there's cash as a pinch point so how can we deliver different ways of doing that and there's not this pot of gold at the start to then share out it's a dribble and a trickle so how do you how do you manage those flows properly and how do you do that and in particular how do you manage expectation when we're talking about 50 99 year agreements and that's so there's what going on in that space mr Hughes um I can't comment on those areas of crafting and communities buying their own things what I can comment on is how we're trying to interact and support and engage and interact with communities that we're we're involved with and I think we're putting an awful lot of effort and we've got some what we hope are really interesting case studies which we want to to bring out as to how we are entering into communities developing sites across um forestry biodiversity um nature-based restoration and then enabling access creating jobs and an economy and and providing um sort of areas for development for communities and and so we're working very hard at working out how we can bring together that patient long-term capital to provide support to communities it's it's not simple um and I think as we as the market evolves we're going to have to work out where that support needs to be focused um in a more nuanced way than potentially it is um right now and but uh I think we are making good strides in in in developing that um and there is one model which obviously the renewable sector has used which involves just cash but I think there are much other better other ways that we can do with that as well which we're trying to to tease out and we're making some success on okay can I ask you that Mr Hughes I mean it as as managers presumably you're generating substantial amounts of wealth for your investors but also Gresham House itself will be making substantial amounts of wealth on the back of these markets can I ask about how that is then distributed so as I understand it Gresham House consists of four limited partnerships are there any community or tenant farmer or crofter interests or wider community interests within those partnerships so in terms of the management of these assets and management of the market are those interests involved in that or you know maybe you could tell us who who are involved with the limited partnerships that comprise Gresham House so so as I say the limited partnerships are collective investment vehicles which bring together an array of different investor types from as we discussed before pension funds insurance companies family officers individuals um and and and they are putting a considerable amount of capital at risk to deliver a long term stable income and so I think we need to be just careful with I'm not suggesting it's not big numbers but the sort of seven eight percent returns are are what are targeted so that is distributed out over a very very long period of time so there isn't some significant realization of capital Gresham House take a fee for managing those assets that's that's that's all we take so we don't have a principal participation within these funds um a couple of the funds uh have historically historically had performance um benchmarks in it but we're we're we're managers and we we take a fee for managing that asset and and yes it's a profitable business but that that's that's that's what we do how we're working out is is is how we are able to maintain a return that encourages and enables people to still invest but also engages and works with those local communities so we haven't yet fallen on these structures where we have provided specific cash payouts to communities or specific positions of of investment within our LPs what we're trying to work out is is how we bring value to communities enable access to those assets and enable them to generate and and build a a a living off that um what we are absolutely against is is enclosing and locking things up to to to to preclude those assets from local communities to to make a living from because that's absolutely key in terms of management of that market you don't have any communities that are directly involved in the work of Gresham House they might benefit from some of the investments that you that you manage in the long term but there aren't actually any communities or tenants or crofters that are involved in Gresham House itself no communities have invested in our funds no no okay right thanks thank you mark and now i'll come to you monica in the right order monica thank you convener yeah just taking those themes around community wealth building i suppose just transition i'm just interested to hear from each of our panel members today to what extent you think the market is delivering these multiple benefits around benefits to community nature restoration and making scotland more resilient to to climate change and i'll come to mr green wooden work my way out across the table and i'll come to mr hugh's last in terms of the projects that we've seen go through the last four or five years there have been some that have been community focused i can think of a specific one where there was a prominent community buyout and that was part funded against carbon from future projects to plug a funding gap to help that community buyout go through and we've also seen other projects delivered where a charitable or quasi charitable organisation has partnered and provided funding to communities to carry out their own schemes with a view through realising carbon and natural capital benefits so we have seen a few selective examples but i would say i haven't seen a broad practice in that across the board thank you mr passerson i would i'm inclined to agree uh with suret um there are some examples some good examples of of where communities have been involved in these projects um and um although um you know there's a number of of you know potential benefits to communities that aren't simply financial in a lot of cases they might be the the principal benefactors of some of these you know nature restoration projects in terms of you know having increased you know biodiversity more open access you know reduced risk from from wildfires you know improved water quality reduced flood flood risk you know so these are the also the kind of benefits that that can be derived from the from these in projects and by investing in in nature um you know that go above and beyond just you know financial sort of recompense and i think that's often overlooked in you know as part of some of some of these schemes yeah i mean i'd reiterate what others have said there are some some good examples of community partnerships but it's looking at the multiple benefits as well of land management as a whole it's important that we have land management that creates jobs maintains housing as well that's hugely important then you've got the kind of more amenity benefits which we've talked about and obviously there are the obvious natural capital benefits but that's not just carbon and biodiversity it's flood management as well fire management it's it's all of these things lumped together so there's various different ways it's difficult to say you know there's one area specifically but i think what it's about is delivering a a range of benefits across everything if possible but a lot of it is about that maintaining the community the housing and the jobs is probably the number one priority in a lot of this in terms of maintaining jobs and job creation which you mentioned a few seconds ago can you expand on that and give the committee a bit more insight well if you take tree planting peatland restoration maintenance of these projects they need good skilled people doing those jobs so that's something that they can deliver and that's it's it's hard to quantify depending on the difference between agriculture or current use and future use but it depends what that current use was but often it is kind of upland farming there's less labour requirement and there would be possible with tree planting maintenance so there's those elements there okay thank you now mr Hughes in response to mark rutherford's questions you talked about um greshwm house fund making good strides and you also mentioned creating jobs um can you tell the committee how many jobs have been created in rural scotland as a result of the greshwm house fund forestry activities in scotland so um yes i'll i'll get that i think in terms of the community i think it's important to know that anything that we do from a perspective of land use change forestation and tree planting has to fundamentally involve the community and we are we work very hard to make sure that we're interacting with the community in terms of our plans to ensure that they are as sympathetic with local requirements and needs and as possible and uh i would say historically our sector has not been good at that but we're getting much better at that and we're making sure that we are are adapting and changing in terms of our plans and our developments and our models we um are absolutely focusing around ensuring that we are using um local resource local um local people to to to plant to manage to operate and remember within the forestry sector this runs upstream and downstream so that's in terms of sourcing the the plants that's in planting the plants that's in operating managing that's then ultimately in harvesting them and that's delivering jobs into into what is a very significant Scottish industry now in the in the timber processing trade so we we're assessing somewhere in the region of somewhere in the region of 200 around two it's very hard to to to measure exactly because of that upstream and downstream factor but somewhere in the region of sort of 200 jobs that we think we are creating um alone from just the planting factors that we've delivered over the last two to three years but it's very hard to to to verify that number in terms of upstream and downstream but it is it what we are not doing is bringing in external resource this has to be local resource to to deliver local outcomes okay no thank you for that answer mr Hughes um i mean because as a parliamentary committee it's important that we you know take reliable information so it's sense that you're not if it's 200 it could be more it could be less but yeah I don't want to sort of over label that that's perfect because it will have done variation to it okay um but would you agree it's important that the committee and the parliament has you know a good idea of how many jobs because you know we're hearing today that The Gresham House Fund is an investment fund for high net worth individuals. It's supported by public subsidies, I think, £50 million from the Scottish National Investment Bank, so it's a lot of public money and, of course, various tax reliefs. This committee and Parliament is very concerned about just transition and the progress that we need to make. We need to pick up the pace, so what's happening to people's jobs is really at the heart of that. You said it's hard to verify that figure of 200, but is that something you can go away and look at and come back to the committee? Does the bank not ask you to give figures on that? Yes, and, effectively, how we verify that is, is historically there was a very interesting paper put together on Estillmure and the effects of land change on transitioning land from sheep land into forestry land, and the variation effects on that. Within that, there are multiple numbers of transitioning land from traditional sheep farming into forestry. What I'm saying is that we're applying a multiplier effect on that rather than counting x, y jobs here or there. That's why the number is that we're out. I can go away and bring that back to you in a form that you can utilise and be very happy to do that, but I just want to be clear that because we are using multiple suppliers and contractors and they will all be involved within multiple projects, it's very hard to specifically say that job was specifically created for that project. What it is doing is creating a living for those people because they've got a scale of opportunity that they can work on if they're all around different projects. We would welcome further information on that. Can I just go back to my earlier question about native tree planting? I think that the figure that you gave was 20 per cent for native broadleaf. I had to dig this out. I'm looking at some correspondence that the bank gave to the committee previously and they were expecting that 46 per cent of the planting would be native and that would exclude the open ground figure that you gave of 20 per cent. Are you on track to meet that expectation? I'm not quite sure about target or expectation, but do you think that it's going as well as it should be? I think that we have to be careful that I was talking in the round on Gresham House. We're managing very significant areas of forestry across Scotland. Within the specific growth and sustainability fund that the National Investment Bank has invested in, just to reiterate this point, it has invested in this fund. It hasn't supported it or it is an investment on behalf of the National Investment Bank for the people of Scotland to deliver an outcome. It isn't a grant or a support, it's an investment. We are and continue to aim towards those targets and I think certainly all of the correspondence and communication we're having with the National Investment Bank is that they're happy with the outcome within the criteria and the targets that we've hit. That 60-2020 is very much of a broader outbreak or breakout of our forestry assets across Scotland. Some of which will come from a historic forestry which had a much higher proportion of conifer in the planting because that was planted in the 1960s and 1970s and there is a fundamental change within the process of forestry, the delivery of forestry under and you'll be aware that the UK forest standard has just changed to limit the maximum amount that a single species can confer within a forest planting scheme. So what you are seeing right now is a fundamental change within the national forest stock to a much lower single species resilience. I would certainly welcome some further correspondence just to clarify some of those figures because I don't know if it's just me, convener, I didn't fully follow all of that but just a couple of more brief questions for the rest of the panels just to turn back to carbon credits. Just to get an understanding of how carbon buyers are using those credits, are they being used as part of corporate offsetting strategies or are they being traded or retained as commodities and what standards are being applied to ensure offsets are being used responsibly, for example, to offset genuinely unavoidable emissions? I'm not sure who would like to go first. I'll just give Ollie a rest maybe. Joel, if you'd like to head off on that and I'll bring one other person in. I'm sorry, we're quite tight for time so Joel, if you'd like to head out on that. No problem. I think to come back to one of the questions that was asked at the start of the meeting in terms of the size of the market and the amount of transactions that are happening at the moment, because this is such a new area, it's very small. There are quite a number of what are known as priority units, which is the precursor to a carbon credit being generated. Certainly in the case of peatland carbon, there have been no verified peatland carbon credits generated and therefore none traded, so it's really difficult to really get a handle on in terms of how companies are going to be used then. There have been some prior issuance units, those precursors, traded in the market, but it's a relatively small amount compared to those that have been generated overall. Again, there needs to be some caution about how we take a view on that. There are a number of standards, national and international standards, and regulations coming into place around how companies make claims around net zero and carbon neutrality and that is definitely becoming a much more tightly regulated place to prevent greenwashing. Any users of carbon credits should absolutely be signed up to some of those standards, whether that's the science-based targets initiative or others, which sets out strict criteria in terms of how they need to decarbonise their activities and always carbon credits and the use of offsets should be the last step in the chain of that mitigation hierarchy. However, it's very early days to tell how that's being done. Oli, do you want to come in briefly on that or are you sufficient? I think that's right on the money. There are so few real units in the market for trading at the moment. What we have seen is some PIUs forward sell, but actually what we've got to wait is for another three or four years until volume starts to appear until we see how people manifest that. Within our fund structure we have created a model where people are able to either take those units in specie and use them for their own in-setting purposes or to sell them, and what we don't know yet is what they're going to elect to do. Okay, perfect. I'm going to go to Mark next because I think you've got a question you want to answer. So I wanted to ask you about how you think the interim principles for responsible investment are working at the moment. Are they being followed? Do they need to change over time so that we get an even higher integrity market? Should they be codified in legislation? I suppose the clue is in the title, isn't it? It says interim principles for responsible investment. We're on a journey here, but you did emphasise earlier the need for certainty. So where do you see it going? Is it working right now? Is it delivering a high integrity market? How does it need to change? Does it need to change? Start with Stuart Greenwood. I think that my experience has been that a more rigorous integrity market would be helpful. We've talked about attracting investment, but to attract investment we also need land that's coming to market for projects and is open. I've had client meetings where they will talk about carbon units and PIUs in the same breath as Bitcoin, as an example, because they just perceive it as far too risky. So any greater integrity or rigor that we can bring to that is only going to be a helpful thing for getting the land out there for what is needed for the investment. Okay. Mr Billy Hughes, do you want to come in on this? Yeah, probably to echo that. I think from a perspective of our support of this, we are still very much of the opinion that to deliver long-term outcome, we look to an underlying real asset in the first place, i.e. in our case, traditional timber, and then we then look to optimise the sustainability and the climate impact on that over and above that as a benefit. And until the markets are more stable and mature, it's going to be hard for us to continue your to increase the amount of capital allocating. So I think we're going in the right direction, but some stability uncertainty would be very, very helpful. So you don't have a view then on whether the principles right now are the right principles, but you want to ensure that whatever principles we use that they're certain going forward to allow greater investment? Yes, I think that's a fair statement, but we don't disagree with the current principles at all. What we would like to see is some stability and certainty in those moving forwards. Okay, thanks. Joel Patterson, Stephen Young, do you want to come in? Yeah, I think that the interim principles are good and they set a clear message from the Government in terms of what they expect. I think that as this space evolves and these markets start to gather pace, they should be kept under review and need to keep pace, but at this moment in time they are good and they send a clear message. Beyond that, I think that there's more that the Scottish Government can do to help to support a high integrity nature market, if you like. There are already other pieces of work going on that are supported by the Government, both at the UK level and at the Scottish level. For example, we've got the consultation on the British Standards Institute nature investment standards. There's a lot of work being done around the voluntary carbon markets integrity initiative. We've got the peatland and woodland carbon codes and also the development of our UK green taxonomy. I think that all of these things together will only help to build integrity in the market and set the rules of the game. I think that until those things are all in place and we see how that plays out, it's perhaps too early to say whether the principles need to be absolutely codified in legislation. I think that there's lots of other pieces there that could come to support that. I'll be really brief when Joel's covered quite a lot of what I was going to say. Scotland does high integrity markets of various things and high quality produce really well. I don't think that any of us want to have any other type of market operating in Scotland in terms of carbon crediting. I don't see how that should be any different. They are welcome and they are working for now. As we said, and it feels like a stuck record it's early days we're going to see how it plays out, but it's early days we're currently, I think, they're working well. It's not to say they won't need tweaked in the future. Okay, Ben. The deputy convener is next. You're up, Ben. Thank you, convener. Good morning, panel. Thanks for your time. Two questions. First of all, please setting aside forestry and tree planting. As I know, there's some discussion on that, particularly recently the RSE published its public financial support for tree planting and forestry report. If we can set that aside for this question as an issue, because I'm interested in other areas of natural capital financing, are there any aspects of government support, be that legislative, tax reliefs, assistance with enterprise agencies, intervening, where we could do more to attract this growing area of patient capital that's looking for places to grow and add to the common good of improving biodiversity and tackling climate change? Everyone's looking at the issues. I should say, and not just Scottish Government, UK Government, local government, there's anything that you haven't been able to contribute in previous answers today that you might want to highlight? Biodiversity is the obvious one. I know that Scottish Government are looking at biodiversity credits and tokens, which could be available there again. The quantification of that is quite tricky in terms of it not being a tangible thing like a tree. More help there. Working across the UK office, we've got biodiversity net gain in England and Wales, how that looks in Scotland or how that could potentially look, there and how we can encourage more capital into rural areas to try and deliver some of those multiple benefits. There's still a lot of work to do around that. That would be the obvious area to concentrate on. I know that NatureScot are doing work in that area. Are you feeling that with your engagement with NatureScot, that's being done in a collaborative way? I think that it is. I feel like we're a little bit behind on that at the moment compared to other countries. In what sense? In terms of that market readiness of biodiversity, what is the thing that's got the token or the credit that's going to help that finance to come in and work in those areas? I think that we just need to move that forward. I don't think that we're far away, but I think that we just could move a little bit quicker. Joe Paterson, did you want to add anything? Yeah, to echo some of what Stephen has just said, I think that the creation of perhaps new codes, new standards for other aspects of nature markets, be that biodiversity or for soil carbon or hydrocarbon, I know that some of these are already in train, but I think that having those frameworks in place and a framework that everybody works to, rather than having lots of different actors doing it all in a slightly different way, makes it a very complex place and one that's difficult to engage in and to also monitor. I think that there's other things that could be done and we're starting to see some clarity come in around the taxation of these schemes and the treatment of credits and other things that come out of these schemes, but I think that more clarity on that would certainly help. I think that there's also some assistance and support in terms of helping to develop different models of investment into these types of nature restoration projects. I know that there's some work underway on that and it would be good to see some of the findings of that and some of the learnings to be published and to help others to engage in the space. Also, to some extent, using public funds in a sensible and responsible way to help to de-risk some of the elements of all of those markets that might encourage or at least catalyse some of the private finance to come in, but that needs to be measured and balanced and it wouldn't be fair for public and public funds to accept all of the risk in some of these schemes, but they can definitely do something to help to leverage it and perhaps take some of that to encourage private finance to come in. That, of course, will require the UK Government and the Scottish Government working together. The other thing about these markets is that the woodland and peatland carbon codes are a UK-wide system and carbon. Within the UK space and corporates it has to work right across the UK, I think, having different standards in different countries that will make it even more complex. Some of those issues are reserved as well that you raised. Are we at a point where, if clarity around frameworks consideration of the models appropriate public investment to de-risk, if all that was lined up, do we have a potential comparative advantage here? Given the strength of the financial sector in the UK and in Scotland, or are we playing catch-up? I think it's a really important factor to hear that the question of patient capital is, and Joel was just touching on that, is this is a global thing? UK capital is looking globally, UK capital is looking into the UK and what we would love to do is to see UK pension fund money coming into the UK, but at the moment the scale, the stability of some of the international markets are greater than maybe the UK markets and people are being diverted frustratingly to other markets. So I think it would be useful to look outwards and to try and compare and align with other markets such as Australia and New Zealand, which are again very high integrity, the US, to be able to create some of that scale. We have got very high integrity aspirations with such small scale that that large scale patient capital is looking elsewhere. That's not a very positive statement, but it's a true statement. I'm inclined to agree that our competitive advantages, if you like, would be in having very high integrity nature market outputs, be that carbon or biodiversity credits or whatever that is. As Ollie pointed out, we are slightly disadvantaged in terms of the scale that we can offer. We are a comparatively small island nation compared to the lights of the US or Brazil with their rainforests and that kind of thing. We need to make sure that the outputs from those markets are of the highest integrity. That was all very interesting and helpful. If there were any further considerations that you had following this meeting about local government, that would also be interesting, for example the planning system. My final question is that we focused in the majority, quite understandably, on potential for natural capital finance to be invested and utilised in rural Scotland. However, there are also areas of land ownership in urban Scotland where the natural environment could be improved and those are areas of private land. Is there anything going on about how such investment could be undertaken? What are the opportunities? That would make a real difference not just for the environment but for the quality of life of the majority of our people who live in urban settings. It is not something that I have seen come to practice and I think that the reason for that might be a question of scale. In rural Scotland, it is much easier to get the sizes of land that you need to make projects valuable or indeed to group them together. I can see that being quite a significant challenge to do within urban Scotland, you would be talking about presumably a number of potentially very disparate sites. I agree that scale is definitely a consideration. However, I have seen examples south of the border where local authorities, particularly urban ones, are using their green spaces to tap into the biodiversity net gain markets. We do not have the same BNG system up here in Scotland, but it is the kind of thing that perhaps could be looked at up here. Authorities work with private landlords collaboratively, there might be some scope and opportunity. Interesting. Thank you very much. Okay, brilliant. Jackie, you are next. I think that you have a question. If I could ask Mr Parterson, we have been talking about land owners today, but I am aware that land owners can mean different things because you have land owners who own the ground, land owners who own below the ground—I am sorry, I do not know the technical term that you would use—and land owners who own both. How will that affect the trading carbon credits? Who would get the benefit of them? Do you need permission from both sets? Are investors going to be made aware that, potentially, if they are dealing with one person, there could be someone else in the loop as well? It might be better directed at the legalities of it, in terms of engagement in some of the schemes that are in place already, whether that is, for example, the peatland and woodland carbon code. It is generally the land owner that has the rights of these carms, tenants and others who have essentially a licence to operate on the surface of the land or whatever. They can engage in the markets, but they need to do so with the consent and co-operation of the land owner. If you are talking more about mineral rights, perhaps, having been sold and how that plays out, I am not quite sure. I am sorry, I will ask Mr Grayden to give us a bit of a steer on crofting, because it is one of the issues that I do not understand. The common grazing might belong to a group of people, some of whom might not have anything to do with crofting anymore, but they could just have a share in it. Who does the carbon rights belong to there? Is it the land owner? Is it the common grazing committee? Is it the—I do not know—perhaps you could widen that out, not so at all? There are two different topics, but I will give it a go. Historically, when land was sold in Scotland, particularly when it formed part of a larger estate, it was quite common for the estate to retain the mineral rights. That is what you are getting at, I think. You would have someone who owns the minerals beneath the soil and someone who owns the surface itself. The reservation of minerals does not just cover anything beneath the soil. It has to be something that is of importance and different to the normal subsoil. If you are undertaking a project on the ground where there is a reservation, it will depend firstly on the terms of the reservation and, secondly, what is there in the ground. It may not be impacted. There needs to be a reservation there in the first instance? Yes. It may not be impacted and it depends on what you are doing. If you are just planting trees, generally speaking, you could probably do that without worrying about a mineral's reservation. If you were going to quarry stone to put roads into plant trees, that might be slightly different, because you are then taking stone out of the ground to make the roads. It needs to be considered in each instance, but it is not a barrier to taking a project forward for that kind of thing. The carbon would generally sit with the surface owner. Crofting is a form of tenancy, for lack of a better word, where you will have a landowner who owns the property, but you will have crofters who have indefinite rights to make use of the property for agricultural purposes. You will have two types of ground in crofting. Generally, you will have in-buy land, which is effectively set aside for a specific crofter to use and manage. You will have common grazings, and a lot of crofters will have their own in-buy, and then they will have a share in common grazings. If you think of it as a sort of circle, you have the crofters in-buy on the outside and the common grazings in the middle that they will all participate in. In terms of taking projects forward, my experience is that you need all the grazers, all the crofters and the landowners to agree. That agreement would normally require them to also agree how the commercial benefit and the units were going to be divided up between them as well. Sounds interesting. Right, Jackie, back to you. I think that Mr Young and Mr Patterson was wanting to come now. Just coming really briefly, I mean just in terms of a carbon credit, and this is, forgive me if I'm telling you something I already know, but a carbon credit generated by doing something which is additional to what's there, so it's not like any other mineral, so it doesn't sit under the soil to be mined effectively. So in terms of doing that, you have to plant a tree, do the work to restore the peatland to generate the credit, and that comes with a cost, and that's where the risk and reward comes to. So in my mind, who's doing the work has to see some of the reward as well. But also in that kind of tenanted and crafted sector just coming back to, with the length of agreements, they generally all fall back on the landowner. If all else goes wrong and everyone else disappears for whatever reason, it all falls back on the landowner, and that's why they have to have a voice in that transaction in one way or another. Okay. That's essentially what he said here. Yeah, basically, yeah. Okay, thank you, and very quickly at the end, convener. We all know that the land reform bills just recently been introduced, so I'd be interested in any initial views or thoughts you have on how this will affect everything that we've kind of been discussing today. Mr Graewood. I wonder whether there might have been a missed opportunity. We've talked about some of the challenges faced today, and I think there may have been an opportunity to try and address some of that in the land reform bill, to try and help to basically solve those challenges and push this market forward. Okay, thank you. Just, I mean, I would argue there's a potential missed opportunity, you know, this was framed in a net zero nation, was the initial framing, and there's very, very little in here, which has actually got any relevance to that. So, there's a missed opportunity for positivity there. There is a risk there as well around the kind of interference in markets, what impact will that have on future finance coming in, whether that's lent finance to landowners, if you're then effectively changing the terms of an existing loan, because of the ability to liquidate the asset and things. So, there's a danger that creates uncertainty and reduces income, but I'd say there's a bit of a missed opportunity, and it's not completely missed yet, because the bills are early stages that we could do more in terms of what it delivers for the environment. Okay, Bob, you've got a quick question, then. I've got a couple at the end. Yeah, just to be joined, it's always coming full circle to my first line of questioning, where I'd referred to investment in, I think, trading in carbon from 2018, 2019 through to 2020, 2023 that showed the investment for Woodland was over £3 million in 2018-19, and it was £9.5 million in 2022-23, and there were similar figures for Petland, which was £19,000, rising to £1.6 million. It's still relatively small, but it was showing that increased trend. I don't fully understand those numbers, but I can see the pattern in them. However, during other lines of questioning, and I apologise for the terminology wrong, convener, there were prior issues units mentioned, and that got me thinking about a pipeline of future investment. Is that the best way to think about PIUs that might not be reflected? That is that we've got estimates for each year, but looking behind that, we've got potential investment for future years. So I just wanted to be sure, is that what we mean by PIUs, I don't understand that properly, and how is that? How can the committee look to see what's positively, Mr Young, lurking in the background at potential future investment so that we can see that pipeline of potential investment coming forward based on what incentives may or may not be given, that kind of thing? Have you understood that correctly, Mr Paterson? Well, I can describe a little bit as briefly as I can about what the PIUs are. So they exist under both the peatland and the woodland carbon codes, and there was a recognition that these are very long-term projects, minimum 30 years up to 100 years, and obviously it takes a long time for woodlands to sequester carbon or for peatland emissions to reduce, and you would have a lot of upfront capital to do the works, and then a very long trickle of carbon revenue potentially. To get round that issue, what the codes did was they said, well, create a vehicle through these prior issuance units whereby if your project, through its design and meeting all of the criteria on the code that is assessed and looks as if it will do what it says it's going to do over time, we will issue these prior issuance units so that project developers can sell those upfront essentially as a promise to deliver to investors, and they can use that money to either fund the works or as another form of investment. Can I just ask Mr Paterson, because I don't wish to make things more complicated than it has to be. I think what I'm hearing here is a way of saying some of the yield will be in year 5, year 10, year 15, year 20, and those who are having to invest now can take some of that yield out now by selling that on to others to allow them to do some of the work that has to be done. That might be overly simplistic, but it's a way of getting money out in the early years for gains in future years. Have I got that bit right? Yes, yes, yes. Okay, I know that's a very simplistic way of looking at it. So, therefore, it's a different question that I'm wanting to ask, which, and I'm sorry, convener, it's about, so we'll soon have, and I'm sorry about the table that I'm looking at here, to teach the witnesses, we'll soon have figures, I suppose, estimates for 2324 under the woodland and peatland carbon codes, but what I don't know is about no insight in what future investments might look like. If this was housing, for example, convener, we would know there was x million pounds worth of investment in the background looking to identify the right land to build on, that kind of thing, how many units that might represent, what the yield might look like, all that kind of stuff. How can we track what future investment might look like? Is that quantified anywhere? Not that I'm aware of. Right. It would be that. It would be that. It's maybe just my misunderstanding, convener, but I just wanted to make sure that there wasn't something that the committee should be looking at. So we can't track this. We can't say that in the next five years we estimate there's going to be investment of x, y and z based on a sighting we'll have, what a future pipeline of investment may look like. That doesn't exist in a public forum anyway. Not that I'm aware of. There's been a number of studies done in terms of what future investment is needed in order to hit the climate and nature targets that we've set for ourselves. There's debate around that number and the scale of investment that's needed in terms of how much is being allocated by investors or funders for future investment. I'm not aware of the number. Right. Okay. I appreciate you trying to answer that question as best you could based on what was asking you. Thank you, convener. Okay. I've got a few quick-fire questions because we're very nearly at the end of our session. First one. I'll give you a prior warning. Oli, it's coming to you. You said Gresham House managed land. They also own land, don't they? And if so, how much they own? Gresham House does not own any land directly. Well, that's not strictly true. We own a proportion of some of the funds that we have invested in, circa 1% of the funds that we have invested in for the purposes of aligning our interests with investors, but we don't own any land directly under the name of Gresham House. So Andy Widman's wrong when he says you're the third biggest landowner in Scotland? He is with the third biggest land manager. Okay. If you could perhaps let us know how much land Gresham House owns, I think that would be useful in their things. I'm a little bit concerned about, we've talked about releasing money up by selling things into the future. To me, the risk seems unquantifiable for 99 years and for 50 years, and farmers may well need those carbon credits to be able to continue to farm. Because one thing's for sure, the industry will force it down to the primary producer their obligations to reach net zero. So there's a huge risk. So one place that's got no risk is Forestry Land Scotland and Nature Scotland, who own between them 670,000 hectares for Scotland. Should they be trading all their credits, is that what your advice would be to them, Stuart? No. Ultimately, it's a commercial decision for any client, but what we've tended to counsel where possible is that if you need to raise some money then sell a proportion, but do not by any means sell a significant proportion or all of them, because you may need those units if something goes wrong, and indeed you may want to hedge against the price going up in the future. Say 200,000 hectares they could sell it on that, that would only be a third. I have to say I find it very difficult to see land owned for the people in Scotland being traded for carbon credits when the market is so risky, but a third 200,000 hectares that would probably allow them to fund all their tree planting targets, the Government's tree planting targets, would that be a good deal? That's a commercial decision for Nature Scotland. Okay, would you advise them to do that, Joel, if you were trading it for them? I probably have to give the same answer as Stuart. Okay, well Ollie's going to jump in and tell him he'll buy it all from them, so Ollie, here we go. No, I think there's got to be careful that there is no carbon value on that existing forest land that carbon is already accounted for within the national account, so the only carbon value is generated from afforestation and new planting in additionality, and so there will be opportunity for Forest Land Scotland to generate carbon through peatland and afforestation, but at the moment I'm not aware of Forest Land Scotland doing any fundamental afforestation under its own name. Yes, but they do own land like Kengel Mountain, for example, and the surrounds like that, which is not necessarily trees. So, I've just got on that. Just say, if you're trading PIUs in the future, what are they worth? What's a PIU worth? 50p? 21 quid? What is it? Well, based on the market evidence so far, and bear in mind, as we've already said, it's fairly limited compared to the number of PIUs that are in existence. But at today's prices it's around £25 per unit. About £25 per unit, and how many PIUs do you get per hectare? That's a difficult question to answer, particularly for peatland because it will depend on how degraded your peatland is within that area and its rate of emissions. For forestry it is slightly easier to calculate because if you know how many trees you've got within that hectare and what species it is and how quickly it grows, then you can calculate that. I don't have the number of... I'm just trying to get a handle on it. Is it one? Is it two? Is it three? Is it somewhere between one and ten, or is it between somewhere between ten and 100? I don't know. I'm trying to get a handle on it, that's all. Yeah, between, you know, sort of one and ten kind of area. Per hectare? Yeah, yeah. Final question. In the past, living in the Highlands, I've heard huge stories about how remote landlords are the thing that we want to get rid of. And this carbon market I would suggest has probably made some of the landlords more remote. I mean, we've got broodog owning Carrara, Aberdeen Standard Life owning Far Relia, Glendaya owned by Aviva Parghti. How do you contact these people who are investing in the natural capital of Scotland? Surely, where do I ring Aberdeen Standard Life to find out who's looking after Far Relia, which will impact local communities? Who wants to, are they not remote? It's a sort of rhetorical question. Who would like to go on that? Stephen? I can't give you the number to ring, but a lot of them will have estate offices like other estates, so that they are there, and they have estate managers in the same way as anyone are, but there is the potential for that to be more remote, I think, because they're not, if they're not physically living there. So, there is the potential for it. I don't know, but at Kinrara, for example, there were five employees, and now there's zero. I'm just trying to work out the effects of what this is going to be. Does anyone want to say a positive thing that it's going to make it more local and bring it back to local people? Stinguish the examples you've given as the few in the market where we've seen large funds and remote buyers purchase the land outright, which I think is in the minority of the activity, as opposed to entering into projects and doing deals with existing land owners on the ground. Okay, I mean, I'm not sure the local communities have much input in the planting of Kinrara, or indeed whether the aspirations of the owner to plant bits fit, which were beat, which he can no longer plant, were actually ever achievable. But anyway, we'll probably leave it there. I think this is a very interesting subject. I think it's very absent that we're looking at this now with the land reform bill that's coming before the Parliament. So, I'd like to thank you all for coming this morning. I don't want to single out anyone, but Oli, I was appreciative that you decided to join at the last minute, and I understand how that worked out, but I'm very grateful because I think you added to the excellent evidence that we've heard this morning. So, thank you very much. I'm now going to pause the meeting. I would ask committee members to be back at 10.46 to restart, please. And welcome back to this session on natural capital. We'll be hearing from a second panel today of witnesses. I'd like to welcome Dr Naomi Byngesner. Have I got that right? Thank goodness for that. Social researcher in transformative land management for the James Hutton Institute. Dr Lydia Cole-Lettra for the University of St Andrews. Dr Josh Dobel, the policy manager for Community Land Scotland, and Joe Pite, the deputy chair of the Scottish Forum on Natural Capital and Chief Executive of the Scottish Wildlife Trust. Thank you all for joining us today. There are quite a lot of questions, and I would encourage everyone, as I said, to give succinct answers. The first question is going to come from Jackie. Thank you, convener. Good morning, panel. I'd just like to ask to what extent do we need private investment in natural capital in Scotland? That's an open question to start with. The problem is, if you all look away, then I have to nominate somebody, so if you could indicate if you'd like to come in on it and try and gauge, oh my god, every hand's gone up. Now, this is not good. Lydia, I think you were first followed by Josh. Thank you for the question and for the invitation to come. I think we need to actually do the numbers on that question. I'm here speaking on behalf of Peatland's, essentially. Is the finance gap as big as reclaimance is? I think that there are some changes since that gap was identified that might bring down that finance gap a lot. For example, I know NatureScot is now financing training of upskilling workers to be able to carry out peatland restoration, which is actually quite a skilled activity. That will reduce the cost. The more people that we have skilled, which I don't know how much that costs, but that will mean that we've got more people who can then work in different places, also bring benefits to local communities if people can be upskilled within communities. The more equipment that we have, the more can be shared. We don't need to necessarily buy land for peatland restoration, if we look to where peatlands are and crofting communities, for example. We need to reassess whether that finance gap is as big as it's claimed to be. Do you think that we've got good evidence on what the financial gap actually is? If we have evidence, it would be outdated, I imagine. I haven't seen the evidence, so I should leave it there. Thank you for the invitation to speak. I'm from community and Scotland with a representative membership organisation for community landowners in Scotland. Just to pick up on that final point that Lydia mentioned, I would say that the evidence that we have seen for what the finance gap may be is not strong. We haven't seen strong, independently verifiable evidence. The Scottish Government has moved away from the figure that was discredited last year and is now talking about an ambition of how much they'd like to see, which is £12.5 billion. Our view is that that is unrealistic. It's a scaling up of investment by many thousand percent, which we just don't think is achievable. On the wider point of the place for private finance, there is absolutely a place for private finance within meeting nature targets, as there is a place for private finance in most sectors of society. I think the really important thing to think about is what the relationship is between the public money and private finance, and if that private finance is meeting a wider range of policy objectives and how it's actually being used. Hopefully, we can get on to talk a bit about the models that are being proposed and how public money is being used to de-risk private finance, and that was touched on a little bit in the previous session. We need to dig into that a bit more because we're not seeing the models being proposed are not talking about reducing public expenditure. It's keeping public expenditure the same or possibly opening us up to even bigger public expenditure, all for de-risking private finance. We're not clear what the other issues are within the sector that need addressing because it's not just a case of finance as a problem that's meaning we're not meeting nature targets. There's a whole host of other issues that need to be dug into, and as much effort needs to be put into those as there is into thinking about leveraging private finance. I'm sure my colleagues will dig down further as they go on. Jo, would you like to add anything? Yes, I think it's a really important question, and I would suggest that we concentrate perhaps less on the precise numbers and more on the broad scale of the challenge. It's been recognised in Scotland that the nature crisis and the climate crisis are inextricably linked. We know that we need to take action urgently, and we know that we need to accelerate and scale up that action. Our view within the Scottish Wildlife Trust, but I think it's fair to say also in the Scottish Forum on Natural Capital across the various collaborative hubs, is essentially that everyone needs to be part of the solution, and therefore that includes the private sector. The other thing I would just add is that people have different definitions of the word investment, and I would advocate as broad as possible a definition of the word investment to pick up on some of what Josh was referring to in terms of what that investment is achieving, and it doesn't always have to be traditional investment for private returns to traditional private investors, so I think the word itself needs to be used as broadly as possible. Thanks, Jackie. Mark, I think that you've got some questions. Do you think that the current projects that are under way and the standards that are being applied, are those going to deliver long-term climate mitigation? Second to that, in terms of the balance of different land use that we have, we could focus entirely on climate, we could focus on food production, a whole range of other uses, is the balance right? Will it be right going forward, or is it too much of a tilt towards climate, or too little? Who would like to go on that? I'm happy to say something very, very briefly. Strategic land use planning and some really good quality opportunity mapping would help us a lot here because we do need to deliver multiple benefits with climate mitigation, but also climate adaptation and addressing biodiversity loss in its own right, so I think that's what will help make the best use of public and private investment if we can do that really good quality opportunity mapping across Scotland. I'd agree with that, and I'd also just say it depends which projects we're talking about. You know, some of the projects that were discussed at the end of the last session are examples of how this isn't working, we would say. It's not delivering, you know, because you could have a project which is chiefly focused on delivering climate and biodiversity goals, but can also achieve a number of other policy goals, just transition to net zero, land reform, community wealth building. So those are the kind of projects that we want to see happening, and from our point of view, they are happening in areas where communities either own the land or have a really considerable say over what's happening because often the investment, wherever that's coming from, is actually generating wealth, which is circling locally.  A lot of the investment that has been spoken about is really kind of like foreign direct investment, external investment, and all of that is going to be focused really on maybe achieving some climate and biodiversity goals, but ultimately is interested in extracting wealth. I mean, I think we'll come back to those points later on around wider social and economic community benefit, but in terms of climate, do you see those projects that were mentioned, say, at the end of the first session, as delivering long-term reductions in carbon emissions, locking out carbon emissions and mitigation? No, I wouldn't, because we also don't have, if those projects are based on the investment targets or financial motivations of a single landowner, be that an individual or a corporate interest, they're interested in the profit from that land, they're not interested in the long-term viability and resilience of that project, that's not their primary concern, so we would suggest that that isn't it. With reference to Peatlands, so I'm a Peatland conservation ecologist, and I've been working on Peatlands for a long time across the world, but most recently in Lewis, and looking at the Peatland restoration there, is it working or not, where is it working, where isn't it, and in the crofting communities there, there are some Peatland restoration successes, mostly via Peatland action funding, so the public funding. There have been, and we interviewed various people, including a Peatland action officer in Lewis, and he was saying that the Peatland action projects are being slowed down because people aren't sure whether there is the potential for private funding coming in through Peatland code mechanism, so on the kind of operational side we're not getting Peatland restoration projects happening because people are unsure about the potential of private investment, what that could mean for them. On the actual structure of the Peatland code, so we need a mechanism that, we talked a lot about de-risking things, but one of the ways of doing that is through the Peatland code, which is a structured mechanism for quantifying the carbon reductions from restoring Peatlands. That has to simplify the process of restoration, so it's looking, there are four condition categories that a Peatland can be categorised into, which is reductionist, but I appreciate that we need that. The most healthy Peatland condition is near natural. If we get to that, then we've got a Peatland that could be healthy, could be resilient, could cope with a degree of climate change in the future that could dry out that ecosystem, cause burning. So if we get to the point where the Peatland is near natural, we could start to sequester carbon, so it could be part of, once we've got to net zero, then we're trying to stay at net zero through absorbing carbon from the atmosphere with healthy Peatlands. But the incentives to get to that point of a near natural Peatland are not really there. You get a lot of money at the moment via this structure going from a eroding Peatland, emitting lots of carbon to a drained Peatland emitting a bit less carbon, but it's still drained, it's still going to be emitting carbon just less. So if we're thinking about long-term climate mitigation, at the moment, those structures in order to allow money to be channeled into Peatland restoration aren't really incentivising movement towards the point where we've got a healthy ecosystem that will then be sequestering carbon. So it needs to get to that end point? And beyond, and then maintained in that position. Thanks, okay, that's clear. Naomi? I think I'm here for a specific piece of research and it did not really look at environmental impacts, but just stepping back a bit, I think, to build on what Josh said, what we found when looking at private investors or investor owners was that it was absolutely, what they did was absolutely at their whim. So in general, yes, it could, but does it have to know would be my answer to the question of will they deliver long-term? Okay, thank you. Thanks very much, Mark. Monica, I think you're next. Thank you, convener, and good morning to our panel. So, yeah, I just wanted to ask our current natural capital finance models where the financing metric is generally based on carbon delivering integrated environmental benefits, biodiversity, natural flood risk management, and how do you think this could be improved? Perhaps come to Joe? So how could the current metrics be improved just so that I understand? Yes, my understanding is that the current natural capital finance model, the financing metric is generally carbon based, and obviously we want to see a delivery of integrated benefits including things like biodiversity, natural flood risk management. So is that the right approach or do you think there could be an improvement there? I think it is really important not to look at things through purely a carbon lens because I think that can create unintended consequences. I think the development of a number of additional codes and there are a lot in development or potential development at the moment. Sometimes it's hard to keep up. I think that will be important if those codes become established and provide a level playing field and some transparency and accountability and clarity. I think that's really important. That includes work on a community code, for example. So it takes in biodiversity, but it also takes account of social aspects. So yes, we definitely need to broaden beyond carbon. That's helpful. Josh wants to add in a bit a community code. How would that work in practice? Well, good question. I have no idea how that would work. I'd agree with what Joe said and there are some examples already of organisations and landowners bundling credits, so they're selling a carbon credit through the established mechanisms, but they are increasing the price that they're selling at because they say that they are also delivering biodiversity and community benefits. The example I'm thinking of, they are actually doing those things as well, which is why they can charge a higher price. This is something that's been spoken about in terms of charismatic carbon, so achieving some of the wider benefits that Joe's talking about, but doing that through the carbon model and then having their own kind of ethical frameworks and standards to make sure that the people who are actually buying those credits line up with the principles of that organisation. This is largely charities that I'm talking about that are doing this because it is more work, but you do potentially get more gain and it does actually rely on a proper relationship with the local community and benefits flowing both ways, so there are some established models and we would encourage those to be developed. Okay, I see Naomi taking notes and Lidia's got her hand up, so yeah, I'll come to both of you. I'm honestly just taking notes for my own purpose. Okay, Lidia. Back to the point about codes. I don't know enough about the new codes that are being developed, but every code will require somebody to develop it to try and get a universal enough code that will fit different systems. There'll have to be somebody who is probably paid to verify the quality of the environment, the community against that code, so it's all adding extra expense. And I would say we need to work back to think about, well, how are these landscapes being used at the moment? Do we need these extra codes or can we, for example, change our taxation system so that there's more money for agricultural subsidies that are putting money into the current way that landscapes are being used and lead to improvement in a holistic way of those landscapes where the effects are seen, and so the incentive is there for farmers, for example, to continue using the land in that way. If we have farmers who are seeing the benefits of reduced flooding because they are restoring their peatlands, then there'll be some activities which will, there'll be much more of a motivation for those activities such as blocking drains, improving biodiversity value of peatlands. That will happen, I think, almost naturally, maybe with some incentive to start with. I fear with the development of more and more codes that either there'll be fads that this will work for a bit and then we'll drop it because it's not working everywhere and then we'll develop a new one, losing money every time we develop a new code, and there's never one size that fits all. That's a very academic answer, but there isn't, and that's why things keep failing, so I think understanding in each different place, and there will be some repetition, but what is going on on the ground in this location is farming happening. In Lewis, there is a lot of agriculture on peatlands, and generally, those peatlands are in a relatively good state, not near natural, but maybe modified, so there's relatively limited restoration work that needs to happen in some of those areas, and then farmers know how to manage those peatlands. They become better for grazing in many cases, and then it will incentivise that kind of land management going forwards. Do we need extra codes in those situations? I don't know. I'll leave it there otherwise I'll keep going. That's all very helpful. I'm just keen to understand how a just transition for rural communities can be ensured. You've talked about some more traditional farming, thinking about gamekeeping industries, where land is changing might fundamentally change that profession. How do we get a just transition for rural communities? Maybe a question not for all of you, but maybe Josh, who wants to come in and perhaps Naomi, should a proportion of Greenland investment profits be shared with communities the same way we see community benefit payments arising from wind farm developments, which I know is not a perfect system. People have their views on that as well, but just to get your take on that. I'm looking at Naomi in case she wants to come in. Just speaking to the research that we did, which was in six case study communities where there had been private Greenland investment ownership, new owners but also a couple that had had the land for a while, there were some communities that had wind farms and more or less liked the model of the particular renewable developers in the area as far as community benefits, but it was definitely something that was brought up. This is my emotional support notes and I should have written more notes on the question so I could not forget it halfway through answering it. Your time. We can always come back to you as well if you were that second. Actually yes, why don't Josh go first? Josh was smiling, so we'll come to Josh and we'll come back to you Naomi. In theory yes, there should be some kind of benefit sharing model akin to renewables, but I suppose there's a big difference between the renewable energy industry and the very nascent immature carbon markets that we're talking about. The amount of money profits that are going to be generated are very different and in the conversations we've had with investors they've made it very clear that community benefits are not really on the table because they don't see themselves making the returns that they need to. The market is very immature, it's very unclear about how it's going to develop, it's not sure if there's no guarantee that carbon price is going to increase in the future, so there's a lot of nervousness which I think was clear from the first session this morning. Because of that, the discussion about what community benefit models might exist is very limited. We're working with the Land Commission at the moment to develop some of those models and thinking about how they could become statutory or there could be some kind of means of enforcing them. I think, as was discussed earlier as well, that there could be a benefit to thinking about non-financial benefits from this as well. If a land purchase is a part of one of these projects, which is the, I've got the name of the gentleman from Gresham House, but he was making clear that buying the land is important because that's where the asset value increases, where there's a reliable investment. So if land is being purchased, a portion of that being given to the community for their own use, for housing, for whatever the local needs may be. So there are other models that could be developed, but this is a very immature, unstable, unknown market. So I don't think there's much scope at the moment for community benefit because of the amount of money. Sorry. Interestingly, you've said there's an opportunity for benefit. Benefit usually comes from risk. There's zero risk on a wind farm. It'll go up and the turbines will turn and you know what's going to happen. On natural capital, there's a huge risk because you don't know what the obligations are. So should there be risk sharing as well as benefit sharing? You could answer that yes or no. I think that when there's significant land use change where the community is living, the land they're living on and adjacent to, there needs to be some kind of benefit or understanding that they are the principal people who are dealing with that land use change and just talking about granting access, as was mentioned in the first session, is not a benefit. We have very well established access rights. So yes, there's risk, but what we're hopefully going to get on to talk about is the fact that the public purse is going to take that risk so that the community should get some of the benefit in the models that are being proposed by the Scottish Government research at the moment. I thought it was a private purse taking the risk. No. So it's not the likes of Gresham House investing in it and buying the PRUs. So we're talking about the investment models that are being put forward in terms of scaling up the investment. This is talking about public finance, remodeling grant mechanisms to de-risk private finance, not talking about what Gresham House may be doing, although they are also using public money through subsidies. Okay. Naomi, do you want to come back in and then we're going to have to move to the next question? Yes, sure. To expand on the, I guess, non-financial benefits, I mean, there are potential for models with community shares if the government de-risks, of course, as some are advocating. And I agree with Josh that they're already, they're already risking and ultimately the landowner has the land and that is really only going to appreciate over the long-term bubbles aside. So the community does bear the risk of loss of employment, of loss of access, as we've seen in cases, of loss of, there were communities that did talk about loss of farms, loss of tenant farmers, loss of opportunities for young farmers coming in because of changing land use, all that sort of thing. And I think, though, as far as non-financial benefits, one thing that we didn't see that people did want was involvement in decision making. So if these changes are going to come in, we need some input up front. And I think there are a lot of good-intentioned investor owners out there who thought they were doing community engagement, but they weren't really, they were maybe communicating information, they weren't doing it frequently, they did it once at the start, all that sort of thing. Nobody wants there to be one million answers to this question, but at some point it does have to come down to the local context and what's best there. Mark, I think you've got another question, and we'll then see who has got questions. Yeah, I wanted to go back to a theme that was asked in the first panel about, and that was around the barriers to participation, tenant farms, crofters, community organisations as well. So if I can get your brief reflections on that, that would be good. Joe, do you want to start? No, I think picking up on the answers that the panellists have just given, one of the barriers that we see in providing meaningful opportunities for communities to shape future decisions is that they need capacity. So within the Scottish Biodiversity Strategy, for example, there's reference to these six aspirational landscape scale nature restoration areas, and it is going to be more difficult for certain communities, for example, in the northwest of Scotland, where the Scottish Wildlife Trust has got the coecanascent. We are involved in the coecanascent living landscape, which we initiated, but obviously it's very much a community-led initiative, and then much, over a much broader area, the community-led Northwest 2045 initiative, which is the same area as the regional land use partnership. But the problem is, at the moment, is there are so many exploratory conversations taking place, which is required, but those exploratory speculative conversations don't necessarily come with a promise of benefits to the local community, and there's only a certain number of people available to take part in all of these deliberative conversations. Therefore, I think more focus needs to be given to providing sufficient capacity to enable communities to engage in some of these conversations. Given that, Josh, do you see a mismatch between the capacity of common grazings committees and the abilities of communities to organise compared to, say, larger landowners, which might include the NGOs as well in some cases? Yeah, but yeah, potentially. There's a difference in access to resources and time and capacity. Say, in some of the crofting communities, they're being approached by consultancies who say they can do all this work for them and they're sitting on pots of gold underneath the peatland and all these kinds of things. So there's organisations we're stepping forward to offer some capacity, obviously, for a fee, but there's other barriers that are in the way. Capacity is definitely an issue, but there's other barriers as well, which apply to community landowners, but also apply to the market in general, which I think we've touched on a bit in both sessions. So there's concerns over the market in terms of its kind of immaturity and volatility. There's concerns over reputation and greenwashing. The lack of clarity for crofting and tenant farmers is a big issue. This issue of permanence is a real issue for communities. You know, we've seen communities who've looked at taking part in maybe the woodland carbon code, but they're not comfortable with tying up 100-year contracts. You know, they don't want their grandchildren to be tied into a contract when they may have another idea of what they want to do with that land. And what they've ended up doing is they do the work that needs to be done. They're just not taking part in the woodland carbon code. They're making use of the generous grant subsidy to do the ecological work that needs to be done. They're not thinking about the profit motive. There's also the point that I think Edward raised earlier about insetting needs. You know, our members are thinking about that as well. There's going to be a point when they're going to have to inset their own emissions from whatever their activities are. There's some really practical concerns about the availability of saplings, the availability of skilled workers to work on peatland restoration. And then there's a fundamental issue of the price of land, which is a real barrier to communities actually taking part in this ecological restoration work, let alone getting involved in some of these kind of market mechanisms. Yeah, so it's great if you're in land now, but maybe in five years' time, yes, beyond what communities can afford. Lydia, did you want to come in? Yeah. Yeah, one quick point to add. In Lewis, people were saying that they were afraid this commitment to potentially losing access to their peatlands, and there are still people who are cutting peat because energy prices are so high for them in this geography. So if energy prices were lower, then people wouldn't need to be asked to stop cutting peat. They would do it because it's a hassle. It costs a certain amount. People are getting older in general. So I think that's another barrier to participation that people are afraid of losing access to, specifically, this free energy source. No, I think that covers it. Can I move on, then, to another question? I'll ask the first panel, which is about the principles for responsible, the interim principles for responsible investment in natural capital, and what your thoughts are on that as a framework right now. You'll be aware that previous session we talked about whether that could be or should be codified in some way into legislation, so getting your reflections on that would be useful. So there's a Scottish Government advisory group on the nature markets framework, which Josh and I both sit on and have joined recently, which I think aspires to take those interim principles and turn them into more of a framework. In response to the question about legislation, I think anything that has got some teeth is really helpful. I think the framework that will be designed as part of this process probably won't have legislative teeth, as it were. I think the timetable is that that will be published in September. I think there is a point of differentiation for Scotland if we really can do this high integrity values-led piece well, and I think it will need all the tools in the box to do that. I don't think there will be one single solution that will be the sort of panacea to achieve it. So this is an obvious question, but why does it need teeth right now? Is it because people aren't sticking to it? I mean, I think as the market matures and grows inevitably, there will be a greater risk of non-compliance, and I think, you know, we've not talked very much in this panel about the importance of monitoring, reporting and verification, but trust is such an important part of this whole discussion, not just for organisations like the Scottish Wildlife Trust in the environment sector, but even for investors who are worried about their PR and that kind of thing. So I think there will need to be enforcement and regulation as well. I think it really definitely needs a holistic approach. Okay. Yeah, I absolutely agree with what Joe was saying. There needs to be some kind of, yes, some regulatory function or some teeth to the market framework, which I think is being developed to build on those interim principles. Interim principles, in my understanding, are transitioning into the market framework. The only couple of points I'd add is, so a lot of this is based on the idea of high integrity and values-led, but those terms have not yet been defined. You know, what does high integrity and values-led mean in Scotland? So that needs to be kind of nailed down and then that can be the kind of standard at which these projects are held to. Sorry, who would regulate it, NatureScot? I mean, that's, I would be spitballing there, but you know, there are bodies, public bodies that look at nature and public bodies that look at land management, so it may well be within their remit, I would suggest. And then the only other point I'd make is that there is a bit of attention within the interim principles and potentially within the market framework that, you know, there's a, they acknowledge the wider kind of policy commitments within Scotland and they're also talking about leveraging in billions of pounds worth of private capital and how those two fit together is very challenging to see. That is going to have to be something that really needs to be kind of worked through because there is a concern that those wider policy commitments will be under, undercut by private capital. Yeah, and just to pick up on what Joe said. Yeah, I think there does need to be some teeth. There's definitely a public impression of greenwashing. And I mean, we heard last session, I guess I mentioned of Conrara and if you, if you go into the maybe more niche segments of the internet, you'll find that there is a pretty big lack of trust that landowners are doing what they say, that anything's checking on them. We've had, you know, participants in our research who said, okay, they're, you know, they say they're doing this on one hand, but then on the other hand, they're doing this other environmental thing that doesn't support their claim and maybe not even necessarily related, but it brings to question the goodwill and a lot of time that without some kind of creditable mechanism of ensuring that what's happening is happening, all people out there have to rely on is goodwill and PR, and they're rightly skeptical when it comes with big changes. Yeah. Quick point. When I think high integrity, I think about the ecological impacts and whether we're actually doing what we want to be doing, which is reaching net zero. So I think that there's definitely all of the high integrity in terms of how we get that market to work between people, but we also need to keep checking on what's happening on the ground and whether we are actually sequestering carbon or not, or reducing emissions, which I know that some of the international carbon offsetting schemes have recently been, it's been shown that there isn't much integrity on the ground, and if that's what we're creating these structures for, then we need to be carefully watching what's going on. You're saying that's absent from the interim principles or it's just a needs tightened up? I haven't read the interim principles, so I can't comment, but in every other situation I know of it needs to be tightened up. Right. Okay, so it's one to watch. Right. Thanks. Monica, I think you've got a question now as well. Oh, is there time that I put my notes aside? I thought we were running out of time. Okay, thank you, convener. So you had a couple of final questions if there's time. So one was on the fact that the Scottish Government wants to see growth in peatland and woodland carbon markets, and we know that Nature Scotland is piloting approaches with the private sector, and we've heard about the Scottish National Investment Bank investing in commercial forestry that is seeking to generate carbon credits. What are your views on the role of the public sector in supporting the growth of natural capital finance? I think you've given a flavour of that already, but is it too early to say if the public are getting value for money? We've heard some concerns about the approach with Scotland, and some people feel that Scotland's seabed was sold off too cheaply. It's a view that's out there. Should people be nervous about what's happening with land at the moment and the current approaches? Josh is nodding, so I'll go to Josh first. Yeah, sure. So yeah, there is the potential of the kind of massive missed opportunity that happened with Scotland. What we're seeing is the development of, in that example, renewable energy and what we could see in this example of carbon sequestration projects, but how much of the wealth being generated in the broadest sense is actually being kept within Scotland, let alone local communities. Because if we are saying, as a public sector, as a nation, that we're handing the incentive and imperative to the private sector, there has to be some very tight regulation of that if the wealth being generated is actually going to largely be kept within Scotland and achieve much wider public good. Is this actually going to work in the kind of public interest? I suppose we have concerns that it's not. There seems to be a fixation on the amount of money to get into this particular sector rather than thinking about what's actually going to be done, be that from an ecological perspective or a wider perspective. So I suppose we would say that the role for the public sector is to take the lead on this. There is a place for private finance, but it needs to be led by the public sector. Not least because, if I think we all agree, this is an existential crisis that we're facing. The public sector has a duty to be taking the lead on this, to be leading the charge and doing that with support from private finance, not handing the incentive and the lead to private finance and saying, you know what to do, you do it. So I just wonder if we're getting the balance right to something like all-around time. I'm very tight for time. Could I ask you to go to your question? I think you had one. I was going to ask about the Land Reform Bill. That's what I'm after, and I need to bring the deputy convener. I was surprised that I was allowed to ask any questions given the time, but so the Land Reform Bill has only recently been introduced. Do you have any initial views or thoughts on the relevance of the bill to what we've been discussing today? Will any of the proposals in that bill tackle the issues raised, for example, relation to land markets, transparency, community engagement or land use changes? The excuse to discuss the whole land reform bill. You can get one thing each if you want to. I'm just sorry, I'm so tight for time. So if you want to join one, that'd be fine. I'll just say very briefly that I think for any change to be sustainable, it's absolutely critical that it's fair and it considers the needs of communities and so on. So I think the equitable sharing of risks and benefits is really fundamental to how we think about changing land ownership. Josh.  There's some potentially interesting proposals in the bill that could be useful for what we're discussing. So the lotting of large land holdings, particularly if that threshold is brought down to 500 hectares, would mean that a more significant number of transactions would be picked up, and then communities may be in a position to buy portions of existing large land holdings to do some of this work when communities get access to land. Usually the first thing they want to do is ecological restoration of one form or another. If the introduction of land management plans again is brought down, the threshold is down from 3,000 hectares to something more akin to 500 hectares, and those land management plans have teeth, then you could actually start achieving some of these climate and biodiversity goals through land management plans, but they need to be robust. There's more as well, we'll talk about that later. I need to say, I saw no reference to carbon in the land reform bill, should it be there? I think we need more guidance around who actually owns carbon, those were brought up in the last session. It's not a mineral, it's not on the surface, at the moment it's dealt with through contractual law, but I think guidance to go with any kind of changes. Do you think there should be a reference to carbon in the bill? I don't know, but it's something that certain communities don't know how to deal with it, it seems like it's falling between the gaps at the moment. Naomi. I was expecting I used to see a little more in the bill around, well, I'm looking forward to the model land management tenancy. I've already been asked, what is this? Is it going to do something? I don't know. I'm going to go to the deputy convener because he needs to get his question. Thank you. It's just briefly, Josh Noble, you talked about the need for considerations about natural capital finance to be public sector led, but I just appreciate the words of caution that you also emphasised, and I wondered if there was anything just further you wanted to put to our committee about the need for, yes, being public sector led, but not public sector subsidised. I think that's important. Absolutely, and this point about public sector subsidy is one thing, but if public money is de-risking private investment, that's a whole other kettle of fish, which I think we need to be very wary of, but there's other ways that the public sector can take the lead, and I think in the last session I was talking about, you know, Forrestia Land Scotland's using its land in different ways or thinking about how to use it lands. There's a lot of land under public ownership that could do some of this work. I think there's an opportunity for thinking about regional land management plans empowering local authorities to have more powers to shape kind of nature restoration in their areas. I know there's proposals for a carbon emissions land tax being introduced. There's other kinds of land taxation that could be looked at. There's a whole host of kind of regulatory mechanisms which could be used, and there's also a role for Scottish National Investment Bank, potentially new models of kind of using public pension funds. There's a whole host of kind of financial levers that would use public money, which would be public sector led, which just haven't been explored, and you know, it's not for us as an organisation to say what all of those should be or bottom out how they're supposed to work, but there's a whole load of policy levers that have just not been considered, and there's this kind of myopic fixation on leveraging in private finance rather than thinking about all of these other things that could be done. So we're just calling on government to think about that. Thanks, convener. Thanks. Okay, and because I've mismanaged the time so badly, I don't get to ask my questions, but they would have been about the size of the problem and the large scale. That's right, Monica, I'm still in charge. The large scale of the projects that are needed to try and achieve that and how we actually achieve that, and I still haven't been convinced that I understand how we mitigate the risks to the people who derive a living from the land from trading the carbon credits, and that remains a huge concern to me. So I'm going to leave it there, and I suspect this may be a subject that we come back to when we're looking at land reform at some stage. So I'm going to thank you all for the evidence that you've given this morning. I'm sorry time was tight, but I'm going to push straight on, say, if you want to extricate yourself quietly from the meeting so I can move on to the next item. So thank you very much. The next item is consideration of a type 1 consent notification relating to a proposed UK statutory instrument to amend the Green Gas Support Scheme Regulations 2021. On 1 March, the Minister for net, zero carbon buildings, active travel and tenants rights notified the committee of the proposed UKSI, whereby the UK government is seeking the Scottish government's consent to legislate in an area of default competence. The committee's role is to decide whether it agrees with the Scottish government's proposal to consent to the UK government making these regulations within the devolved competence and in the manner that the UK government has indicated to the Scottish government. If members are content for consent to be given, the committee will write to the Scottish government accordingly. In writing to the Scottish government, we have the option to pose questions or to ask to be kept up to date on relevant developments. If the committee is not content with the proposals, however, we may make one or two of the recommendations outlined in the clerk's note. I'm not going to propose to go through those just at the moment and I'm just going to ask for if there's any members have any views on this or whether they are content with the SI being passed. Does anyone have any views? No one's indicated they have any views, so I'm going to move to the substantive question for this item. Is the committee content that the provision set out in the notification should be made in the proposed UK statutory instrument? We are agreed. I will write to the Scottish government to notify them of that effect. That concludes our bit of the public meeting and we'll now go into private session.