Annex B: Stakeholder engagement methodology and questions
In advance of each interview, stakeholder engagement materials tailored to each category of stakeholder (supply, demand, investor) were distributed to the interviewee. These materials included a summary of the project, options materials and questions, in order to allow for efficient discussion. Each 45-minute interview began with a short presentation explaining the concepts and meeting objectives, with the remainder of the discussion centred around the stakeholder category specific questions. Following each interview, meeting notes were shared with the interviewee to ensure their thoughts were accurately captured and provide them with an opportunity to make any additional contributions.
1) What is your experience in peatland restoration?
2) What are the barriers to peatland restoration?
3) What is needed to overcome barriers, and encourage greater participation from all stakeholders in peatland restoration?
4) Are the current funding options (i.e. Peatland Action Grants) sufficient and adequate to fund peatland restoration? If not, why not?
5) What is your interest in the Peatland Carbon market? What benefits are you looking to achieve by engaging with the peatland carbon market?
6) What are your concerns about / limitations of the Peatland Carbon market? Are their any key bottlenecks you see? E.g. Contractor capacity?
7) We are looking at how further support could be provided to projects. We have looked at a range of approaches. Would upfront project finance or a guaranteed upfront buyer of all PIUs be useful? The former offers greater opportunity to share in benefits of carbon sales over time, but less opportunity for short term benefit. The latter offers greater security that credits can be sold at an understood price.
8) Would a guaranteed government supported price floor for verified carbon remove barriers to delivering projects? This wouldn't stop you selling to private buyers if you could get a better price.
Additional questions for community organisations and tenant farmers
1) How do you view peatland restoration and carbon markets in Scotland? What concerns and opportunities do these have for communities?
2) How can peatland restoration projects and carbon markets be structured to benefit local communities in Scotland?
3) How can local communities participate in peatland restoration?
4) What are the key barriers to unlocking community led projects? What could help overcome these barriers?
5) What local engagement / benefit sharing would you like to see from private led projects?
1) Do you have or are you looking to develop a corporate Net Zero Policy? Have you mapped your emissions and what steps are you looking to take to reach Net Zero?
a. Have you considered purchasing carbon offsets as part of your strategy? If yes how so? If not, why not?
b. Have you considered purchasing from Scottish peatland restoration projects? If yes how so? If not, why not?
2) When considering carbon offsets what are your key considerations and why? For example:
b. Co-benefits (community / environmental)
c. PR benefit/narrative (is the project charismatic)
d. Location (e.g. UK/international)
e. Project distribution (all from one or from multiple varied projects).
f. Credit quality
g. What standard / carbon code (UK standards (e.g., WCC, PC) versus international standards (e.g., Verra, Gold Standard, etc.).
h. Project Type (nature-based solutions, e.g., woodland/peatland vs. technological solutions e.g., DAC).
i. Negative emissions vs emission reductions (i.e. abatement of emissions)
j. Market factors – maturity and liquidity of supply, track record.
k. Which of these are more important to you and which would you be willing to trade for other benefits?
3) Have you considered purchasing carbon offsets from peatland restoration projects?
a. On behalf of Scottish Government, we are looking to design funding mechanisms to focus in particular on restoring Scotland's degraded peatlands. The carbon locked up in peat soils is equivalent to 140 years' worth of Scotland's total GHG emissions and need to be restored to prevent further degradation.
b. How do you consider abatement credits like these compared to sequestration credits (if different at all)? What are your key considerations?
4) What are your concerns when buying credits (e.g. "quality", market price volatility)?
5) When buying credits are you looking to purchase credits for reporting purposes? Are you looking for longer term contracts to secure prices or do you purchase for near term needs?
6) Do you prefer to purchase credits from a small number of projects, a wide range, or do you have no preference? Would exclusivity from a specific site be interesting?
7) When buying credits do you work with a broker or have you tried to approach projects directly? What challenges have you faced?
Scotland Carbon Fund
1) Have you either invested, or considered /assessed the opportunity to invest in Natural Capital and specifically UK voluntary carbon markets?
a. If so, what was your experience, in which markets and through the use of which financial mechanisms (e.g. fund, direct investment into projects, purchase of credits, etc.)?
b. If not, is this something you would consider in the future? If not, why not?
2) What barriers do you see to engaging with carbon markets (at all / more)?
a. Do you have the necessary expertise and internal capacity to make informed decisions about carbon funds?
b. Are there specific risks or market failures you would point to (e.g. lack of liquidity, price volatility and uncertainty, understanding of project risks, project availability, counter party risk (e.g. individual farmers), investment horizon, etc.)?
We are working with Scottish Government on the design of two possible approaches to market development, the SCF (Scotland Carbon Fund) and PFG. Regarding the SCF, we are looking at two models:
- A liquidity vehicle would act as large-scale buyer of PIUs with a view to resell these a premium as PIUs, or PCUs (once verified). This would be an evergreen brokerage or "market maker" vehicle.
- A more traditional project finance vehicle which would invest in projects to finance their upfront development costs.
Under both models we would expect the SCF to play a major leadership role in the market and play a part in setting minimum standards for projects.
3) Would either of these vehicles be attractive as an investment?
a. What parameters would you be considering to make an investment decision (e.g. return, size, duration of the fund, ability to receive some of the return in-kind, tax considerations/incentives, etc.)?
b. How important would first loss government capital be to your response?
4) What co-benefits / outcomes are important to you when investing in a carbon project (e.g., community, biodiversity linked outcomes)? Why are these benefits important to you?
5) We would aim to enshrine Scotland's Just Transition and Responsible Investment Principles into the SCF characteristics. How important is the community benefits element to you? What would be acceptable for investors in terms of profit-sharing mechanisms?
6) What other fund characteristics would be important to you? (e.g., fund investment ticket size, investment horizon, return in cash vs in-kind (i.e. carbon), shared endowment to cover projects maintenance costs, any other).
Price Floor Guarantee
To kickstart the peatland market, a price floor guarantee may also be offered. The price floor would be expected to cap downside market pricing based risk from projects (although some delivery risk remains and the potential upside from price increases remains available for investors to capture).
1) Would a price floor guarantee change your approach to investment peatland carbon markets?
2) How would a price floor mechanism (protecting your capital from downside carbon price volatility) affect your return expectations?
3) How do the two risk-reduction proposals of the price floor guarantee and first loss capital compare, are the benefits additive, is one more attractive than the other?
4) Are there any other mechanisms that Scottish government could employ to increase your interest in this type of project?
5) Are there any wider concerns you have regarding this approach?
A short accessible survey was created to gather thoughts and opinions from a broader range of stakeholders, on peatland restoration and voluntary carbon markets. The survey was distributed through a number of channels, including the Scottish Nature Finance Pioneers Forum. The results of the survey were used to generate additional insights and outputs for the final report.
1) How would you describe yourself or your organisation?
- Provider of finance
- Buyer of carbon credits
- Expert / Adviser
- Tenant farmer
- Project delivery
- Other (please specify)
2) Have you participated in (1) the delivery of peatland restoration and/or (2) the peatland carbon market (i.e., bought / sold credits)?
- Yes, both
- Yes, in the delivery of peatland restoration only
- Yes, as a participant in the peatland carbon market only
If "Yes", please provide a description of your involvement
3) If you are not yet involved, are you intending to participate in peatland restoration or peatland carbon markets?
- I am already involved (as per response to question above)
If "Yes" or "No", please provide a reason for your response
4) Are you supportive of the sale of carbon credits in the voluntary carbon market? [sliding scale from "Not supportive" to "Very supportive"]
5) Please describe the main reason(s) for your views on the voluntary carbon market (as provided in Q4).
6) What do you see as the main barriers to delivering peatland restoration in Scotland? (please select your top 3)
- Capacity of contractors to deliver restoration
- Design / limitations of Peatland ACTION programme
- Impact on use / value of land
- Long term maintenance obligations / liabilities
- Scale of financial incentive
- Ecological / logistical challenges to delivery and maintenance
- Awareness of benefits of restoration
- Unattractive carbon prices
- Uncertain future carbon prices
- Concern over ability to find a buyer (liquidity)
- Uncertainty over access to future grant funding mechanisms
7) Have you experienced any other key barriers to delivering peatland restoration beyond those detailed above? Please provide details below. [open text box]
8) What should be prioritised to overcome these barriers? (please select 2)
- Stronger market governance
- Improved access to funding
- Increased resourcing / capacity
- Greater financial rewards
- Further regulation of landowners
- A guaranteed carbon price
- Other (please specify)
9) Who should pay for the restoration of peatland in Scotland?
- Carbon buyers
- Landowners and operators
- Non-governmental organisations
- Local communities
- Other (please specify
10) Who should be recognised as the key beneficiaries of peatland restoration? (please select up to 3)
- Farmers / tenants / crofters
- Local communities
- General public
- Other (please specify)
11) How can benefits (monetary and non-monetary) be shared amongst the beneficiaries? [open text box]
12) What more do you think the government should be doing to support peatland restoration? [open text box]
13) Is there anything else you would like to tell us about facilitating peatland restoration [open text box]
14) If you are happy to be contacted further, please provide your name, email and, where applicable, the name of your organisation
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