A new requirement for most developments to achieve a minimum level of "biodiversity net gain" will come into force in November this year. For some this will be an additional burden when preparing planning applications, but others will see it as an opportunity to create value through enhancing biodiversity whilst burnishing their "green" credentials.
Biodiversity Net Gain Planning Condition
From November planning permission will be deemed to be granted subject to a condition requiring the approval of a biodiversity gain plan ("BGP") prior to the commencement of any development. The BGP needs to demonstrate how the development will achieve at least 10% biodiversity net gain to be maintained for a minimum of 30 years.
This requirement will apply to applications currently being prepared if they are likely to be determined after the commencement date of November. Although, in practice local planning authorities are incorporating biodiversity net gain requirements in planning agreements already.
Exemptions
The main exemptions to these requirements are:
- development affecting habitats below 25m2 (or 5m2 for linear habitats e.g. hedgerows);
- permitted development;
- sealed sites (e.g. sites sealed with tarmac or existing buildings).
Phased development and s73 permissions
The requirements will apply to phased development with an overall BGP to be approved prior to the agreement of any development and BGPs for each phase to be approved prior to the easements of that phase.
BGP will also be required for s73 applications, but only when the original permission was granted after the requirements come into force in November.
Nationally Significant Infrastructure Projects (“NSIPs”)
The requirements for a minimum 10% biodiversity net gain are to be largely mirrored for NSIPs which are covered by different consent mechanisms under the Planning Act 2008, though the requirements are not expected to come into force for NSIPs until November 2025.
Biodiversity Net Gain Plans
The BGP must comply with certain minimum information requirements, but broadly it has to set out the pre-development biodiversity value of the on-site habitats and the post-development biodiversity value and set out how a 10% net gain is to be achieved. The biodiversity value of a site is determined by applying a "biodiversity metric" published by Natural England. There are two metrics, in fact. The first for "small sites" and the main metric (The Biodiversity Metric 4.O.) and an accompanying User Guide.
A "competent person" has to be used to apply the metric. The pre-development biodiversity value of the site is to be assessed at the date of the planning application. The rules include an anti-avoidance provision aimed at preventing developers from artificially lowering the biodiversity value of the site prior to the application date by introducing a default date for assessing biodiversity value of January 2020 where unauthorised clearing activities have taken place. Broadly, the metric measures biodiversity value by habitat (eg. Hedgerows). Note that it does not measure by species but uses habitat categories as a proxy for species. Each habitat category has a “biodiversity unit value”. The 10% net gain has to be demonstrated in each habitat category.
How to achieve net gain
There is a number of ways to achieve 10% net gain (including by providing off-site biodiversity gain) but it is important to recognise that the BGP will need to set out how the proposed development complies with the biodiversity mitigation hierarchy (i.e. in order, avoidance, minimisation, restoration and off-setting).
If 10% net gain is achieved on-site then that is the end of the matter (provided it is legally guaranteed for 30 years), but provision is also made for securing net gain off-site.
This is permitted where biodiversity net gain is to be achieved on a registered off-site biodiversity net gain site and the net gain is secured (for 30 years) under a planning obligation or a conservation covenant.
A register of sites and off-site biodiversity net gain is to be maintained by Natural England. Landowners and public bodies (or charities) can register to become biodiversity net gain site operators (subject to certain requirements) then can generate "biodiversity units" which can be sold to development to meet their 10% net gain objective. This opportunity could well help businesses achieve their internal sustainability requirements. In addition, developers can on sell excess biodiversity units (i.e. those over and above their 10% requirement).
Note that "biodiversity units" should be distinguished from "biodiversity credits". The former are created and marketed privately by landowners or public authorities. The Government has, however, decided against creating a trading platform for biodiversity units, so the price will be determined by individual negotiation between the parties.
Conversely, biodiversity credits will be sold by the Government (via Natural England) with the price set at six-monthly intervals. Biodiversity credits are intended as a stop-gap, to be phased out as a market develops for biodiversity units. Current expectations are that biodiversity credits will be priced at around £30-£40 per credit.
It should also be noted that the value of a biodiversity unit varies according to the distance the biodiversity gain site is from the application site, the value of a unit is diluted, the greater the distance of the gain site from the application site.
Securing Biodiversity Net Gain
An essential requirement for achieving net gain through off-site biodiversity enhancements, is that it must be legally guaranteed for a minimum period of 30 years. This can be done either through a s106 planning agreement or a "conservation covenant". Both are local land charges and both need to be registered on Natural England's register. A conservation covenant is an agreement between a developer and a "responsible body" under which a landowner agrees to meet positive conservation obligations. As it is a local land charge it automatically binds successors-in-title.
Next Steps
Although the obligations requiring 10% biodiversity net gain will come into force in November 2023, no details of regulations have been published, nor has the Government published a price for Biodiversity Credits, which puts developers and landowners in a difficult position. As they stand, local authorities are generally implementing a "shadow" regime by requiring net gain through s106 agreements but without the degree of certainty such Regulations would provide.
In a future blog we’ll be looking at how the UK scheme compares with other biodiversity trading schemes around the world notably in the US and Australia.
