Since the beginning of 2023 there has been a flurry of publications and announcements on biodiversity net gain (BNG). In this article we take a look at some key points arising from government announcements, but first a recap on BNG.
From January 2024, planning permissions, apart from proposed limited exemptions and small sites, will be granted subject to a condition that requires a BNG plan to be approved before development can be lawfully commenced.
The proposed exemptions are:
However, in respect of exempted sites, planning policy will be developed to secure ‘proportionate on-site biodiversity enhancements’.
Small sites are defined as residential sites that are less than one hectare in size and with one to nine dwellings, or less than 0.5 hectares if the number of dwellings is unknown. Non-residential sites that are less than one hectare, or where the floorspace that will be created is less than 1000 square metres, will also be classed as small sites. BNG plans will be required for small sites from April 2024.
BNG plans will need to show a 10% BNG. The BNG will be measured from the baseline at the time planning permission was granted, or at a date agreed with the local planning authority. Where habitats have been degraded since January 2020, the pre-degradation habitat will be taken as the baseline. This is to deter landowners and developers from clearing habitats prior to BNG being assessed.
BNG is measured using a biodiversity metric that is based on habitat features to calculate a biodiversity value. When the BNG regulations come into force, then BNG will need to be measured using the statutory metric. The statutory metric has not yet been published, although Natural England has indicated that biodiversity metric 4.0 will be the basis for the statutory metric. In any event, Defra has confirmed that there will be a transitional period in which metric 4.0 will be accepted by local planning authorities and the biodiversity gain register.
The 10% BNG can be achieved by increasing or improving on-site or off-site habitats, or purchasing statutory credits. All three options, on-site, off-site and statutory credits, may be used to achieve 10% BNG. For more background information on BNG please see our article What is Biodiversity Net Gain?
On 27 July 2023, Defra announced there will be over £9 million of funding to support the roll-out of BNG and help local authorities recruit additional ecologists and specialists. In the same announcement, Defra confirmed that BNG “will exclusively apply to new applications”. This indicates that the requirement to provide 10% BNG will only apply to planning applications submitted after the new BNG regulations come into force, in January 2024.
In respect of phased developments, additional BNG information setting out how BNG will be achieved "across the whole site on a phase-by-phase basis" will be required. Phased developments will also be subject to a condition that requires the approval of a BNG plan before commencing each phase, although Defra acknowledges it is important to give local planning authorities some room for discretion.
Where a developer needs to vary a planning permission, by way of a section 73 application, the requirement to provide 10% BNG will only apply where the original planning permission was granted after BNG regulations come into force.
Whilst the information published by Defra provides some guidance for developers and local planning authorities, the exact implementation details for BNG will not be known until the BNG regulations are published.
If a developer is “creating or enhancing habitats” to comply with statutory obligations or policy, such as green infrastructure, river basin management enhancement measures, or mitigating or compensating for protected species or sites, this can potentially be counted towards BNG. Utilising areas already set aside for environmental purposes will potentially reduce the risk and costs to developers of providing BNG on-site. It may also provide the opportunity to stack biodiversity units and different types of credits – you can find more information on stacking below. If excess biodiversity units are created that are not required for the on-site development, then the developer may be able to register and sell the excess biodiversity units for other developments.
From January 2024, landowners, including local authorities and conservation bodies, and habitat bank operators can apply to register and sell biodiversity units. Local authorities and conservation bodies may also be interested in setting up their own biodiversity credit schemes or habitat banks, and registering to sell biodiversity units. The register will be operated by Natural England, however there won’t be a central trading platform for biodiversity credits.
Persons interested in registering and selling biodiversity units will need to consider:
The legal agreement to manage the habitat for 30 years will be in the form of a conservation covenant, between the landowner and a ‘responsible body’, although s106 could also be used. The responsible body may be the local authority or other body whose main purpose is conservation. All organisations that wish to be designated as a responsible body must apply to Defra.
If landowners meet the eligibility criteria and make the required habitat enhancements, they may be able to sell biodiversity units, nutrient neutrality credits, nature market credits and carbon credits for the same area of land. This process is known as stacking, and provides an opportunity for landowners to maximise the return on land used for environmental purposes. Grants may also be available to help landowners set up their land for biodiversity units.
Setting up biodiversity credit schemes or habitat banks, plus stacking and selling biodiversity units and other credits, will potentially provide landowners with additional revenue streams. However, it’s important to seek specialist legal advice before entering into such arrangements. Our planning team has considerable experience of negotiating and advising on ecological covenants, and setting up and advising on credit schemes whether for nutrients or BNG. More information can be found at Credit Schemes and Natural Capital.
Defra’s guidance on the indicative statutory biodiversity credit prices makes it clear that purchasing statutory credits is intended to be the ‘last resort’ when 10% BNG cannot be achieved on or off-site, and developers will be required to evidence that BNG cannot be achieved by other means. Developers will also need to purchase double the number of statutory credits that would have been required if BNG had been delivered in an alternative way. As such, pricing will potentially deter developers from relying on the fall-back position of buying credits.
Regulations setting out the detail for the implementation of BNG and how it will operate, have not yet been published. In the meantime landowners, developers and local authorities need to prepare for the implementation in January 2024.
In respect of future planning applications, developers need to ascertain the level of BNG that can be delivered on-site, if any areas can be enhanced to serve more than one environmental purpose and whether they need to purchase off-site biodiversity units. If there is an excess of biodiversity units, developers may wish to consider registering and selling the excess biodiversity units.
Local authorities and conservation bodies should apply to Defra for ‘responsible body’ status to enable them to enter into and enforce conservation covenants. They should also instruct legal advisers to draft precedent conservation covenants, ready for January 2024.
Landowners who are intending to set up a habitat bank/biodiversity credit scheme and/or registering to sell biodiversity units, should instruct ecology specialists to advise on stacking. Landowners should also seek specialist legal advice on structuring a biodiversity credit scheme or habitat bank.
If you have any queries or would like further information on BNG and credit schemes, please contact our planning team.