A new trading platform for nutrient offsetting

By Phil Courtier | 16 October 2023

Nutrient neutrality has had a profound impact on many parts of the country and has stalled thousands of desperately needed homes. One of the most significantly affected areas is Norfolk where multiple districts have been unable to grant planning permission for new homes for the last 18 months, leading to a backlog of approximately 16,000 new homes.

While it is acknowledged that the Government is continuing to seek a ‘silver bullet’ solution to the restrictions arising from nutrient neutrality, our experience is that the development sector has limited faith in such a legislative solution being found and in this vacuum of uncertainty there is a need to deliver local solutions to re-start our growth agenda.

In response, a number of districts in Norfolk have formed a unique partnership to address this potentially catastrophic impediment to growth. Four councils – South Norfolk, Broadland, Breckland and North Norfolk – have established a new joint venture company called, Norfolk Environmental Credits (NEC). The company will provide a trading platform for nutrient offsetting and other environmental credits, including Biodiversity Net Gain (BNG).

This is not the first environmental trading platform to be established but it is the first time that so many councils have formed a trading company of this nature. Furthermore, this partnership is at the vanguard of delivering significant tranches of credits to meet the nutrient demands of new housing and is doing so in an innovative manner.

Norfolk Environmental Credits is designed to secure largescale nutrient mitigation from projects such as changes in use of agricultural land, septic tank conversion and water infrastructure enhancements, etc. These credits are then parcelled up by the company and sold to developers to offset the equivalent amount of nutrients arising from their new development.

The company’s business plan sets out the allocation policy for distributing credits across the four districts and it also sets out the initial credit price for nutrient neutrality which is currently the lowest nutrient credit price in the country.

NEC’s first deal will provide credits to offset approximately 5,000 new homes and the company will prioritise the needs of SME builders to ensure they can secure much needed cash flow. Assuming an average house price of £300k this equates to a £1.5bn initiative which will have a profound positive impact upon the respective districts.

The complexity of forming the company should not be underestimated but the impact of nutrient neutrality is blind to the boundaries of district councils and therefore the solution must also be blind to those boundaries. This joined-up approach across districts also enables Norfolk Environmental Credits to develop a portfolio of offsetting solutions to trade, thus flattening out the fluctuating cost of mitigation.

This partnership will also ensure that the respective districts will all be exceptionally well placed to engage with the delivery of Bio-diversity Net Gain  early next year and provide a trading platform for BNG credits. This will also present an opportunity for other councils, which currently lie outside the nutrient neutrality catchment, to become shareholders in the company and to broaden the geographical area in which NEC operates.

Norfolk Environmental Credits has launched its new website www.norfolkenvironmentalcredits.co.uk allowing housing developers to calculate their additional nutrient load and register an interest in purchasing credits as they become available. The website also provides a mechanism for landowners and interested parties to come forward with potential nutrient mitigation solutions that the joint venture may wish to invest in.

Phil Courtier is the director of place for South Norfolk and Broadland Councils

comments powered by Disqus
Environment Planning Housing