Kate Bond
- Senior Associate
Insights | Rural
Who owns carbon in Scotland?
5 March 2025
In response to the pressing global issue of climate change, the Scottish Government has committed to delivering a net zero society by 2045 – five years earlier than the rest of the UK. Meeting this ambitious target not only requires reducing waste and emissions, but we also need to sequester carbon.
Scotland is renowned for its natural capital and we have witnessed a surge in investment in the purchase of land for the restoration of natural resources, as well as the rapid development of carbon markets.
What is the carbon market?
In the rural landscape, there are currently two main natural capital schemes which are utilised for the carbon market:
- The Woodland Carbon Code which focuses on the restoration and creation of forests and woodland
- The Peatland Code which enables the restoration of degraded peatland
Carbon Credits and Pending Issuance Units generated through these two existing codes can be sold, allowing landowners to sell to third parties verified units of sequestered carbon. With the possible introduction of a Soils Carbon Code, Hedgerow Carbon Code and Saltmarshes Carbon Code on the horizon and strong demand for the delivery of carbon sequestration projects, the question of who owns the carbon in our land will come into focus.
Existing carbon
Carbon is already stored in our natural environment, in the trees, soils, and hedgerows. This carbon cannot be used to offset emissions, only carbon which passes the ‘additionality’ test can be traded in the carbon market. Additionality means that the landowner (or occupier) takes action to sequester carbon which would not have taken place in the ordinary course of agricultural or land management such as a peatland restoration project or woodland creation for the sole purpose of sequestering additional carbon.
There is a general principle in Scots property law that the owner of the land owns from the ‘centre of the earth to the heavens above’ and includes anything which becomes fixed to the land, such as trees. While there are defined separate tenements of land such as salmon fishing or minerals, carbon is not one of them. The carbon is held within the soil, which belongs to the landowner.
Carbon sequestration requires positive action on behalf of the landowner or land manager in order to create that additional carbon. So, in this case, who owns that carbon which can then be traded on the carbon market? The person who owns the soil in which the trees are grown or the person, such as the farming tenant, who has taken the action, including the financial burden, to plant and cultivate the trees? Based on the principle above, once the carbon is stored within the land, regardless of how it got there, it would belong to the landowner.
Tenants
On a practical basis, in a tenancy situation, it is most likely that the best person to carry out activities is the tenant, having the right to use the land. Given the relatively new status of the concept of carbon sequestration and carbon markets, it is unlikely that many existing long standing agricultural (or other land leases) would competently provide for carbon sequestration activity by the tenant.
While many farmers will already be sequestering some carbon via ongoing maintenance of hedgerows, soils and woodlands the ‘additionality’ required to meet carbon sequestration in terms of carbon codes will involve activities that will alter the use of the land permanently, often taking it out of agriculture production. Therefore, where a tenant wants to undertake action to offset carbon emissions within the carbon codes, resulting in tradeable carbon credits having the landowner’s permission is essential. How the benefits of the carbon offset are apportioned will be for agreement between the parties.
Looking ahead
As carbon markets expand, and as demand grows for carbon offsetting, clarity of carbon ownership and rights will be essential. Until then, collaboration between owners and occupiers will be beneficial to all.
Landlords and tenants should consider the benefits and implications to each party in engaging in carbon offset activities, and tenants must seek the agreement of the landlord before taking action. We would recommend that parties considering carbon offsetting consult their professional advisers.
If you have any questions on the points raised in this article, please contact Kate Bond at kate.bond@andersonstrathern.co.uk.
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