New Energy World Network: Connecting Investors, Innovators & Deal-Makers worldwide

Essential industry insights

cleantech --- renewables --- sustainability


UK biodiversity credit trading platform could achieve net gain, report finds

17 Feb 2011

A biodiversity mechanism market system could turn biodiversity credits into tradable assets, much like a carbon trading platform, new research highlights.

A new report published by eftec and Climate Change Capital calls for scaling up private investment in the protection of nature by creating a habitat banking system with tradable biodiversity credits. The report presents habitat banking as a new and potentially vital policy tool to address existing UK laws, which it says are insufficient to prevent loss of biodiversity.

The authors argue that the UK needs a paradigm shift in the way capital is raised for nature conservation and that progress will require a rapid increase in money available from the private sector. Part of this should involve the UK extending biodiversity protection laws towards the goal of no net loss coupled with net gain, making parties responsible for activities that damage biodiversity pay for fixing it.

The UK coalition government has committed to introduce a new habitat banking system to protect habitats and encourage biodiversity conservation, following in the foot-steps of the World Bank’s recently-announced green accounting partnerships. However, public sector expenditure and reliance on voluntary donations is unlikely to generate the quantum of capital needed to halt biodiversity loss in the UK.

The Habitat Banking report recommends scaling up the private sector’s contribution to solve the capital deficit that needs to be filled to adequately protect the country’s biodiversity. Habitat banking is one method it suggests for delivering biodiversity credits that can be turned into assets that can then be traded. This is defined as a market where credits are earned from projects that benefit biodiversity and can be purchased to offset the debits from environmental damage. Exchange rates will also be essential to attract investment in the credits and create liquidity in the market, the report suggests.

The report also puts forward corporation tax relief that could be set at 50 per cent or so as an alternative to a habitat banking system. Such a system could provide tax relief to the cost of buying biodiversity credits. It also suggests that the government could underwrite a set number of credits in a similar way to how carbon credits are set and limited each year in order to encourage early investment.

The bottom line of the argument for the system is that the current level of compulsion businesses have to protect biodiversity is too weak to have an effect. National legislation, complemented by incentivisation, offers the most pragmatic and sure way of addressing the national lack of impetus to protect the environment, according to the report’s authors. They show that a legal commitment to biodiversity will be essential for creating visible long-term demand for biodiversity credits, or investments in projects that generate these credits will not scale to a meaningful size.

Read the Habitat Banking: scaling up private investment in the protection and restoration of our natural world report by Climate Change Capital and eftec.

Copyright © 2011 NewNet


Related Posts

Leave a Reply

You must be logged in to post a comment.

Legals & Terms of UsePrivacy & Cookies Policy

NewNet is a trading name of Investor Networks Limited, registered in England (No. 06695690).
Registered Office: Zetland House, 5-25 Scrutton St, London EC2A 4HJ
Content is © New Energy World Network (NewNet) 2008-2014