Questionable exemptions for developers from England’s biodiversity net gain (BNG) rules are throttling demand for the market, a lawyer at Environment Bank has said.

Issues with exemptions are placing more pressure on Local Planning Authorities (LPAs) at a time when they are already struggling to cope, said Alexa Culver, general counsel at the BNG project developer.

Exemptions are “both confused and abused … creating a stranglehold on demand”, Culver told Carbon Pulse.

“The exemptions are quite complicated – even I struggle to understand them, and I’m a lawyer. It is putting even more pressure on LPAs at a point where they’re still under-resourced,” she said.

Developers in England have had to plan to boost nature by 10% since February under BNG requirements, but demand has been slow to take off.

Some development types can apply for exemptions to BNG. One of the key concerns for market actors has been ‘custom build’ exemptions – for sites of up to nine dwellings, on areas up to 0.5 hectares, built by individuals.

On Wednesday, the government updated its guidance on BNG custom build exemptions, including a link to previously published information and the legal definition.

However, the guidance places the responsibility of judging whether exemptions are valid on time-strapped LPAs, Culver said. “I don’t really see when they are going to have the time to do that.”

The custom build exemption is “odd and relatively artificial that doesn’t really speak to nature positive development … it’s still a building, it’s still ripping away nature, it just happens to be being built by a person that’s going to live in it”, she said.

The maximum number of dwellings, nine, is a significant figure, she said.

Thousands of applications across the country could be going under the radar, she claimed. Carbon Pulse has asked the government’s environmental department for the proportion of applications that have been exempt from BNG.

DAILY DEMAND

A simple solution to the exemptions issue could be scrapping qualifications such as custom builds to enable transactions to happen quickly, Culver said.

“This is a quick and simple way to take pressure off the planning authorities and to bring that throughput of demand, because this private capital is there, ready to invest.”

“On any given day these past several months, we’ve got live pipeline enquiry data from developers that’s anywhere between £150 million to £160 mln worth of demand.”

Environment Bank, which is funded by asset manager Gresham House, has more than 2,400 ha of habitat creation underway in the UK, most of which is dedicated to BNG units alongside voluntary biodiversity credit initiatives.

BNG unit site in Harrogate, England. Credit: Environment Bank

Enquiries about purchasing off-site BNG units are coming from supermarket chains, utilities, and data centres, she said.

Some market actors have voiced concerns about the long-term prospects for demand for their BNG units.

“These market dynamics haven’t been given a chance to breathe. We’re confident that once there’s that chance to breathe, the sentiment will improve,” Culver said.

MORE CUSTOM BUILD APPLICATIONS

Earlier this month, Green Finance Authority (GFI) said BNG had 40 challenges across demand, supply, governance, and its metric in a roadmap.

“Early feedback suggests that demand for sites is low due to exemptions and other routes being relied on to circumvent BNG obligations,” GFI said.

LPAs had reported difficulty in the consistent application of the exemptions including custom build applications, GFI said.

“Anecdotally, LPAs have received significantly more custom build applications since Feb. 12.”

“Some market stakeholders have highlighted that the definitions … are open to wide interpretation and are difficult to verify in practice, leading to a significant risk of misuse in the context of BNG exemptions.”

GFI suggested better defining custom builds, and clarifying how LPAs should handle rejected exemption applications.

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

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