*This article was amended Apr. 24 to clarify the Peatland Code is undecided whether it will stack or bundle biodiversity credits. 

Peatland could generate voluntary biodiversity credits for sale in combination with carbon credits in the UK next year under Peatland Code proposals launched this week.

The Peatland Code is likely to include a monitoring, reporting, and verification option for biodiversity credits in Version 3.0, which is expected in the second quarter of 2025, the International Union for Conservation of Nature (IUCN) UK Peatland Programme said in draft guidance released Thursday.

While stacking ecosystem service credits or units will not be feasible under the next version of the code, 2.1, work on making the practice possible is underway, the programme said in a consultation open until May 20.

Backed by the UK government, the Peatland Code offers the UK’s only official peatland carbon units, which can be purchased and retired by companies to offset greenhouse gas emissions.

The inclusion of biodiversity credits is significant as it could provide government backing for voluntary biodiversity credit standards, driving corporate investment in nature, at a time when demand in the nascent area is lagging due to lack of confidence.

“We are over the moon that this is now being formally looked at … it will give us the clarity over what should be measured,” Freddie Ingleby, managing director of peatland restoration company Caledonian Climate, said.

“The Peatland Code embodying biodiversity into its standard is the right approach to take, rather than having a fragmented approach over the same areas of land,” Ingleby told Carbon Pulse, adding that peatland has “massive opportunity” to generate biodiversity credits through nature uplift.

STACKED LINEUP

Currently, wider ecosystem benefits of peatland restoration projects are bundled with carbon units. Mechanisms need to ensure future stacking or bundling changes do not compromise the integrity of the Peatland Code market, the programme said.

Additionality is key – ensuring biodiversity uplift would not have happened anyway without intervention, the guidance said. This week, an ecological economist predicted many biodiversity credit initiatives would not be able to credibly prove additionality.

The Facility for Investment Ready Nature in Scotland (FIRNS) announced funding last year to develop biodiversity crediting for woodland creation and peatland restoration in Scotland, across four pilots, by Scottish Forestry and IUCN UK Peatland Programme.

The pilots are assessing the ability to either stack carbon and biodiversity payments within the same project, or consolidate both quantified outcomes into a single credit, the guidance said.

A programme of work is underway at the Peatland Programme on:

• Examining existing credible voluntary standards for each ecosystem service in the stack. Where these do not yet exist, the development of methods that could be used for Peatland Code projects.
• Trialling methods for distinguishing bundled projects from stacked projects for buyers, including mechanisms to show this on the UK Land Carbon Registry, while avoiding double counting.

The Scottish government said stacking and bundling units from ecosystem markets could make natural capital projects more viable, in an engagement paper to create a natural capital market framework published this week.

Stacking sells different types of environmental units from the same land, while bundling combines diverse nature-related uplifts from the same area into one unit.

Ingleby said Caledonian Climate has been advocating for more guidance on what the biodiversity standard is going to be for peatland.

“We have our ideas as to what we could be monitoring, and we do monitor in some situations. However, these things are quite costly,” he said.

“If you get it wrong, landholders could have dropped cash … on something that’s not overly relevant. Landholders are very keen to start measuring and demonstrating change.”

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

*** Click here to sign up to our twice-weekly biodiversity newsletter ***