The UK government should apply parts of the biodiversity net gain (BNG) system to nutrient neutrality, in a bid to galvanise much-needed private investment, market actors told the government in a letter seen by Carbon Pulse.

The structures underpinning England’s BNG scheme could help expand the national nutrient neutrality initiative with benefits for nature while unblocking housebuilding, nine company executives said in a letter sent to the housing minister on Wednesday.

“The [previous] government’s approach to nutrient neutrality policy and funding was kneejerk and reactive. We consider that a structure to facilitate the [nutrient] market is desperately needed,” said the group.

“We have significant private investment appetite and technical expertise standing ready to create liquidity in nutrient markets.”

The signatories included executives from project developers Greenshank Environmental and Wild Capital, alongside conservation project Wendling Beck, who are members of the industry group Nutrient Neutrality Forum.

The group said BNG structures that could apply to nutrient neutrality include:

• A national register showing schemes with complete technical and legal sign off
• Templates mirroring BNG plans
• Using public money to create nutrient credit banks priced similarly to statutory BNG credits, for use as a last resort

Under the BNG legislation, developers have had to plan to increase biodiversity by at least 10% since February.

The nutrient neutrality scheme requires some developers to purchase nutrient credits to offset pollution from new buildings, but a planning backlog led to claims the scheme was blocking the construction of 100,000 homes in 2023.

One nutrient credit represents 1kg of nitrogen or phosphate mitigated through practices such as developing wetlands or halting agricultural activity.

BLENDED FINANCING

The group outlined other government actions that could address the nutrient neutrality “crisis” at “little or no cost” to the taxpayer, including defining an approach to blended financing.

Allowing public schemes to fund private operational expenditures would have a “significant impact on speeding up the delivery of private mitigation schemes, reducing the burden on the state”.

“We request that you bring together nutrient neutrality mitigation providers, local planning authorities (LPAs), Natural England, and government to define a joined-up approach to blending public and private finance.”

UNSTABLE POLICY

The previous government failed to engage with the sector, delivering “poorly considered measures with no coherent strategy”, the group said.

“Nutrient neutrality has evolved without a top-down approach to its implementation. The result has been an unstable policy environment with a piecemeal response that differs catchment by catchment, stymying the ability for the private sector to invest confidently in addressing the nutrient neutrality challenge.”

Delays caused by LPA and Natural England have cost private companies money, said Kim Connor Streich, chief commercial officer at Greenshank Environmental.

“We have 9,000 homes in Tees alone that would be deliverable if Natural England signed off on our river restoration approach. It’s been with them 12 months and only seems to be getting traction now,” he told Carbon Pulse.

Nevertheless, over 100 mitigation schemes have been secured, the letter said.

UNCERTAINTY

Labour said it would follow through with the nutrient policy “without weakening environmental protections” in its manifesto.

However, uncertainty has been created by reporting this month saying the government planned to overhaul nutrient neutrality to unblock development plans, the nutrient group said.

The Labour party secured a resounding victory in the UK’s general election earlier this month, with consequences for nature policy.

The new government must take steps to allow the private sector to engage with the nutrient neutrality scheme, said one expert recently whose company had to halt around 15 such schemes due to uncertainty.

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

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