The Natural Capital agenda
The rise of the net zero agenda means that carbon offsetting has become more acceptable in dealing with emissions that cannot be eradicated.
The value we attach to nature based solutions and services has never been so relevant.
The stratospheric rise of the net zero agenda has meant that carbon offsetting has become more acceptable as a means of dealing with those emissions that cannot be eradicated. As businesses globally and across the UK commit to achieving net zero, the need to offset and the demand for carbon credits is set to escalate exponentially. This presents a problem as currently ‘voluntary’ carbon markets are unregulated. This is something that will undoubtedly change in the coming years. For now it is about parties undertaking their own due diligence and putting in place the right contracts to protect their interests.
Alongside the re-emergence of carbon offsetting we have seen the rise of biodiversity net gain pursuant to the Environment Bill. The basic concept is that future development will need to include onsite biodiversity net gain where possible. When that cannot be achieved, offsite solutions can be considered. A new framework of conservation covenants is being introduced to help facilitate the delivery of biodiversity net gain in seeking to ensure long term protection of sites that have been put forward to deliver net gain requirements.
Again the trading of biodiversity credits is unregulated and is underpinned by contractual arrangements between the parties involved — land owners, developers, agents/brokers, regulators and others. When significant sums of money are being invested, the lack of legal governance and regulation will lead to nervousness and we think will be an inhibitor to the success of biodiversity net gain on a wider scale. This is an area that DEFRA and the Treasury are investigating.
Sites that have been earmarked for the delivery of carbon credits and or net gain are also being considered in relation to the delivery of other benefits too, such as mitigating flood risk and community value. This is a clear indication that we are entering a new era in which the true value of land is set to change dramatically. Will we see future planning policies that will limit the amount of land that can be used for the purposes of delivering natural capital? Quite possibly.
The direction of travel is very clear. Soon businesses will move from the measurement of their carbon footprints (in a drive to achieve net zero) and they will begin to consider their wider natural impact. As they do that, they will want those services and products to be ‘natural impact’ neutral — businesses will need to eradicate any impact as far as possible, but then they will again need to consider some form of offsetting.
Contact our environmental lawyers or our energy and utilities solicitors who can provide commercially focused legal advice in England, Wales and Scotland, to help you benefit from the opportunities created by energy market regulation, policy and market drivers.