Biodiversity Net Gain – overview and opportunities

Biodiversity net gain is a concept enshrined in the Environment Bill 2019-2021. A product of the UK’s EU Withdrawal Act, the Bill establishes how the UK’s environmental law will function and develop post-Brexit.

It comes at a time of widely-recognised environmental emergency, be it degraded soil quality, climate change or biodiversity loss; the UK needs ambitious environmental law, not least to show it is serious about this agenda in the run up to the UN climate change conference, COP26, due to take place in Glasgow in November 2021.

The Bill sets out to deliver a “green” Brexit in line with the government’s stated ambition.

The background – the Environment Bill

The Bill provides two key things, firstly a framework for governance, for example by the establishment of a new UK environmental watchdog, the Office for Environmental Protection, and secondly by providing specific measures to improve the environment, for example by requiring the government to set long-term targets in four priority areas (air, water, waste and resource efficiency and nature). Although many of the UK’s long-standing core environmental law principles are maintained, such as “polluter pays” and the “precautionary principle”, the Bill as a whole has the potential to set challenging new targets and tighten regulation.

The Bill was included in the Queen’s Speech on 11 May 2021 and the current expectation is for it to receive Royal Assent in the autumn.

Biodiversity net gain in the Environment Bill

Biodiversity net gain is one of several key compliance areas in the Bill, and is not the only one which is likely to impact on the utility sector. The requirement for long-term targets as touched on above may provide both challenges and opportunities for the utility operators, for example water companies who are required to adapt their operations to help meet the government’s target, or electricity companies who find themselves more often having to divert cable routes as a result of a protected habitat.

Focusing on biodiversity net gain, the Bill introduces a new general condition which will apply to all planning permissions granted in England, requiring that all new developments achieve at least a 10% biodiversity net gain, which must be maintained for at least 30 years.

Although the regime introduced by the Environment Bill remains some way off – the Bill anticipates a two year transition period before it is operational – some elements are already in play. The concept of biodiversity net gain has been part of National Planning Policy Framework since 2018 and is incorporated in many local plans, albeit not always consistently.

While the detail remains to be finalised, based on consultation so far it is likely that there will only be limited exemptions to mandatory net gain, including nationally significant infrastructure projects (NSIPs), marine development and irreplaceable habitat sites, for example sand dunes or salt marsh, which are already subject to requirements that damage be avoided, mitigated and compensated for.

The new planning condition will require a biodiversity gain plan to be submitted and approved before development can lawfully commence. The plan should contain an assessment of the value of natural habitats before development and after development, and show that at least a 10% net gain is achieved between the earlier and later values as measured by a metric produced by Defra. A beta version of the metric is already available but at the time of writing an updated version, 3.0, is due to be published shortly.

The metric gives an indicative score for biodiversity quality pre- and post-construction, taking into account the site’s distinctiveness, condition, strategic significance and habitat connectivity. The score is calculated by reference to the number of “biodiversity units” present at the site, which are awarded for a particular length of hedge or a set area of a particular habitat for example. The plan must include details of how the biodiversity value has been calculated, and how the net gain target will be achieved.

The biodiversity value attributable to the development for the purpose of calculating net gain can include onsite biodiversity value, any registered offsite biodiversity value which is allocated to the development and biodiversity credits purchased to “top up” the gain to the required 10% level.

There has been some debate regarding biodiversity credits, but as laid before parliament these may be purchased from the Secretary of State by a developer for the purpose of meeting the biodiversity gain objective. The money must be used by Secretary of State for habitat enhancement purposes, with a report to be published at least annually setting out how much was received, how the money was used and the projected biodiversity value as a result.

Offsite gain and conservation covenants

Offsite biodiversity value may be evidenced by way of a conservation covenant. This new concept, introduced by the Environment Bill, will operate as a voluntary, legally binding private agreement made between a landowner and a “responsible body” which contains provisions that conserve the natural or heritage features of the land, enabling long-term conservation. The covenant will bind future owners of the land.

To qualify, a conservation covenant must meet the statutory test, namely to create a positive or negative obligation relating to the land with a conservation purpose for the public good. “Responsible bodies” are the Secretary of State and those designated by the Secretary of State, which can include charities, public authorities or private companies.

A conservation covenant could for example be entered into between a developer and a responsible body to achieve offsite gain for a development on other land the developer already owns, or alternatively a developer could enter into an arrangement with a landowner whereby a conservation covenant is put in place on the landowner’s land land to evidence the necessary 10% biodiversity net gain.

What to do now

Utilities undertaking development will need to consider factoring biodiversity net gain considerations into all of their projects. Even where planning permission is not required because works are permitted development or major development is undertaken under the NSIP regime, biodiversity gain might be appropriate as part of any internal environmental commitments businesses make.

Where planning permission is required, net gain will be a statutory requirement (above current policy or environmental obligations) so must be complied with. The lead in time means that it is sensible to assess land already held for its ability to deliver onsite biodiversity net gain if undeveloped or otherwise any offsite gain opportunities. There may also be benefit in seeking to establish a strategic partnership with a local or national wildlife charity to help deliver offsite biodiversity net gain. Finally, it will be important to consider biodiversity net gain in the context of future projects, for example how it might be able to be delivered on a particular site.

Despite the lead in time, the impact of biodiversity net gain is already impacting on developer’s plans in terms of the value of land and the viability of delivery projects. Early adopters who succeed in building a biodiversity net gain approach into all their projects are likely to reap the benefits of having a clear plan now.

Caroline Bush is a senior associate in Osborne Clarke’s environment team and co-leads the team focused on decarbonisation regulation and policy (caroline.bush@osborneclarke.com).

 Neil Bromwich is a partner in Osborne Clarke’s planning and infrastructure team.  He focuses on early stage consenting and strategy for renewable energy and energy infrastructure projects (neil.bromwich@osborneclarke.com).