UK’s damaged peatland is seeping pollution but emerging as a hot ticket for carbon investors
From the granite tor of Clachnaben hill in Aberdeenshire, breathless hikers can gaze out over miles of scrubby moorland dotted with heather and crossed with burns.
The view might appear to be quintessentially Scottish, but it is actually at the beating heart of a revolution in the way land is bought, sold, and valued in the UK.
Traditionally aristocrats and businessmen with deep pockets would dominate the market for such country estates.
They would arrive with budgets upwards of £2m, dreaming of baronial houses or turreted castles to house family or welcome visiting friends. The accompanying land was cheap and plentiful, with estates boasting thousands of acres. It was likely to be used for grouse shooting or deer stalking, and not much besides.
But in the last 18 months a new kind of buyer has been showing up on the doorsteps of Scottish estate agents. These are smartly dressed corporate teams, holding document files and laptops filled with accounts and spreadsheets.
They are not in Scotland for the castles, or the grouse. They are after the peat – the more degraded the better.
Around 80 per cent of Scottish estate sales used to be to individuals, according to Robert McCulloch of estate agents Strutt & Parker. Now at least half of buyers coming through his door are companies, on the hunt for land to restore peat or plant trees on.
“The dynamics of the market have shifted very rapidly in a short space of time,” he tells i.
Peat could be one of the UK’s carbon heroes. Around 12 per cent of the entire country is covered by peatlands, amounting to nearly three million hectares. They store 5.5bn tonnes of carbon, over half of the entire country’s current carbon storage.
But peat is only a carbon store if it is in good condition. Almost 80 per cent of peat in the UK is not – it has been burned, drained or eroded to make way for farmland, or grouse moor. And when peat is in poor condition it starts seeping out carbon. Peatland emissions accounted for 3.5 per cent of total emissions in the UK in 2019, according to official figures.
This is the opportunity big corporates and finance experts have spied. Because degraded peatlands can be restored – effectively turned back into carbon sinks – and the carbon “credit” that comes from that can be kept to offset emissions from business activities, or sold on to the highest bidder.
That is exactly what insurance provider Aviva has done in Aberdeenshire. In December it announced it had teamed up with Par Equity to buy 6,300 hectares of degraded moorland around Clachnaben, with a plan to restore that scrubby moorland peatland and plant trees.
Restoring peatlands generally involves ‘re-wetting’ bog and planting new sphagnum moss, which helps peat to form. This work would generate carbon savings that speed Aviva’s journey to net zero emissions by 2040.
It is not just insurance companies. Universities, fund managers and corporate executives are buying degrading patches of the UK countryside in a frantic scramble to net zero emissions. The surge in interest is driving up land values. In 2021 the average price of estates sold in 2021 also increased by 87 per cent, from £4.7m to £8.8m, according to Strutt & Parker, while the total spent on buying estates jumped 119 per cent on the previous year.
It is not limited to Scotland – experts say peatland-rich northern England and Wales are also seeing the value of land rise as investors cotton on to the carbon credit potential of the region.
Universities are some of the major drivers of the market, says Athole McKillop, a partner at the estate agents at Galbraith.
“Some universities are saying ‘look, we have an awful lot of overseas students coming over into our universities, we know there’s a big carbon footprint associated with that, and we want to help offset that,” he tells i.
“There’s more than a handful of universities looking at this.”
He agrees that land values have been pushed up as interest in peatland restoration has grown.
“What I can confidently say is that we have seen a significant uplift in values,” he says.
The more degraded peatland in a parcel of land, the more valuable that land is for the investors. Galbraith is helping buyers in Scotland find the most valuable tracts of land, with the help of satellite technology from Nottingham-based firm Terra Motion.
“We’ve identified a business opportunity in the UK to inform people about the potential that their land has in terms of generating carbon credits,” says director Dr Andrew Sowter.
“Using our technology you can see the areas that are degrading the worst. These are the ones that have the greatest potential to prevent emissions.”
Degrading peatlands are spotted by the satellites picking up ‘bog breathing’, Dr Sowter explains.
“Bogs are a bit like sponges,” he says. “When it rains they rise, and during droughts they fall. If it’s a really healthy peat it reacts really well – when it rains it swells quite a lot, when it’s dry it goes down quite a lot. But when it is rubbish peat, it’s been drained and dried out, it hardly reacts at all to precipitation. And just by looking at that bog breathing, the amplitude and the timings, they [the satellites] can tell whether it’s good peat or bad peat.”
Dr Sowter’s team have been working with Galbraith since January, surveying patches of land and calculating the earnings potential of restoring the peatland, which can total more than £100,000 per year, depending on the size of the estate. “Commercially, there’s an opportunity there,” he says.
The rush for peatlands follows a huge surge in corporate interest in land for tree planting. Conservationists say low grade land that can’t support crops or livestock should be used for “carbon farming”, but some are sceptical of the carbon credits system that is incentivising corporates. Most would prefer the carbon benefits to be banked, rather than used to offset emissions elsewhere.
There are also questions over the effect on traditional rural economies. Restoring grouse moors back to healthy peatlands could put gamekeepers out of a job, for example.
It is still early days, but estate agents say they will know by autumn whether the investment interest in peatland is here to stay. For windswept and remote rural economies, it could mark the start of a new carbon gold rush.