Mandatory Biodiversity Net Gain (BNG) will apply to large developments granted planning permission from November 2023. Following the publication in February this year of its response to a major public consultation on the nuts-and-bolts of BNG, the government has published two guidance notes, aimed at developers and landowners seeking to sell biodiversity units.
In this briefing note, we summarise the key elements of the new guidance and highlight some aspects which remain unclear. The government has promised further BNG guidance and consultations during the course of spring and summer and most critically of all, we await the publication of the regulations designed to bring all of the government's policy announcements into law.
What counts towards a development's BNG?
For many developers, BNG obligations will be satisfied by the creation of new habitat areas whether on, or off site; acquiring units from third parties; or as a last resort, purchasing credits from the Secretary of State. Most of the time, this should be straightforward.
However, the guidance seeks to assist developers that are already required to establish habitats or undertake mitigation works as part of 'regular' planning, by explaining the circumstances when those works can also be used to satisfy BNG obligations. This is not without some difficulty given that one of the core concepts of BNG is additionality: in other words, BNG needs to be 'over and above' that which would ordinarily be required to secure a business-as-usual planning permission.
The guidance states that developers may be able to use habitats created or enhanced as part of their development schemes towards BNG, even if the habitat is, for example, undertaken to:
- comply with a statutory obligation or policy, such as the creation of green infrastructure, sustainable urban drainage systems (SUDS), or environmental impact assessment mitigation works;
- provide river basin management plan mitigation and enhancement measures; or
- provide mitigation or compensation for protected species or sites, including nutrient mitigation.
It is not clear if that list is meant to be exhaustive of the instances when necessary habitat can count towards BNG, or whether the above are simply used as examples. We suspect the latter.
The guidance states that developers who are "providing off-site mitigation and compensation for protected sites and species…may count [these works] towards their BNG requirement" but the guidance also states that developers "should do at least 10% of your BNG through other activities, for example, on-site habitat creation and enhancement". In other words, not all BNG can be provided through this mechanism.
Finally, the guidance makes clear that developers cannot count habitat creation or enhancements towards their BNG obligation if that habitat creation or enhancement is already required for:
- restocking conditions relating to a tree felling licence or a restocking notice
- marine licensing; or
- remediation under the environmental damage regulations.
We expect there to be tension between developers and Local Planning Authorities (LPA) as to the use of other habitats for BNG, with the former keen to satisfy their obligations through these means, and LPAs keen to limit duplication. Early engagement during the planning process will be essential to avoid delays.
Selling BNG Units as a Land Manager
The second guidance note refreshes guidance published in February, and relates to the steps needed to be taken by those wanting to create and sell BNG Units.
The guidance describes a five stage plan:
1. Find out what habitats are needed in your local area.
On the basis that habitats should be replaced on a like-for-like (or better) basis, it is important to understand what units are needed in the local area (or possibly further afield) to replace habitats and areas of biodiversity lost through development. The guidance notes that useful information may be held by the local planning authority in biodiversity action plans; green infrastructure strategies; catchment management plans; biodiversity opportunity areas; and local nature partnership documents.
2. Consider whether you can combine BNG and other environmental payments
The same parcel of land can be used to "stack", or generate at the same time, BNG Units and nutrient credits. Nutrient credits are used to help a residential development achieve nutrient-neutral status by ensuring that it does not add to the nutrient loads in water bodies where protected sites have an "unfavourable condition".Stacked units/credits can be sold to separate developers.
3. Calculate the BNG units on your site
Using the Biodiversity Metric published by the Department for Environment Food & Rural Affairs (DEFRA), a qualified ecologist can assess the baseline condition of land and then help design an enhancement scheme which will increase biodiversity at the site and thereby generate biodiversity units. Biodiversity units can be created before they are sold, hence 'habitat banking'.
4. Secure the land by legal agreement
BNG works need to be secured by a legal agreement – this is achieved by a S106 Agreement or a Conservation Covenant, containing a series of obligations or covenants which will together ensure that the biodiversity objectives for the land are achieved. Details of the habitat management and monitoring will need to be approved.
5. Calculate the price of the BNG Units
The obligations within the legal agreement will be onerous and demanding, requiring BNG works to be established and maintained for at least 30 years. The guidance lists a number of considerations in setting unit prices, not least inflation, professional costs, annual monitoring and reporting, as well as works which may be necessary to deal with habitat failure during the 30 year period. From November, the habitat bank can be registered with Natural England.
What's going to happen next?
As noted above, we await further materials to be published by DEFRA in the coming weeks and months. In particular:
- a consultation of the definition of "irreplaceable habitat", which won't be subject to BNG, but will be subject to a requirement for alternative appropriate compensation;
- guidance as to the factors that should be taken into consideration when drafting conservation covenants and S106 Agreements to secure BNG works;
- further guidance for phased developments and the application of BNG;
- guidance as to the expected content of a Biodiversity Gain Plan; and
- regulations to bring all policy decisions into law. It is not known whether the regulations will be published in draft for comment, or simply made.
For further information in relation to the issues raised in this briefing, or to discuss the Biodiversity Net Gain scheme and how it may affect you, please contact sustainability partner, Ben Stansfield, Ben Sasson (associate) or any member of the Planning and Environment team.