Wilder Carbon CAP0044
Kent Wildlife Trust Group (KWTG) is unusually well positioned to take a helicopter view on how government, DEFRA, and other key players around the NBS space are handling the provision of clear guidance to landowners, project developers, buyers and investors in the emerging UK ecosystem service markets.
KWTG has
As a result we regularly glean substantial direct and networked “on-the-ground” intelligence with regards how landowners across the UK view the emerging nature based solutions market.
The Committee plans to examine the following principal questions in the course of its inquiry:
This is clearly very substantial, as well as critical given likely limits to government spending in the short to medium term, as well as the £59Billion within-decade financing gap identified by Green Finance Institute and others. And, it encompasses investment in various forms through to ESG, recognising that private firms are made up of individuals who are equally as concerned with the interlinked nature and finance crises as any other section of society, but that they are also increasingly exposed to increase business risk from tipping points affecting supply chains, stability of the wider economy, etc.
Investment needs clarity of government ambition, and explicit guarantees around government commitment to assuring the mechanisms around and returns from investment.
This means translating the international and national 30x30 nature targets and commitments (linked to the subsequent 50x50 targets) into a legally binding landscape planning approach through the Nature Recovery Network, as being currently initiated through responsible bodies including local authorities across the UK, and embedding this with the planning system, whilst selling this spatially derived system as fully investible on the basis of nature restoration and its co-benefits including climate mitigation, adaptation and resilience (e.g. drought and flood mitigation) etc.
It means taking a logical approach to mainstreaming the requirement for biodiverse land and seascapes into supportive policies and practices across government and the private sector including the tax incentives, and enable stacked green finance streams, for land managers and farmers to encourage them to join in with long-term land sparing financed by private capital through payments for ecosystem services (as well as land sharing through reformed agri-environment payments) otherwise there will be supply-side issues and/ or only limited supply from the third sector and/ or corporates buying land themselves to supply their own increasing requirement for carbon/ nature/ water quality credits – which has significant societal equity risks around it.
This nested approach to public policy, and commitment to ambitious nature restoration does not exist. This mainstreaming is notably absent from many individual policy areas. Examples include: a lack of focus on integrating investible landscape concepts into the opportunity side of designing the Local Nature Recovery Networks that will collectively add up to our National Network e.g. around BNG potential receptor sites, or high restoration potential low grade farmland for multiple local national and international benefits (biodiversity, carbon, or water quality) as well as the potential attached funding streams being key layers in the mapping (& instead focussing on partial species-level data that fails to recognise we are working from an incredibly low “species bar” and that all of our species distribution on which data is dependent are now meaningless in the context of climate change).
Finally there need to be a “derisking” of nature investment. Investors currently see nascent nature based payment systems as high risk and therefore expect high returns (as per conventional investment thinking). This is unrealistic at this stage in the market, and yet we know that a lot of this space is effectively “xxx” territory. Therefore govt should ensure it enables private insurance (linked to high integrity schemes as below) and/ or government underwriting of strategically important nature markets, etc. to overcome issues like patchy data, and to reduce the level of return that is expected from early mover projects that are trying to help the market to scale up to deliver against government targets.
Although clear frameworks and standard are necessary to establish high integrity markets these need to be based on high level principles (aligned to emerging international consensus on both supply and demand side of carbon, for instance, or pre-existing good practice on international offsetting for biodiversity net gain) rather than going into counterproductive detail that threatens to curtail demand in what has to be a dynamic innovative space to match the different types of private sector demand that exist and are emerging in light of initiatives like TFND. At the moment, however, processes like British Standards Institute work for DEFRA are in danger of going into detail that should be determined by the market. This risks complicating an already over-complex looking market from an investor standpoint, and slowing the potential scaling of nature restoration at a moment when we need to be increasing the pace of private investment. Equally limitations on issues like stacking and bundling from silo’d teams e.g. that working on BNG with guidance suggesting that this cannot be stacked with voluntary carbon payments are both contrary to DEFRA Nature Framework principles and will both limit land supply (because land-owners won’t sign up to long-term contracts now that limit future possible income) and investor returns. (See attached paper submitted to DEFRA on this issue by KWTG).
The NCEA should be helpful in the longer term. However in order to get nature restoration going at scale now, and therefore deliver on 30x30 targets we have to work with the data we have now, get going with ambitious on-the-ground/ marine delivery programmes and monitor, finesse and adaptively manage as we go. If we wait for perfect data, particularly at a time when things like species distribution, habitat composition, and – unless we limit climate change to within 1.5 degrees – entire ecosystems are shifting then we won’t succeed in providing societal resilience through nature. Therefore we need to be working to new paradigms e.g. creation of receptor sites/ landscapes that are managed through reinstigation of dynamic natural processes to enable new species compositions and assemblages for form and move over time. With species by some estimates needing to now move 11m northwards per day the static assessment methodologies implied by the NCEA’s objectives are already completely outdated. It might be that the institutions working within this programme are fully aware of this behind the scenes, but as KWTG we work with most of them and although individuals within them are receptive to these ideas they feel constrained by linear organisational thinking. Once more this goes to clarity around what 30x30 actually looks like for the UK under climate change, and therefore what we should be monitoring and why. This updated context and strategy is absent from the 25 Year Environment Plan downwards.
Clarity around issues like what constitutes ‘sustainability’ in relation to a resource use and climate mitigation action could be immensely helpful in providing the private sector with confidence that they are doing the best they can and therefore getting publicly involved in defensibly financing nature restoration. For instance, there are potential large-scale carbon unit buyers that we are working with through Wilder Carbon who are not sure enough that they are doing the right thing in terms of their broader emissions reduction or sustainability strategies to want to publicly publish their plans and then buy conservation grade carbon in the UK. They fear they will be scrutinised and vulnerable if they do so.
One of the key aspects in multiple nature markets is the application of a genuine mitigation hierarcy. This has yet to be fully defined/ and or made trackable and enforceable in the context of Biodiversity Net Gain; it is fundamental to any attempts at future biodiversity credit trading beyond BNG using nature credits (and probably means that this should be very limited from this perspective given that biodiversity is inherently different from one location to another and cannot be viewed as a fungible unit like carbon), and it is crucial for the integrity of the voluntary carbon markets in order to demonstrate genuine climate benefit is being delivered rather than offsetting enabling continued pollution (as per the Wilder Carbon Standard for Nature and Climate’s requirement that units only be sold to firms who are demonstrably bearing down on their emissions). Transparency registries, independent verification, etc. can also help in showing that all of these checks and balances are being properly employed, but all of these need to be cost-effective within the nascent market that we are trying to encourage. Plus, government regulation must be aimed at enforcing high level principles across the market rather than mandating detailed mechanisms and stifling innovation.
If the above balance between regulatory frameworks to prevent greenwashing and double-accounting are codified and then communicated effectively via an agreed common lexicon c.o. the Green Taxonomy then the innovation that is taking place in the UK around new high integrity mechanisms like Wilder Carbon is exportable internationally. It can also underpin London becoming a global natural capital investment centre via commonly developed systems that we have helped to generate from the UK.
As above, but at the moment we need to learn from and incorporate emerging international standards, codifying them within national policy and mechanisms to meet our shared international targets. The UK has the financial, conservation, and academic sectoral strength in depth to do this is government enables it.
September 2023