The UK Infrastructure Bank (UKIB) has announced a first £12-million investment in a major nature restoration project in Scotland amid plans to grow its role in markets that underpin positive climate and biodiversity outcomes.
On Friday, UKIB said it will provide a short-term bridging loan to Highlands Rewilding in Scotland, to facilitate its acquisition of the Tayvallich Estate, a 1,300-hectare rural estate on which the group plans to restore temperate rainforest.
“The Highlands Rewilding project on the Tayvallich Estate has exciting potential for climate, biodiversity, and economic growth benefits, and I am pleased we are able to provide short-term financial support,” said UKIB CEO John Flint.
“The bank’s investment is intended to support the development of the science, data, and understanding needed to deliver high integrity natural capital markets, in line with our mission to boost the innovative infrastructure technologies which will be essential to achieving net zero.”
With the UKIB funding, Highlands Rewilding will be able to move to further rounds of funding with potential investors, with a goal to develop new natural capital business and revenue models for the estate, according to a press release.
“Highlands Rewilding is thrilled to receive this support from the UK Infrastructure Bank. We will be working hard to turn it into a significant scaling of nature-recovery, one congruent with the ambitious targets many governments, including the UK’s, set in the recent global biodiversity treaty signed in Montreal,” said Jeremy Leggett, founder and chief executive of Highlands Rewilding.
FIRST STEP
The short-term loan is UKIB’s first move into natural capital markets, but its intention is to ramp up activities significantly.
“Natural capital markets have emerged as a way of generating sources of revenue from improvements to our natural environment. These diverse new income streams include the sale of credits for carbon captured by ecosystems and for improved biodiversity,” Kate McGavin and Helen Williams, both directors of strategy and policy at UKIB, wrote in a blog post accompanying the announcement.
“The markets underpinned by these revenues are nascent – but with huge potential to grow if barriers to scale are overcome, such as high transaction costs, data gaps, and novel risks.”
UKIB in November released a discussion paper on natural capital markets, where it identified woodland and peatland carbon markets, England’s biodiversity net gain framework, and water services as areas where it will initially build expertise and concentrate efforts, all the while remaining open to wider opportunities.
“Highlands Rewilding intend to use Tayvallich as a testing ground for innovative natural capital approaches, working with their wide-range of academic partners to generate new data and insights with the potential to help shape high-integrity natural capital markets across the UK,” McGavin and Williams wrote.
“For example, plans to improve the verification of biodiversity uplift at Tayvallich may have applications both in Scotland, where a voluntary market for biodiversity credits is emerging, and in England, where mandatory biodiversity net gain is set to be introduced later this year.”
That approach fits UKIB at its current stage of engagement with the market and its ambitions going forward.
“This is in line with our ambition, as set out in our strategic plan, to invest across the infrastructure landscape, including in new infrastructure technologies and demonstrator projects that can create, scale, and accelerate markets beyond the scope of an individual project,” McGavin and Williams wrote.
By Stian Reklev – stian@carbon-pulse.com
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