Biodiversity Credits allow developers and local planning authorities (LPAs) to make a financial contribution to compensate for the negative impacts of development projects on biodiversity. You get them when you take part in the statutory biodiversity credits scheme and they contribute towards the mandatory 10% BNG requirement set by the UK government.
Biodiversity Credits are not the same as BNG Units which are the measurement by which landowners and local councils can help to deliver biodiversity net gain and can be bought in order to boost the biodiversity in their specific locations.
Biodiversity Credits Vs Biodiversity Units
Both Biodiversity Units and Biodiversity Credits make up an important part of the global biodiversity framework however Biodiversity Units are what the government wants developers and other companies who are required to participate to purchase, either onsite or through the offsite private market. They are considered by the government to be a private sector.
However, there will be occasions, due to either the availability of stock levels of biodiversity Units or because of a particularly rare or unusual BNG requirement, where there are no Biodiversity Units available on the private market.
In order to avoid disruption to the development sector and to ensure that projects can still go ahead the government has created a backstop scheme where developers can purchase Units directly from the government. These are known as Biodiversity Credits and they are intended to be a last resort option.
Measures to Ensure Biodiversity Credits are a Last Resort
To ensure that the Biodiversity Credit scheme is used as a last resort the government has introduced the following measures:
- Developers applying for a Biodiversity Credit must provide evidence that they have tried to source Biodiversity Units for the local planning authority. The easiest way to do this is to use the Gaia marketplace search function that allows developers to download proof that there aren’t enough Units on the market that they can then share as evidence as part of their request.
- The second step that the government has taken is that they have priced Biodiversity Credits significantly higher than the anticipated prices of Biodiversity Units and this will be adjusted accordingly to make sure that Credits are always more expensive than Units to purchase.
Biodiversity Credits are a really important part of the UK government’s strategy to counteract climate change as well as protect the natural biodiversity of the UK.
The prices will be set by DEFRA and Natural England will be in charge of actually selling the Credits to those who need them.
Why are Biodiversity Credits important?
Climate change is a huge problem for the planet. Recent numbers suggest that there is a 2/3rds chance that the average temperatures will be 1.5 degrees Celsius for at least one year, a major milestone for climate change. Alongside this, it is estimated that there is a 98% that one of those years will be the hottest on record.
The challenge with any sort of environmental change is that for it to be truly effective it requires governmental backing and enforcement. Too often we see the onus being put on the individual rather than acknowledge that it is often companies and corporations responsible for the vast majority of carbon emissions and environmental issues.
This can lead to a significant reduction in both species loss and biodiversity loss, pushing habitats to the verge of extinction and, in the cases of some rare species, disappearing altogether.
Biodiversity Credits and Biodiversity Units are important for a number of reasons.
- The first is that because it is government enforced it means that companies have to abide by it. Too often we see voluntary climate schemes treated as a good PR opportunity (think greenwashing) but without being serious about the cause. And this isn’t necessarily the company’s fault. They have their own goals and priorities and so it is a strange premise that we should expect them to simply volunteer to spend more money. That is not to say they shouldn’t take responsibility and be held to account over basic pollution laws but the simple truth of the matter is that anything new or additional, which the environmental data very much says is required, needs to be backed by government enforcement, which the biodiversity credit scheme very much is.
- The second reason why Biodiversity Credits are such a good policy is they give companies and locations a genuine revenue opportunity. Too often it seemed like the choice had to be monetisation or protecting the climate. However, with Biodiversity Net Gain and the biodiversity metrics that make it a tangible and trackable asset, landowners now have the opportunity to actually make revenue all the whilst boosting the biodiversity in their region. Too often local councils or local landowners were under pressure to monetise specific plots of land at the cost of the local biodiversity, however, now there is an opportunity to do exactly that.
By utilising the biodiversity metric landowners are able to directly identify which of the Biodiversity Units offer them the most opportunity across the main Biodiversity categories of Area Units, Hedgerow Units, and Watercourse Units. All of these provide that nature positive effect that we are looking for.
How to Buy Biodiversity Credits
- The statutory biodiversity metric calculation tool can be used to calculate the number of statutory credits needed for a specific development. It is calculated from the number of biodiversity units needed to achieve 10% Biodiversity Net Gain (BNG).
- Proof must be provided to the LPA that a developer has no other option than to buy statutory credits.
- Once approved, due diligence checks will be carried out and then the invoice will be sent to the developer.
- Once the invoice is paid the developer will receive proof of purchase and a VAT receipt.
- The developer must provide this proof of purchase when submitting a biodiversity gain plan and a biodiversity metric calculation.
What are the costs of Biodiversity Credits?
DEFRA have recently announced the cost of Biodiversity Credits, you can see below the full breakdown.
Biodiversity Credits, similar to Biodiversity Units, have 3 main categories. Specifically Hedgerow, Area and Watercourses. Within each category there are a variety of other subcategories and the sub-category contributes towards the price depending on the distinctiveness of each habitat.
Low distinctiveness habitats
| Habitat distinctiveness | Broad habitat type | Specific habitat type | Price per credit | Tier |
| Low | All | All | £42,000 | A1 |
Medium distinctiveness habitats
| Habitat distinctiveness | Broad habitat type | Specific habitat type | Price per credit | Tier |
| Medium | Heathland and shrub | All | £42,000 | A1 |
| Medium | Grassland | All | £42,000 | A1 |
| Medium | Individual trees | All | £42,000 | A1 |
| Medium | Urban | All | £42,000 | A1 |
| Medium | Cropland | All | £42,000 | A1 |
| Medium | Woodland and forest | All | £48,000 | A2 |
| Medium | Intertidal sediment | All | £48,000 | A2 |
| Medium | Lakes | Reservoirs | £125,000 | A4 |
| Medium | Lakes – ponds (non-priority habitat) | Ponds | £125,000 | A4 |
| Medium | Sparsely vegetated land | Other inland rock and scree | £125,000 | A4 |
High distinctiveness habitats
| Habitat distinctiveness | Broad habitat type | Specific habitat type | Price per credit | Tier |
| High | Wetland | Reedbeds | £42,000 | A1 |
| High | Grassland | Traditional orchards | £42,000 | A1 |
| High | Grassland | Lowland calcareous grassland | £48,000 | A2 |
| High | Grassland | Tall herb communities (H6430) | £48,000 | A2 |
| High | Grassland | Upland calcareous grassland | £48,000 | A2 |
| High | Heathland and shrub | Dunes with sea buckthorn | £48,000 | A2 |
| High | Heathland and shrub | Lowland heathland | £48,000 | A2 |
| High | Heathland and shrub | Upland heathland | £48,000 | A2 |
| High | Urban | Open mosaic habitats on previously developed land | £48,000 | A2 |
| High | Woodland and forest | Wet woodland | £66,000 | A3 |
| High | Woodland and forest | Felled | £66,000 | A3 |
| High | Woodland and forest | Upland birchwoods | £66,000 | A3 |
| High | Intertidal sediment | Littoral mud | £66,000 | A3 |
| High | Intertidal sediment | Littoral mixed sediments | £66,000 | A3 |
| High | Intertidal sediment | Littoral – biogenic reefs – mussels | £66,000 | A3 |
| High | Intertidal sediment | Littoral biogenic reefs – Sabellaria | £66,000 | A3 |
| High | Intertidal sediment | Features of littoral sediment | £66,000 | A3 |
| High | Intertidal sediment | Littoral muddy sand | £66,000 | A3 |
| High | Wetland mosaic | Floodplain wetland mosaic (CFGM) | £125,000 | A4 |
| High | Ponds | Ponds (priority habitat) | £125,000 | A4 |
| High | Ponds | Temporary lakes, ponds and pools | £125,000 | A4 |
| High | Coastal lagoons | Coastal lagoons | £125,000 | A4 |
| High | Rocky shore | High energy littoral rock | £125,000 | A4 |
| High | Rocky shore | Moderate energy littoral rock | £125,000 | A4 |
| High | Rocky shore | Low energy littoral rock | £125,000 | A4 |
| High | Rocky shore | Features of littoral rock | £125,000 | A4 |
| High | Coastal saltmarsh | Saltmarshes and saline reedbeds | £125,000 | A4 |
| High | Intertidal sediment | Littoral seagrass | £125,000 | A4 |
| High | Sparsely vegetated land | Coastal sand dunes | £125,000 | A4 |
| High | Sparsely vegetated land | Coastal vegetated shingle | £125,000 | A4 |
| High | Sparsely vegetated land | Maritime cliff and slopes | £125,000 | A4 |
| High | Sparsely vegetated land | Inland rock outcrop and scree habitats | £125,000 | A4 |
| High | Woodland and forest | Upland mixed ashwoods | £125,000 | A4 |
| High | Woodland and forest | Native pine woodlands | £125,000 | A4 |
| High | Woodland and forest | Lowland mixed deciduous woodland | £125,000 | A4 |
| High | Woodland and forest | Lowland beech and yew woodland | £125,000 | A4 |
| High | Woodland and forest | Upland oakwood | £125,000 | A4 |
| High | Lakes | High alkalinity lakes | £650,000 | A5 |
| High | Lakes | Low alkalinity lakes | £650,000 | A5 |
| High | Lakes | Marl lakes | £650,000 | A5 |
| High | Lakes | Moderate alkalinity lakes | £650,000 | A5 |
| High | Lakes | Peat lakes | £650,000 | A5 |
Linear habitats
Hedgerow
| Habitat distinctiveness | Broad habitat type | Specific habitat type | Price per credit | Tier |
| Various | Hedgerow | All | £44,000 | H |
Watercourses
| Habitat distinctiveness | Broad habitat type | Specific habitat type | Price per credit | Tier |
| Various | All watercourses | All | £230,000 | W |
Biodiversity Credits vs Carbon Credits
Biodiversity Credits are not a competitor of Carbon credits. Instead, they are designed to work alongside.
Carbon Credits are a measurable metric that allows companies and governments to counteract their greenhouse gas emissions through the use of paying for projects that directly remove harmful gases such as Carbon Dioxide from the atmosphere.
The idea behind this was that companies could achieve net zero promises by funding enough of these projects to counteract their specific emissions with an equal amount of projects.
Biodiversity Credits, as mentioned above, are the Government backstop for Biodiversity Units and are focused on improving the biodiversity in the area focusing on the dangers of loss of habitat and natural ecosystems. It is set up to complement the Carbon Credits scheme.
The other two core differences are that biodiversity units are compulsory and are to be written into law towards the end of 2023 and that net zero is not enough, developers need to increase the biodiversity by 10% minimum.
Summary
Biodiversity Credits are an important part of biodiversity net gain and biodiversity value in general. The reason is that it prevents the development sector from stalling but it also ensures that biodiversity conservation is a hugely important part for the UK moving forward.
Biodiversity offsetting and hitting the Governamnet biodiversity targets are critical with the risk of climate change and the biodiversity Unit and Credit scheme (along with biodiversity offsets) can play a huge part in ensuring the nature positive effect of looking after and building upon species richness and to avoid the dangers that biodiversity loss brings.