Biodiversity net gain in the UK – a year on

Measuring gain 

To recap, the statutory BNG requirement came into force on 24 February 2024 for major developments, and is expected to come into force in November 2025 for Nationally Significant Infrastructure Projects, having been introduced by the Environment Act 2021. It requires almost all new developments to achieve at least a 10% BNG. 

The Department for Environment, Food and Rural Affairs' ("DEFRA") has developed a statutory metric to calculate the biodiversity of a site, by way of biodiversity units. This metric is used to ascertain the biodiversity value pre-development, as well as the units required to achieve the required BNG post-development. This gain can be achieved by way of on-site or off-site improvements, includes the purchase of off-site biodiversity units, as well as through the purchase of statutory biodiversity credits. Any habitat improvements must be maintained for at least 30 years. However, to ensure the gain is achieved as locally as possible to the development, it must be delivered in accordance with the biodiversity gain hierarchy. This states that on-site BNG must be considered first, and only once this option has been exhausted can developers consider off-site BNG. 

Delivering on its promise? 

So has the regime delivered the significant diversity gains hoped for? The quantum of BNG provided on-site is hard to assess, as on-site gain is not recorded nationally, just evidenced via biodiversity gain plans as part of the planning process. The on-site gains achieved this year could be significant, not least because, according to the Parliamentary Office of Science and Technology's note on BNG dated 2 September 2024, available data from Local Planning Authorities who "adopted polices prior to it [BNG] becoming mandatory…suggests large developments and energy infrastructure are most likely to opt to deliver biodiversity units onsite". This being the case, it may be that the on-site impact of the BNG requirement becomes more obvious in the next few years as any permitted habitat creation and enhancement starts to be completed. 

In comparison, to generate units for off-site BNG, sites producing the gain must be recorded on the Biodiversity Gain Sites Register. This means there is a relatively clear picture of how many sites, so far, have been producing BNG to be able to allocate (and likely sell) to others. According to a blog posted by DEFRA on 12 November 2024, as at that date , there were "19 gain sites on the register, totalling over 500 hectares of habitat". Given that registering involves navigating a new system, which necessitates having drafted and/or entered into various supporting documents including a habitat management and monitoring plan and a legal agreement, 19 sites is an encouraging figure, even if it doesn’t paint the full picture. Indeed, each site could introduce a wealth of BNG units, or may only create a few. 

The number of designated responsible bodies is another indicator of the uptake of off-site BNG. As noted above, a legal agreement, ensuring that enhancements are maintained for at least 30 years, is required to be entered into to be able to register a site on the Biodiversity Gain Sites Register. The legal agreement can be in the form of a section 106 agreement, which would be between a local planning authority and landowner, or a conservation covenant, which would be between a designated responsible body and landowner. At the time of writing, there were 21 designated responsible bodies (including some local planning authorities), a figure which has increased from 17 when the aforementioned DEFRA blog was published. Although not a huge number, it does suggest an increasing demand and future uplift in the number of gain sites on the register. 

The last option available to developers seeking to achieve their BNG requirement is through the purchase of statutory BNG credits. As promised, the government has set this system up to be an intentionally uncompetitive process and is very much a last resort. However, the number of developments relying on this option is hard to ascertain given that there is no public register for the sale of such credits. Instead the Secretary of State for DEFRA is to publish an annual report detailing how any such monies paid to the government have been spent. A meaningful report in this regard is not expected until the end of this year. 

Fundamental flaw or teething trouble? 

There have been some concerns raised that the BNG regime is not delivering enough gain, which is perceived to be in part because of the various exemptions. This very concern was addressed by DEFRA in the blog noted above, in which they supported the exemptions as being proportionate and encouraging "developers to avoid impacting biodiversity in the first place". This is because those sites which are not already biodiverse are often exempt from the requirement. 

However, it is too early to tell whether the exemptions are in fact too far reaching as the mandatory BNG requirement only applies to planning applications submitted on or after 12 February 2024. This means that we may not see the true impact of the BNG mandatory requirement for some years to come. BNG requirements will only demonstrate gain when developments start, so we need to wait for the schemes permitted by applications submitted, and granted, since that date to commence before we can really appreciate the impact. Tough economic conditions may also mean it takes longer for those relatively new permissions to start on site. 

However, as the regime matures, it seems likely that we will see an increase in not only on-site habitat creation and enhancements but also in dedicated BNG sites and portfolio management in a way that optimises BNG. 

This article appeared in Estates Gazette on 17 February 2025. 

Authored by Hannah Quarterman and Rosie Shields.