A London-based investor is considering preparing sites in Scotland covering up to 17,000 acres (6,880 hectares) of collective land for the generation of biodiversity credits, Carbon Pulse has learned.

The investment manager Foresight Group could gather the baseline data required for producing biodiversity credits from a 10,000-acre initiative in Pennyghael, Isle of Mull, alongside other smaller projects in Scotland, said Rob Guest, co-lead at Foresight Sustainable Forestry Company (FSF).

FSF has committed to working towards generating biodiversity credits from another Scottish project, the 2,000-ha Fordie estate in the Southern Perthshire Highlands, in collaboration with credit developer RePlanet, Guest told Carbon Pulse.

“We’re pilot testing with Fordie, and then we’ve got a wave of other projects. Some of them would be smaller sites with potentially less of a big range of different habitats, so simpler to baseline and monitor,” he said.

Collecting baseline data entails gathering at least five key metrics, under non-profit Wallacea Trust’s methodology, from which ecosystem improvements can be measured annually.

“We need to focus on where we think the most exciting nature uplifts can be generated,” said Guest. The most attractive areas have a mix of forestry with open ground, degraded peatland, or farmland, he said.

The announcement of FSF’s involvement in biodiversity credits is significant because few investors have revealed their engagement with such initiatives so far.

The biodiversity credits market has attracted an increasing amount of attention the last few years, but few actual transactions have taken place.

FSF has raised £175 million ($223 mln), in its initial and subsequent fundraise, towards its goal of managing UK sustainable forests alongside income streams including carbon and biodiversity. Foresight Group manages FSF.

The Pennyghael initiative is owned by Foresight Inheritance Tax Fund (FITF), a substantial shareholder in FSF.

FLAGSHIP FORDIE

The 2,000-ha Fordie project has peatland, wetlands, woods, and mountainous landscapes, according to its website. It also hosts deer stalking, fishing, holiday accommodation, and a hydroelectric system.

The area has a “good baseline” of various habitats, meaning FSF sees it as a “natural capital flagship” project for the company, Guest said.

Fordie project managers are gathering seven metrics under the Wallacea methodology for biodiversity credits: spiders, beetles, funghi, macro invertebrates, birds, plants, and UK habitat condition.

Conservation activities will include regenerative grazing and peatland restoration. A blockchain platform will register any independently verified biodiversity credits, before making them available for sale to stakeholders interested in nature restoration, Guest said.

Wallacea Trust defines a credit as a 1% uplift, or avoided loss, in biodiversity per hectare using a ‘basket of metrics’, which vary based on habitat type and location.

Scotland does not have a clear biodiversity credit plan yet, unlike England’s biodiversity net gain scheme, but project developer CreditNature is in the process of developing a platform for biodiversity credits in the country, backed by the government.

Fordie’s credits will be independently peer reviewed via the Biodiversity Future Initiative (BFI), as part of the Wallacea methodology.

FSF has been working on a separate monitoring tool called Biodiversity HAB-CON Alpha. Based on the UK Habitat Classification System and condition assessment, the tool aims to measure the habitats of commercial softwood and long-term broadleaf woodlands over 60-year periods, according to the company’s 2023 annual results.

COMMERCIAL REALITY

The question for FSF with sites such as Fordie is how to create a diversified rural business with environmental outcomes, Guest said.

“The biodiversity credit market … fits neatly into the business. Because we’ve got other income streams, they are an exciting nature opportunity to start gathering data and positioning oneself for those markets.”

Market players are beginning to consider the “commercial reality” of biodiversity credits by weighing up the potential costs against the potential revenues, he said.

“The end market is starting to tell people what they need, and developers are starting to tell the ecologists and scientists what they can afford.”

Cost is a key factor for these projects, but monitoring technologies are rising up the agenda, he said. Last week, RePlanet said it was looking to pilot a method with 10 project sites to enable cheaper monitoring of biodiversity credit projects.

Whether the nature benefits from Fordie will be exclusively for biodiversity credits, or to augment carbon credits as co-benefits, remains to be seen, but the company is gathering data now so it can capitalise on long-term ecosystem uplift in the coming years, he said.

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

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