Mastering BNG Trading and Habitat Banking

While developers know 10% biodiversity net gain compliance is required on construction projects, they may not realize all trading rules involved with delivering BNG –– or recognize where services can be stacked against BNG planning (including nutrient neutrality).

To examine these aspects, Sustainability Superheroes Host and AiDash Director of Innovation Stephen Marland sat down with Jack Potter, Partner and Head of Biodiversity Net Gain and Nutrient Neutrality for Wild Capital UK.

A move toward nature forever

After coming from a background that includes working with UK Government to advise on BNG policy, Potter moved to Wild Capital to work on the practical implementation side of BNG. Wild Capital is a supplier of made-to-order high-integrity BNG offset units and nutrient neutrality credits. This move to the private sector allows Potter to champion biodiversity, encouraging education about natural habitats and paving the way to solving the biodiversity crisis –– in perpetuity.

The duo discussed the best ways to address BNG planning and nutrient neutrality and streamline compliance with ongoing nature benefits in mind.

Catch the full live event recap here, or read on for 3 key takeaways.

Takeaway 1. Approach biodiversity net gain with BNG trading rules

In its trading rules for BNG, the government sets minimum requirements for enhancing and creating habitats to compensate for lost habitats. The rules are based on the type of habitat lost and how distinctive it was.

• Very highly distinctive habitats: Plan to replace like habitats with like habitats or better. However, it is very difficult and expensive to replace very highly distinctive habitats.
• Highly distinctive habitats: There is some difficulty in replacing these habitats, but government biodiversity credits may be available.
• Medium distinctiveness: Habitat enhancement or replacement must be within the same habitat group or better. For example: grassland must be replaced with grassland or better.
• Low distinctiveness: These habitats are easy to replace or enhance and ensure 10%.

Potter notes that even full like for like may not be acceptable for all LPAs. For example, a developer replacing lowland meadow with lowland meadow could be denied by local authorities if the original habitat has been in existence for 100 years. Considering the habitat history, the local LPA may require further BNG activity, such as purchasing additional statutory biodiversity credits or even translocating the original soil to the developer’s planned BNG area.

Potter also offered several other reminders regarding BNG:

• 10% net gain: Each type of unit must deliver a minimum of a 10% net gain across all types of habitats. That includes 10% on water courses, 10% on other linear features, and 10% on area-based habitats.
• Defra’s Statutory Biodiversity Metric calculation tool. This tool must be used to calculate BNG.
• Deviation. Some departure from these rules may be considered by local authorities when plans present unique opportunities –– such as restoring historically important habitats or implementing very complex and large-scale improvements.

Takeaway 2. BNG offsets: On-site, off-site, habitat banks and now “build to order” and “option contract”

Developers are familiar with ensuring a 10% BNG improvement on development sites or off-site at another location they may own. In difficult circumstances, they may need to purchase BNG units from the biodiversity unit marketplace — or, as a last resort, from the government.

But Potter explained that two new approaches are available: “build-to-order” BNG units and “option contracts.”

Build-to-order approach

This option offers bespoke schemes to meet specific needs of developers, where standard, off-the-shelf, habitat types will not work. Offsets are available for less commonly used offset habitat types, including high-distinctiveness habitats. Build-to-order options give developers access to the specific number and type of offsets they need at competitive prices within the location where they need them.

“Build-to-order is something the market needs,” Potter noted. “It’s relevant in situations where there isn’t something off the shelf and it actually doesn’t really make sense for the habitat provider to speculatively create something off the shelf.”

Option contracts

This product is effectively a promise for future availability and cost under agreed contractual time scale. It secures price and availability of offsets at a very low premium. Developers can proceed with land acquisition and planning, knowing they will have the ability to secure necessary offsets, without laying out full offset cost up front.

Potter advised that developers consider all BNG offset approaches after looking at the mitigation hierarchy for their project’s habitat. They need to determine their project’s impact on biodiversity and whether they will seek to avoid, minimize, restore/repair, or purchase offsets to address that impact — and then choose an approach to offsets as needed.

Takeaway 3. Nutrient neutrality requirements are still here and evolving

Nutrient neutrality regulations have evolved, Potter explained because “our waterways are in a very poor state of affairs.” A case law was enacted as the government determined that areas at the end of watercourses, such as harbors and estuaries, could not be degraded any further. Upstream runoff, including chemicals and sewage from developments could not be allowed to contaminate the system.

For example, Potter described how adding more houses means more toilets, sinks and showers, and more water going to the water company for treatment. Subsequently, the water company treats and releases water that often still retains nutrients that are damaging to watercourses and their endpoints.

Developers can answer nutrient neutrality requirements with solutions such building nature-based solutions to filter water or upgrading infrastructure. They can also pay to close down an area, such as an agricultural area using fertilizer that causes damaging runoff to nearby watercourses.

Developers can buy offsets to meet requirements and the good news, Potter said, is that any BNG offsets can be stacked with nutrient neutrality offsets.

Learn more about Wild Capital solutions for BNG and nutrient neutrality.

Speed your BNG application process with AiDash Biodiversity Net Gain Management System™.