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The UK’s BNG Journey: A Transformative Compliance Market Mechanism

In light of Biodiversity Net Gain (BNG) policy becoming mandatory, Environment Bank’s founder, Professor David Hill CBE, reflects on this monumental milestone and the journey we took to get here: 

“The UK government has mandated into planning law, through the passing of the Environment Act 2021, that all significant development must deliver a minimum 10% increase in biodiversity as a result of the development project being permitted.  

A transition period to enable developers and planning authorities to accommodate the new law came to an end in February 2024 and, from now on, almost all development must comply with the mandated policy. 

This progressive law will generate much needed investment into the natural environment, restoring nature, and building resilience against the effects of climate change."

The origins of Biodiversity Net Gain

"Having spent 15 years designing mitigation schemes to enable developments to be permitted, I came to realise that the development sector would never commit to effective nature conservation within the development site boundary, nor would off-site compensation be a consideration since there was no effective regulatory requirement. 

Local planning authorities (LPAs), which oversee planning applications and grant planning permission, had to prioritise certain criteria to assess the merits of each development, with no pressure or incentive to consider biodiversity on equal footing as transport or design, for example. 

In 2004, I decided to disrupt this model and suggest that all development should be required to create gains for nature as a result of the development activity."

Developing a policy for BNG

"Based on ‘mitigation banking’ from the United States, I began to promote the concept of going beyond biodiversity offsetting and achieving a ‘net gain’ for nature and, in 2006, I established Environment Bank to begin securing parcels of land for nature restoration.  

I initially thought that I would buy land, create biodiversity rich areas on poor quality farmland, and then sell the ‘credits’ generated through the uplift, to developers. However, land in the UK is rarely available to the open market, typically being purchased by other farmers instead, and it isn't always available in places that can provide strategic offsetting opportunities for development. 

I had also hoped that a voluntary market would emerge where developers could purchase credits to help them to gain planning permission. I managed to set up a small number of voluntary offset sites, but it was slow, and developers struggled to see the value or incentive of a voluntary approach.

It soon became clear that a significant regulatory framework would need to be established and this was going to require considerable consultation, lobbying, and heartache."

Lobbying for BNG

"Over the next 14 years I consulted and lobbied numerous government officials from the Department for Environment, Food and Rural Affairs (Defra), the Department for Communities and Local Government (DCLG) – now the Department for Levelling Up, Homes and Communities – Natural England (the government’s statutory advisers on nature), and HM Treasury (plus 15 Ministers of State and five Secretaries of State). 

Beyond these government officials, I also began to meet with key individuals from the environmental non-governmental organisation (eNGO) sector. Professional institutes started to take interest, and I was given the opportunity to speak at numerous workshops. 

Whilst everyone was very sympathetic to our objective, I simply hadn’t appreciated how long it takes to introduce new policy, let alone get it written into law! The government set up six pilot sites in association with LPAs, but only one of those succeeded, making it clear that LPAs would play a key role in effective policy implementation. 

In 2011, I became a member of the government’s new Ecosystem Markets Taskforce. In its final 2013 report, the Taskforce listed biodiversity offsetting as the number one priority for getting private finance into the natural environment. 

Defra and Natural England began to design a metric for biodiversity measurement at both development and BNG sites and, with the backing of HM Treasury, the idea gained vital ground. 

At last, a detailed consultation process was initiated with key stakeholders, including developers, landowners, farmers, eNGO conservation bodies, academics, consultants, planners, and LPAs. Environment Bank and its ecologists were instrumental in this process and most of our recommendations for creating an effective and market-based model were accepted by the government."

BNG policy becomes enshrined in law

"The halleluiah moment arrived in 2019 when the then Chancellor of the Exchequer, Philip Hammond, announced that after so many years of lobbying, marginal gains, and numerous setbacks, Biodiversity Net Gain was to be implemented into law through the enactment of the Environment Bill. In November 2021, the law passed, triggering a two-year transition period for developers and LPAs. 

As a direct consequence of the new law passing, the number of BNG-specialist jobs skyrocketed, particularly in the ecology field. A whole industry has emerged to provide BNG calculations, create biodiversity gain plans, liaise with LPAs, engage with landowners and farmers, and develop specialist large-scale habitat banks. 

The final requirement for legal implementation was the production of statutory guidance documents. These were produced in draft for consultation in late 2023 and, in January 2024, the House of Lords agreed the adoption of the legislation.  

At long last, BNG had arrived. From 12th February 2024, almost all development must, by law, deliver BNG as part of the development."

BNG: A pivotal moment for nature

"Mandatory BNG, which has now come into law in England, is probably the single most significant conservation policy initiative of the past 40 years. It gives clarity and certainty to the development sector, enables development to proceed faster and more efficiently than before, and will generate much needed finance into the natural environment to tackle the substantial impacts of biodiversity loss, also making land more resilient to the effects of climate change.  

Environment Bank is leading the way on servicing the requirement for off-site Biodiversity Units and now has a significant pipeline of Units available for sale across England. The BNG model also provides a template for supplying similar Biodiversity Credits to the emerging and potentially vast market associated with corporate businesses becoming Nature Positive.” 

Professor David Hill CBE DL DPhil(Oxon)