Climate Change: Nature-based Solutions (STC Report)

Lord Harlech Excerpts

Thursday 9th February 2023 Grand Committee

[Lord Harlech (Con)]

My Lords, I declare my interests in farming and land management, as set out in the register. I take this opportunity to congratulate the noble Baroness, Lady Brown of Cambridge, on securing this debate, and I thank all noble Lords for their contributions. I welcome the opportunity to respond to the points raised and to provide an update on the actions that have been taken since the publication of the Science and Technology Committee report. I agree at the outset with the noble Baroness, Lady Blake of Leeds, and other noble Lords about the urgency and extreme importance of tackling climate change.

As was acknowledged following the report’s publication in January 2022, the Government are grateful to the committee for the report and pleased that our ambitious plans for nature-based solutions have been recognised. Nature-based solutions are key to tackling climate change and averting its impacts. They deliver multiple benefits for climate, biodiversity, and people, and play a critical role in our plans to tackle the interrelated climate and biodiversity crises.

At the time of publication, the Government acknowledged the challenges and risks raised by the committee and set out the action being taken with our delivery partners to address these issues. Following the important announcements in this area since the publication of the report and in recent weeks, I welcome the opportunity to provide an update on the key themes raised in the report and in this debate.

First, I will provide an update on our overarching targets and progress being made. We have stretching nature-based targets that set out the Government’s strong ambition to protect and improve our landscapes. We are working tirelessly to ensure that our targets become a reality and that progress is being made.

Starting with forestry, the noble Baroness, Lady Brown, raised the need for more action in this area. We have full confidence that our targets are achievable and have increased tree planting and woodland creation in England from 2,700 hectares in 2021-22 to now investing £750 million through our Nature for Climate Fund, which will support England’s contribution to our UK-wide target of planting 30,000 hectares of new woodland annually from May 2024. Tree planting is a key priority in the environmental land management schemes, which I will provide more detail on shortly.

On support for nurseries, also raised by the noble Baroness, Lady Brown, the Government committed in the England Trees Action Plan 2021 to 2024 to provide funding for UK public and private sector nurseries and seed suppliers and to set up the sector capacity project. In addition, £879,000 has been provided through the Tree Production Innovation Fund to encourage the adoption of innovative ways of working in the nursery sector. Last year, a new tree production capital grant opened for applications, providing capital support to nurseries and seed suppliers to modernise facilities and improve the quantity, quality, diversity and biosecurity of planting stock available for planting in England.

The noble Baroness, Lady Sheehan, raised the subject of tracking marine biodiversity. In English waters, we have established a network of marine protected areas across more than 35,000 square miles. We have just created a new statutory target for 70% of designated beaches in marine protected areas to be in a favourable condition by 2042, with the remainder in recovering condition and with an interim target of 48% of designated beaches to be in favourable condition by 31 January 2028, in line with the trajectory required to achieve the long-term target.

On peatland, we are delivering on our commitment to restore 280,000 hectares of peatland in England by 2050, which is supported by funds such as the Nature for Climate Peatland Grant Scheme and the new environmental land management schemes. Through the development of the peat restoration road map, to be published in 2024 by Natural England, we will be able to set out a trajectory for restoration over the next 20 years.

The noble Lord, Lord Patel, raised the subject of lowland peat used for agriculture. I thank him for highlighting this important issue of peatland restoration and, in particular, for highlighting the focus areas for the Government. In 2021, the lowland agricultural peat task force commenced working with stakeholders to deliver recommendations for a more sustainable future for lowland peatland in England. Its aim is to identify ways of extending the usable life of our agricultural peat soils to preserve the carbon stored in them and to ensure that profitable agriculture can continue for decades to come. The task force will report to government in the summer.

To meet our global climate target under the Paris agreement and our commitment to net zero, we need peatland restoration and opportunities for woodland expansion to happen without one compromising the other. Our commitments are reinforced in our recently published Environmental Improvement Plan 2023, which is delivery-focused and sets out the actions that will drive us towards reaching our long-term goals. It includes stretching interim targets to be achieved by the next review of the plan, driving progress towards our new long-term targets as required by the Environment Act 2021.

The noble Viscount, Lord Stansgate, raised the issue of skills and research and development. Of course, action to meet our headline targets must be underpinned by research and development and the necessary skills to deliver, issues which the committee report highlighted in detail.

The Government recognise the importance of investing in these areas. In the net-zero strategy we committed to £75 million on net zero-related research and development to inform our pathway to 2037. Defra is involved with many research and development projects to address evidence gaps and inform policy-making on agroforestry, lowland peat and hedgerow planting. Projects cover areas such as: understanding how climate stress will affect tree species in the future; the £5.6 million Paludiculture Exploration Fund, which looks at tackling barriers to developing that farming practice as commercially viable; and further modelling to estimate the potential benefits of hedgerow creation on carbon storage and sequestration.

A focus of the committee was on the need to build a stronger evidence base on blue carbon habitats in the UK, and a number of actions are being taken in this area. The UK’s recently published UK Net Zero Research and Innovation Framework identifies research needs on coastal wetland habitats to support improved greenhouse gas accounting and reporting as a priority. Research and development was also raised by the noble Lord, Lord Kakkar.

On agroforestry, Defra is currently involved in several agroforestry research projects that are looking at different evidence gaps, including expanding agroforestry in an evidence review and gap analysis to fill in key evidence requirements. Furthermore, Farm Tree will develop decision-support tools for integrating trees on agricultural land and Agroforestry Futures will identify opportunities for, and barriers to, an expansion of agroforestry into peri-urban areas and rural parts of the UK. The Agroforestry Pollinator Plantations project aims to understand how climate stress will affect tree species and which tree and shrub species growing in the UK will be suitable for future climates.

In the England Trees Action Plan, we committed to an ambitious research and development programme which includes building more evidence for the reintroduction of woodland species such as the pine marten, supporting the development of innovative wood products and building the evidence base on how best to protect and enhance ancient woodlands.

Defra has committed £1.2 million from the net-zero research and development allocation over the spending review period to further build the blue carbon evidence base. My noble friend Lord Holmes and the noble Baroness, Lady Worthington, asked about work on the seas. In 2022, we established the UK Blue Carbon Evidence Partnership, through which UK Administrations are working together with BEIS, as it was, and Defra to address key research questions related to blue carbon policy, advancing our commitment to protect and restore these habitats to support them as nature-based solutions. An initial aim of the partnership has been to set out key research questions related to blue carbon by producing an evidence needs statement, which will be published in spring 2023.

The noble Baroness, Lady Sheehan, raised the issue of bottom trawling, which can cause carbon dioxide to be released from sediments. However, the processes are complex and the impact of trawling on carbon dioxide remains uncertain. That is why Defra is actively progressing the evidence space to better understand the resilience and recovery of sea biodiversity stores in sediments in response to human practices and management interventions.

The noble Baroness, Lady Warwick of Undercliffe, raised the issue of skills and growing the workforce. This will be essential to delivering on our targets. We are taking action across key sectors, such as scoping out options for a research project on peat-restoration sector capability. We continue to develop new educational routes and career opportunities around skills in the forestry sector. A new Forestry Commission development woodland officer apprenticeship has been launched jointly with the University of Cumbria and the Institute of Chartered Foresters. It is the first time a degree-level forestry apprenticeship has been offered in the UK. In addition, through the Forestry Commission, we are supporting the Forestry Skills Forum in refreshing its action plan for England, which will raise the profile of forestry careers among school leavers and career changers.

The noble Baronesses, Lady Warwick of Undercliffe and Lady Walmsley, asked about green jobs and job opportunities. Last May, the Government established the Green Jobs Delivery Group, bringing together Ministers from BEIS, Defra and the Department for Education with leaders from the green economy, skills sectors, academia and trade unions to ensure that the UK has the pipeline of people needed to deliver our climate and environment ambitions. The new Environmental Improvement Plan 2023 reaffirms our commitment to this continued joint working to address skills needs in priority sectors, including sustainable land use and nature.

Advancing our research and skills allows us to develop and deliver targeted policies to support our key sectors in taking collective action. We recently set out plans for the environmental land management schemes designed to support the nation’s farming sector to be profitable and resilient as it produces food sustainably while protecting nature and enhancing the environment. Key announcements to support our ambitious nature targets covered the following.

The first is accelerating the rollout of the Sustainable Farming Incentive, with six new sets of paid actions for 2023, adding to the three already in place. This will provide farmers with a range of paid actions to manage hedgerows for wildlife, plant nectar-rich wildflowers and manage crop pests without the use of insecticides. The SFI application window is continuously open, and applications continue to be received. This point was raised by the noble Baroness, Lady Brown of Cambridge. It has always been the intention to add more elements to SFI as funding is released from BPS reductions.

Secondly, expanding our popular Countryside Stewardship Scheme to reward farmers for action to support climate and nature will see around 30 additional actions available to farmers by the end of 2024.

Thirdly and lastly, applications for further rounds of the landscape recovery scheme will open in spring and in 2024. Round 2 will focus on net zero, protected sites and habitat creation, including landscape-scale projects creating and enhancing woodland, peatland, nature reserves and protected sites such as ancient woodlands, wetlands and salt marshes.

My noble friend Lord Roborough raised the issue of tax around assets focused on natural capital rather than agriculture or forestry. HMRC and Defra are considering the evidence that inheritance tax might be a potential barrier to the conversion of land from agricultural to environmental use in some situations. HRMC recently updated its IHT manual to help clarify the position, and further updates will follow in due course. Analysis, including discussions with external stakeholders, is taking place, and the Government are looking carefully at what changes may be required.

The noble Baroness, Lady Walmsley, raised the issue of landowner engagement. Agroforestry is an innovative practice that has a significant role to play in achieving the Government’s commitment to increased tree planting across the UK. Therefore, Defra is introducing agroforestry as part of ELMS; it will play a key role in increasing tree cover on farms. Agroforestry can provide a source of income to the farmer from both the marketable agricultural enterprise and forestry-generated products. This diversity will help reduce the risks from fluctuating agricultural markets and help stimulate and build resilience into the rural economy, without compromising the ability to produce food.

We know we will need to continue to develop our schemes, based on the learnings from our pilots, tests and trials and early rollouts. We will work with stakeholders across the whole sector to achieve this. There are many benefits to delivering nature-based solutions and they play a key role in our efforts to adapt to climate change. Defra is working across government to develop a third national adaptation programme for publication in 2023. This will include key actions for restoring nature and enhancing its ability to adapt to climate change risks, as well as maximising the benefits for communities.

As emphasised in the committee report, and by the noble Baroness, Lady Brown, finance is a key enabler for meeting our climate targets. Nature-based projects need to be financially attractive to landowners and investors. The noble Baronesses, Lady Warwick of Undercliffe and Lady Walmsley, both raised the subject of investment. The Government have committed to maintain the farming budget for England at £2.4 billion per year throughout this Parliament, and I have outlined how we are repurposing funding for farmers and land managers as part of the agricultural transition.

We are already seeing progress. Currently, there are around 40,000 agreements in our countryside and environmental schemes, covering about 34% of agricultural land. There are 94% more countryside stewardship agreements now than in January 2020. By 2028 we plan to increase the number of agreements to at least 70,000 in our environmental land management schemes, covering 70% of farmed land and 70% of all farms, so that farmers and land managers can collectively deliver our ambitious targets for the environment, climate and food production. We are committed to being transparent about the budget and how it will be spent. We included in the Agriculture Act a requirement for government to publish an annual report about the budget, and we did this for the first time in 2022.

Alongside publicly funded schemes, the Government have set a target to raise at least £500 million in private finance to support nature’s recovery every year by 2027 in England, rising to more than £1 billion per year in 2030. To set the conditions to achieve this, we are taking a number of actions, including supporting the development of nature projects that can attract private capital through our £10 million Natural Environment Investment Readiness Fund and accelerating the natural capital investment market by investing £30 million in a new, blended finance vehicle for nature: the Big Nature Impact Fund.

We continue supporting the Woodland Carbon Code and the Peatland Code to encourage private investment, with registrations continuing to increase. I am grateful to my noble friend Lord Roborough for his recognition of these as world-leading certification standards.

Both my noble friend and the noble Baroness, Lady Brown, highlighted the importance of strong governance and standards in the current markets for nature-based solutions. The UK has championed initiatives to strengthen and scale up high-integrity voluntary carbon markets, including under our COP 26 presidency.

The noble Baroness, Lady Worthington, raised the issue of high integrity in carbon markets. We have launched multi-stakeholder initiatives such the Integrity Council on Voluntary Carbon Markets, and the Voluntary Carbon Markets Integrity Initiative, to establish the very highest standards.

We are developing plans to put in place a comprehensive suite of domestic standards for nature markets to provide assurances of high integrity, create confidence in the market and allow investment to flow at scale into a much wider range of ecosystem services and habitats. We will ensure that, as we develop new domestic standards, we draw on relevant international best practice.

Several noble Lords raised competing demands on land. It is vital that we make the most productive use of our land and strike the right balance between the many priorities that place a demand on land, including food security, sustainable development, action on climate mitigation and adaptation, and promoting nature’s recovery. The noble Baronesses, Lady Brown, Lady Walmsley and Lady Blake, the noble Viscount, Lord Stansgate, and my noble friend Lord Holmes all mentioned the need for a clear land use strategy, as did the committee’s report. The Government recognise the importance of this and of managing these trade-offs, and we have therefore committed to publishing a land use framework in 2023 to bring greater alignment in policies affecting land.

I thank all noble Lords here for taking part in this crucial debate and for raising many important points that I will take back to Defra and colleagues across Whitehall. I will look at Hansard and write to noble Lords to follow up on any questions that I have been unable to answer. The Government have committed to leaving the environment in a better place than we found it. There is no doubt that nature-based solutions play a vital part in achieving our ambitions, and, although we recognise that there is work to do, we are confident that we have a strong foundation to build on. With our recent announcements and ongoing commitment to action, we will continue working with key stakeholders in the sector and our delivery partners to deploy nature-based solutions to improve our natural environment and support the climate agenda.