Statutory biodiversity credits

Question

Accepted Answer

Biodiversity net gain (BNG) is mandatory from 12 February 2024.

You can view all of the BNG guidance in the BNG collection.

Overview

Guidance on statutory biodiversity credits may be relevant to you if you are a:

developer
local planning authority (LPA)

Buying statutory credits means that as well as, or instead of, creating and enhancing biodiversity on or off a development site, developers can make a financial contribution which counts towards their mandatory 10% BNG. This contribution will be used to fund biodiversity enhancements across England.

Prices are based on the cost to create, maintain and monitor different habitat types. There is also a mark-up to prevent statutory credit prices undercutting the off-site market.

Buying statutory credits is a last resort option for developers who are unable to use on-site or off-site units to deliver BNG.

Developers buy statutory credits using the credit sales service. There is no minimum or maximum purchase for statutory credits. You can buy fractions of a credit, if it is rounded to 2 decimal places. For example, 0.5 credits, or 3.76 credits.

Before developers buy statutory credits, they can estimate how much they will cost.

When developers use the statutory biodiversity metric tool, it will tell them if they need to make bespoke BNG compensation, if they are building on some types of habitat. Developers cannot use statutory biodiversity credits if they are required to make bespoke compensation. LPAs will advise developers on bespoke compensation where appropriate.

Ways to achieve BNG: on-site units, off-site units and statutory biodiversity credits 

Through site selection and layout, developers should avoid or reduce any impact on biodiversity. They must deliver 10% BNG, as measured by the statutory biodiversity metric.

There are 3 ways a developer can achieve BNG. 

Enhance and restore biodiversity on-site (within the red line boundary of a development site). 
If developers cannot achieve all of their BNG on-site, they can deliver through a mixture of on-site and off-site. Developers can either make off-site biodiversity gains on their own land outside the development site, or buy off-site biodiversity units on the market.  
If developers cannot achieve on-site or off-site biodiversity net gain, they must buy statutory biodiversity credits. This must be a last resort.

Developers can combine all 3 options, but must follow the steps in order. This order of steps is called the biodiversity gain hierarchy.

Statutory biodiversity credits are different from off-site biodiversity units sold in the off-site private market. Statutory credits are a last resort way of acquiring biodiversity units needed to achieve BNG. If developers buy statutory credits, this is because it is not possible to restore habitats on-site or by buying off-site units. Developers can buy statutory credits to add to on-site and off-site biodiversity units, to meet their total BNG. Statutory credits can also fulfil a developer’s entire BNG if both on and off-site options are not possible. Developers wanting to buy statutory credits must prove why they cannot meet BNG using on-site and off-site options.

When to buy statutory biodiversity credits

Statutory biodiversity credit purchases are non-refundable. Developers should not purchase statutory credits until they are ready to submit their biodiversity gain plan and discharge the biodiversity gain condition.

How to buy statutory biodiversity credits

Check the cost of statutory biodiversity credits to work out the total cost.
You should contact the LPA to discuss buying statutory biodiversity credits as part of your overall BNG strategy.
Your LPA should confirm that you can use statutory credits before you buy them.
Apply to purchase credits. It can take up to 8 weeks to approve your application.
If your application is approved, you will receive an invoice for the total price of credits.
Pay for the credits.
Submit your proof of purchase with the biodiversity gain plan.

How to find out the type and number of statutory biodiversity credits needed

Developers need to use the metric tool to calculate the number of statutory credits they need. You should agree this number with the LPA.

The number of statutory credits for a specific development depends on the number of biodiversity units a development will need to meet its 10% BNG.

When you complete your biodiversity metric calculation, the metric tool will automatically calculate the remaining units you need to fulfil the BNG requirement.

Your calculation must include the biodiversity value before and after the development is complete. This is for both on-site and off-site.

The metric tool’s ‘unit shortfall summary’ tab shows you how many statutory credits of each tier you need to purchase and how this ‘unit shortfall’ was calculated. There is also detailed guidance in the metric tool’s user guide.

Notes on statutory credit terms in the metric tool

Tiers

Statutory credits are priced in tiers. Different habitats are grouped in tiers to reflect the cost and value of different habitats.

Tiers ‘A1’ to ‘A5’ refer to area habitats, tier ‘H’ refers to hedgerow, and ‘W’ to watercourse habitats. The ‘habitat unit shortfall summary’ tab in the metric tool automatically sorts your habitat deficit into the right pricing tiers.    

The spatial risk multiplier

If you buy statutory biodiversity credits, a ‘spatial risk multiplier’ (SRM) will apply. This means that a credit is worth 0.5 biodiversity units, so you will buy 2 statutory credits for every 1 biodiversity unit. The metric tool will apply the SRM for you on the ‘unit shortfall summary’ tab.

One credit is worth 0.5 units. Applying the SRM means that statutory credits are treated the same as off-site biodiversity units from a different local authority to a development.

This is so that credits do not compete with the development of the off-site market (including sales across different local authorities).

There is more information about the SRM in the metric tool’s user guide.

What information developers need from the metric tool to estimate the total cost of statutory credits or buy statutory credits

Based on the information you enter in the metric tool, the ‘unit shortfall summary tab’ will show how many credits you need to purchase at each tier.

Developers can estimate the cost of statutory biodiversity credits to work out the total cost of statutory biodiversity credits they need. They need to enter the number of area (A1 to A5), hedgerow (H) and watercourse (W) credits from the metric tool’s ‘unit shortfall’ column (column D), to 2 decimal places, for example 3.87.

How to prove statutory credits are needed

The developer will need to include the following in their gain plan:

Evidence that they considered on-site BNG and the reasons why this is not possible.  
Evidence that the developer approached 3 local or national suppliers, habitat banks or trading websites and that insufficient off-site options are available in England. For example, correspondence emails or a PDF download showing a marketplace search.

Evidence for small numbers of statutory credits  

If a developer needs less than 0.25 biodiversity units (area or linear), they can buy statutory credits without following step 2 above (showing evidence that insufficient off-site options are available).

Statutory biodiversity credit prices

There is a price list.

Prices will be reviewed every 6 months. We will announce any planned price changes in the price list guidance, giving at least 10 weeks’ notice.

Statutory credit prices are not guideline prices for off-site biodiversity units.

Phased development

Statutory biodiversity credits are a last resort to meet the BNG requirement for a phased development. 

The biodiversity gain plan must include information about the proposed use of credits for the overall development. Any gain plans for future phases must include details of previous credit purchases.

Transfers

Statutory biodiversity credits are purchased for a specific planning permission. You cannot transfer them to a different permission.

If you make a section 73 application to vary a planning permission, you can count previous credit purchases from the original permission towards the new permission.

Find out more about section 73 permissions in the planning practice guidance.

Who sells statutory credits and how the funds will be used

Natural England is selling statutory credits on behalf of the Department for Environment, Food and Rural Affairs (DEFRA).  

Funds from the sale of statutory credits will be invested in habitat creation or enhancement, as set out in the Environment Act. You will be able to see how credit investment is spent in annual reports from the Secretary of State for DEFRA, which we will publish on GOV.UK when available.

Buying statutory biodiversity credits: further guidance for developers

Developers can buy statutory biodiversity credits using a credit sales service.

You can estimate the cost of statutory biodiversity credits before you buy them.

Before using these services, use the biodiversity metric to understand how many biodiversity units and credits you need. You may want to discuss this with the LPA. 