Biodiversity net-gain: Ambitious policy or a glorified offsetting scheme?

Stock image.

The legal requirement for developers to deliver Biodiversity Net-Gain (BNG) came into effect for developers of major housing projects on Monday (12 February) – more than a year after the policy package containing this law, the Environment Act, received Royal Assent.

Delays in the implementation of the mandate have been attributed to Covid-19 and to the subsequent economic downturn but it is now live. It will be extended to cover smaller housing developments in April 2024 and to other kinds of infrastructure developments in 2025.

Should the Government deliver an ambition to deliver 300,000 homes each year, the mandate would avoid the loss of 78,500 football pitches of habitat within five years and create an additional 44,500 pitches, according to biodiversity startup Joe’s Blooms.

The Government is hailing the BNG mandate as a “vital tool” to reverse the decline of nature.

The UK is regarded as one of the world’s most nature-depleted countries. Since 1970, species have declined by around one-fifth on average. Recent assessments have proven that this depletion is ongoing, with progress off-track towards most Government nature targets.

BNG could, in theory, help to address this trend. But it could also be a political playing point. After the Conservatives’ nutrient neutrality row and scaling back of energy efficiency requirements for landlords, BNG one of few examples of Ministers clamping down on housebuilding’s environmental impact rather than letting the sector benefit from lax environmental requirements in the name of short-term profits.

Natural England chair Tony Juniper has highlighted that delivering Britain’s domestic nature targets, and its fair share of the global UN Biodiversity Treaty, will necessitate that developments do not result in a net loss of biodiversity.

The use of the word ‘net’ and the practicalities of calculating loss and gain have caused debate over whether the mandate will result in meaningful change.

Wildlife and Countryside Link (WCL) has cited previous assessments of the scheme’s impact from the UK Government itself, acknowledging that, in some cases, developers ticking the BNG mandate’s boxes for 10% gain may only deliver no net loss.

The charity network is advocating for local authorities and housing developers to commit to a 20-30% net-gain target to cover for this potential weakening of impact. A handful have done so but this is the exception rather than the norm; WCL has found that only 8% of the UK’s 317 local councils have either committed to BNG beyond the 10% mark or are considering doing so.

The mandate, WCL’s chief executive Richard Benwell has said, is “too lenient” and will “make no dent at all in the annual gap in funding for nature recovery”.

Offsetting loopholes

A persistent concern about BNG is whether companies will simply turn to offsetting. The Government has implored developers to deliver net-gain on-site or near to their sites wherever possible, in a bid to avoid greenwashing and generate local co-benefits for residents.

This stance has been welcomed by those campaigning against the long and ongoing trend towards developers producing fewer green spaces.

Some developers, however, with limited options on-site, will be able to purchase credits to meet their BNG mandate obligations. The UK Government’s Department for Environment, Food and Rural Affairs (Defra) is managing the process for granting consent for credit use by developers. It is also overseeing the credit verification process.

Credits do have to be generated within the UK but could be far from the development.

WC’s Benwell has warned that the mandate could “only amount to a glorified offsetting scheme” unless changes are made by Defra.

His team wants the Government to reverse Defra’s recent decision to allow developers to sell excess credits to their competitors. Also on their wishlist are more funding, more resources and more robust strategizing to enforce the delivery of net-gain on-site.

WCL is additionally calling on the Government to clarify its strategic approach to compensation for irreplaceable habitats as soon as possible. This will be particularly crucial given the expansion of the BNG mandate beyond housing, with a case in point being the felling of ancient woodland to make way for the HS2 rail link.

Learn as you go?

The RSPB, a member of the WCL, has stated that the initial mandate “is not a silver bullet and still has issues that need to be ironed out”. But it has voiced optimism that it can be bolstered over time and calalyse significant investment in habitats in England.

The Green Finance Institute has estimated the maximum economic benefits of BNG-induced habitat creation and avoided loss at £11.4bn.

It has, like nature NGOs, cautioned that these benefits are not guaranteed. Successful implementation of the mandate “will require continued support, clarity and guidance from the Government,” according to the Institute’s director of nature programmes Helen Avery.

Avery said: “Today’s introduction shouldn’t be seen as the conclusion of the process, but the next evolution. It is now on all stakeholders from across national and local government, the ecological, financial and built environment sectors to work together to deliver what is deeply needed for nature.”

To that end, the Green Finance Institut convened a group of experts in fields including ecology, land use, academia, finance and the public sector to co-develop recommendations to the Government.

Like WCL, it is advocating for more resourcing for local planning authorities to monitor delivery and ensure compliance – beyond the £10.6m already promised and talked-up by Defra.

Unlike many NGOs, the Green Finance Institute’s group believea that onsite BNG projects should be treated as equally important as offsite options. Without a level playing field, their line of argument stands, a “robust supply of and demand for” credits will not be built as significantly or rapidly. The institute sees the potential for a credit market worth at least £135m annually.

The Institute is mainly focusing on the fact that onsite solutions are, at present, going to be subjected to less stringent requirements and thorough checking than offsite projects. It is advocating more on the side of ensuring onsite delivery, than loosening rules for offsetting using offsite projects.

The Institute is additionally advocating for clarity on which tax rules landowners will be subjected to and how landowners of offsite projects will share expenses with developers.

Whatever your view is on how BNG needs to be clarified or bolstered, there will doubtless be agreement on the urgency of the situation.

There are less than six years for the UK to achieve its commitments under the UN Biodiversity Treaty, which are all the more important given that the UN’s international biodiversity targets for the 2010s went unmet. Yet policy experts have cautioned that there is only a slim chance of delivering domestic goals, which would materialise with nothing short of unprecedented policy changes and concerted collaborative action in the real economy and financial services space.

Meeting these ambitions is not only a moral imperative but a means of avoiding socio-economic risk and creating opportunity. An oft-quoted PwC statistic is that more than 55% of global GDP is dependent on nature.

There will also be questions about the Government’s ability to build the plane as it flies in terms of nature policy, given the delays and confusion that plagued the rollout of post-Brexit farming subsidy schemes intended to boost nature outcomes, and the continued absence of updated climate and nature requirements as standard in post-Brexit trade deals.

This is not to mention the General Election looming large, limiting what Ministers are – and are not – willing to change in the coming months.