Publication - Advice and guidance

Natural Capital Market Framework

Published: 5 November 2024
From: Cabinet Secretary for Rural Affairs, Land Reform and Islands, +6 more … Acting Cabinet Secretary for Net Zero and Energy, Acting Minister for Climate Action, Deputy First Minister and Cabinet Secretary for Economy and Gaelic, Minister for Agriculture and Connectivity, Minister for Employment and Investment, Minister for Public Finance
Directorate: International Trade and Investment Directorate, +2 more … Agriculture and Rural Economy Directorate, Environment and Forestry Directorate
Topic: Business, industry and innovation, Economy, Environment and climate change, +1 more … Farming and rural
ISBN: 9781836018957

Scotland's natural environment is at the heart of our identity, economy, and communities. This document supports responsible, values-led investment in natural capital through the expansion of high-integrity voluntary carbon markets, and development of opportunities to invest in biodiversity.

Supporting documents

Footnotes

1. Natural capital is the renewable and non-renewable stocks of natural assets, including geology, soil, air, water and plants and animals that combine to yield a flow of benefits to people. Adopting a natural capital approach enables us to understand the role of our natural environment, alongside its intrinsic value, as an asset that underpins our economy and society.

2. Publication of Scotland Natural Capital Accounts: 2023 - gov.scot (www.gov.scot)

3. Home - UK Woodland Carbon Code

4. Peatland Code | IUCN UK Peatland Programme (iucn-uk-peatlandprogramme.org)

5. Private Investment Natural Capital: PINC@gov.scot

6. Investor Panel: Mobilising international capital to finance the transition to Net Zero

7. Investor Panel - Scottish Government Response to Investor Panel Recommendations (www.gov.scot)

8. Green industrial strategy - gov.scot (www.gov.scot)

9. Climate change: Scottish National Adaptation Plan 2024-2029 - gov.scot (www.gov.scot)

10. Supporting woodland creation in Scotland with Gresham House Forestry Fund I Scottish National Investment Bank (thebank.scot)

11. The main 'currency' of carbon markets is carbon units, whereby one carbon unit corresponds to one tonne of CO2 equivalent. Woodland Carbon Units (WCU) and Peatland Carbon Units (PCU) are issued at verification, and therefore the associated carbon is guaranteed to have been sequestered or emissions prevented. When WCUs and PCUs are "retired", the owner of these units can state that they have offset the corresponding mass of CO2 equivalent. Landowners can also retire their own units, without selling (assigning) them to another party, and therefore offset their own emissions directly (insetting). Businesses can only use PC and WCC credits to offset their land based emissions from activities within the UK

12. Sources: IUCN (August 2024) and WCC interim summary statistics (July 2024). Further information regarding PC and WCC projects is publicly available on the UK Land Carbon Registry Note: the time periods of the sources above are very similar, but not identical. This will have a minor impact on the comparison.

13. Pending Issuance Units (PIUs) are issued at project validation. Carbon has not been sequestered or emissions prevented at this point, and PIUs when sold (assigned) represent an advance purchase of a WCU or PCU. PIUs cannot be included in a company's Net Greenhouse Gas Emissions Report.

14. Additionality is a fundamental requirement of any high-integrity natural capital market. Additionality is change that would not have occurred in the absence of management actions, measured relative to the baseline.

15. For financial additionality tests: The financial feasibility test for the PC states that projects shall have a maximum level of non-carbon income of 85% of the project's restoration and management costs over the project duration. This non-carbon income could be public grant funding or other private income. The remaining minimum 15% shall come from carbon finance The WCC has an 'investment test' to demonstrate that, over the project duration, without carbon finance, woodland creation is either: a) not the most economically or financially attractive option for that area of land b) not economically or financially viable on that land at all

16. Peatland ACTION | NatureScot

17. Mansion House 2023 - GOV.UK (www.gov.uk)

18. Biodiversity: draft planning guidance - gov.scot (www.gov.scot)

19. ISO - Certification

20. ICROA | Accrediting Best Practice in Carbon Offsetting

21. The Core Carbon Principles | ICVCM

22. The Taskforce on Nature-related Financial Disclosures (tnfd.global)

23. Home - CreditNature

24. Leven, Scotland - Landscape Enterprise Networks

25. #FIRNS Edinburgh Garden City Programme – Water of Leith Catchment | The National Lottery Heritage Fund

26.240514-River-Catchment-Restoration-Project-Overview.pdf (fms.scot)

27. The Eddleston Water Project – Tweed Forum

28. Climate change: Scottish National Adaptation Plan 2024-2029 - gov.scot (www.gov.scot)

29. Climate Ready Clyde | Building a more resilient, prosperous and fairer Glasgow City Region

30. Home - Highland Adapts

31. Nature Investment Partnership: FAQs | NatureScot

32. Wild Heart Expansion Project – Tweed Forum

33. Principles for Responsible Investment in Natural Capital - gov.scot (www.gov.scot)

34. Management of land for carbon includes increasing carbon sequestration (trees, hedgerows, saltmarshes) and reduction of emissions, such as peatland restoration or improved soil management.

35. Forestry and Land Management (Scotland) Act 2018 (legislation.gov.uk)

36. UK Forestry Standard.

37. Scotland's Forestry Strategy 2019–2029 - gov.scot (www.gov.scot)

38. Scottish Land Rights and Responsibilities Statement 2022 - gov.scot (www.gov.scot)

39. Scottish Forestry - Integrating Trees Network

40. Cairngorms Connect | Home

41. Habitat Map of Scotland | Scotland's environment web

42. Peat restoration planning tool - Cairngorms National Park Authority

43. Land Reform (Scotland) Bill | Scottish Parliament Website

44. Developing a Landscape Scale Natural Capital Tool for Scotland | NatureScot

45. Nature Networks Tool | NatureScot

46. Green Finance Initiative - The Flow Country The Flow Country