A programme for building nature projects up to investable standard is receiving funding from the UK government, but biodiversity credit-related initiatives will not initially be eligible.

The UK Nature Accelerator will be delivered by Finance Earth with new grant funding of undisclosed size from the UK’s Department for Environment Food and Rural Affairs (Defra) a conference heard Tuesday.

It will incubate projects in preparation for investment from the blended finance UK Nature Impact Fund, which was co-designed by investment manager Federated Hermes and Finance Earth. The fund managers will also advise on the accelerator.

The UK government will provide funding by matching the fee paid by project sponsors to the accelerator.

“We are at the initiation phase, open to understanding the projects in the market that are ready for going through the first round of the accelerator,” Alicia Gibson, senior associate director at Finance Earth, told the Nature Finance UK conference in London.

“Initially, we’re targeting three rounds to bring forward as many projects as possible to build up replicable, scalable transaction structures,” she said.

The programme aims to tackle an issue mentioned by delegates at the conference, including the Green Finance Institute, of the market being “stuck”, Gibson said.

The accelerator will first look for applications from projects in biodiversity net gain (BNG), woodland creation, and peatland restoration, Gibson said.

Biodiversity credits could be eligible for support from the accelerator in the future, but the market is currently too immature, she told Carbon Pulse on the sidelines of the event.

“Voluntary biodiversity credits we still see as an emerging market. There’s not necessarily enough consistency and consensus around measurement, or in the claims of buyers,” she said.

The accelerator could support BNG initiatives covering areas such as ecological modelling, biodiversity unit uplift, pricing, demand, and market functionality, she said. New building developments in England and Wales will be required to improve biodiversity by 10% under the BNG law from November.

There are not currently enough investable opportunities for the UK Nature Impact Fund, according to Gibson.

“The accelerator is there to make sure that we actually can develop that pipeline of projects,” she said.

Helping to refine investment cases through support in developing financial models, in-house skills, and access to initiative templates are other aspects of the programme.

“There are still quite a lot of barriers and obstacles to actually getting to the investment stage,” Gibson said.

“We know that many of the project developers or environmental NGOs or landowners still need support, they don’t have the experience of developing projects, engaging with buyers, developing financial models, or looking at what contracts they need to have in place.”

Eligible projects will need:

• A completed investment case
• Funding need based on a robust financial model
• Evidence of demand
• Buy-in from landowners, delivery partners and the local community

By Thomas Cox – t.cox@carbon-pulse.com

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