How do Biodiversity Credits Work?

‍What are Biodiversity Credits? 
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Biodiversity Credits are a way to help developers meet the requirements of the new Biodiversity Net Gain (BNG) rules. However, they are intended as a tool of last resort, only to be used when there’s no other way to meet the BNG requirements.

From February 2024 all developments in England must deliver a biodiversity net gain of 10%. This means a development must improve the natural habitat, compared to what was there before it took place.

These natural habitats are places like hedgerow, woodland, lakes and watercourses.

The developer can provide either on the development site, or off-site. 

When it’s not possible to either create habitats that deliver the BNG of 10% or purchase Biodiversity Units from the open market, the developer can buy Biodiversity Credits from the government. It’s the option of last resort. 

credits instead of offsetting through habitat enhancement measures. 

How do Biodiversity Credits work?

A development project in England has to deliver a BNG of 10%. Wherever possible this should be done by making improvements to habitats either on or off the development site, either specifically for this development or by buying existing Biodiversity Units.

Where this can’t be done, the developer can meet their 10% obligation by buying credits. They need to provide proof that they can’t deliver the BNG requirement to provide habitats either on-site or off-site 

Credits are bought from the Government. There’s no maximum purchase and they can be bought in fractions up to two decimal places, or 0.01 credit.

The prices of Biodiversity Credits are based on the value of different habitats. A Credit is worth only half of a Biodiversity Unit, so you have to buy 2 credits to offset the loss of 1 unit. At current prices, the cost of offsetting a single unit with Credits is £84,000, rising to £1.3m for the rarest habitats. Prices do not include VAT.

Developers need to take care when buying credits because they are non-refundable. They also can’t be transferred to anyone else or even to a different planning permission.

The Government provides a tool that allows developers to estimate the cost of Biodiversity Credits.

The money used to buy credits is put into biodiversity projects across England. When and how to buy Biodiversity Credits

Developers need to take care when buying credits because they are non-refundable. They also can’t be transferred to anyone else.

The buying process starts by using one of two different biodiversity metric tools. There’s a small sites metric, which we can help you use through our BNG tool. The full biodiversity metric tool is available from the Government website.

Once the biodiversity metric is calculated the developer will have a good idea of what the Biodiversity Credits will cost.

Buying credits involves:

• Uploading the biodiversity metric calculation tool
• Providing details about the development
• Adding the Biodiversity Credits from the metric

It takes about 8 weeks for orders to be processed.

Are any developments exempt from BNG rules?

Some developments are exempt from the requirement to increase biodiversity by 10%. These include:

• A planning application submitted before 12 February 2024.
• Small domestic developments, such as extensions or loft conversions.
• Small self-build and custom-build developments.

There are other potential exemptions, such as making a variation to a planning permission. Developers should take advice on whether their project is exempt. 

Use our BNG Exemption Checker to find out if an application is exempt from BNG.

Why Biodiversity Credits are less desirable than offsets

In earlier blogs we’ve talked about climate change having profound effects on biodiversity. While climate change is a global issue, the impact is on local ecosystems. Wherever possible, these ecosystems need to be protected.

This means it’s vital that biodiversity mitigation and offsets are done as close as possible to the point of impact. 

Biodiversity Credits, while a useful last resort, are disconnected from the site where the development has taken place, and where the ecosystem has been damaged. Replacing lost species in one area by nurturing them elsewhere has a value, but the local connection is lost.

This is why Biodiversity Credits are only a last resort. Wherever possible, local biodiversity should be encouraged. Even buying offsite Biodiversity Units encourages this via the ‘spatial risk modifier’, which makes units closer to the development more valuable.

There are other issues with credits: 

Credits could stifle the growth of local habitat creation markets.

‍These markets, based on Biodiversity Units, are vital for promoting biodiversity conservation and supporting local economies. The Government knows this and has suggested that it would like to withdraw credits once it is clear that the market in Biodiversity Units is functioning well. 

Unhelpful for developers to become dependent on credits.

Because the Government hopes to phase out credits, developers should explore other ways to meet BNG requirements.

Credits are more expensive than other BNG solutions.

Credits are deliberately priced to be less competitive than other options. The Government is encouraging developers to work with local authorities, landowners and organisations to deliver local habitats. Credits will rarely be the most cost-effective way to meet BNG requirements.

How Joe’s Bloom helps avoid Biodiversity Credits

We encourage developers and potential buyers to avoid using credits wherever possible, as protecting biodiversity is our main goal. We’re also a big believer in the mitigation hierarchy and in encouraging best practice.

That’s why our BNG tool only makes the credit option available when all the other steps have been exhausted and there’s full compliance with the mitigation hierarchy.

Wherever possible, we recommend an approach that avoids or minimises the impact of developments on priority habitats and natural ecosystems.

By using our tools you’re taking a positive step towards avoiding the purchase of Biodiversity Credits. By doing so, you’re moving towards achieving your BNG requirements while emphasising local habitat enhancement. This will not only benefit the environment but also contribute to the long-term sustainability, species richness, ecological connectivity, and resilience of local ecosystems.

Biodiversity Credit Q&A

What’s the difference between Biodiversity Credits and Biodiversity Units?

Biodiversity Credits are a tool of last resort for achieving BNG requirements. The Government hopes to phase these out once a market in Biodiversity Units has developed. Credits cannot be sold or transferred.

Units are also a tool for achieving BNG requirements and can be bought and sold.

What’s the right time to start thinking about Biodiversity Credits?

As soon as a development is being considered, the BNG requirements should be taken into account, and preliminary assessments made. Our tools offer a flat price per project for unlimited use, so you can engage with your BNG from project start to end, without running up endless fees, whilst helping to keep your impact on nature a positive one.

What’s the difference between on-site and off-site for BNG?

On-site means within the boundary of the development site, typically as agreed with the local planning authority. This is sometimes referred to as the ‘red line’ boundary. Off-site is anywhere outside of this boundary.

What is the mitigation hierarchy?

This is a good practice framework that provides a guide to limiting negative impacts on biodiversity. The main steps are avoiding impact, then minimising, then restoration and finally offsetting. 

Are BNG credits impacting decisions by developers?

In short, yes. Some developers are changing how they choose sites, and how they design, as a result of statutory BNG requirements. This was reported by Natural England, in their review of the first six months of statutory BNG requirements.