Nutrient Neutrality

Nutrient pollution causes many environmental issues, especially in freshwater habitats and estuaries which suffer from ‘eutrophication’ when excess levels of nitrogen and phosphorus are present. This process speeds up the growth of certain flora such as algae, adversely impacting other plant and wildlife. Common sources of excess nutrients include sewage treatment works, septic tanks, grey water, livestock, arable farming and industrial processes. Across 27 catchment areas in England, designated as being in an ‘unfavourable condition’ by Natural England under the Habitat Regulations 2017, development cannot proceed unless designed alongside suitable mitigation measures.

The decision to grant planning permission ultimately rests with the LPA, however they must have a regard for NE’s advice. To assess the environmental impact of development the LPA will use NE’s Nutrient Budget Calculators and a Habitat Regulations Assessment (HRA). Planning permission can only be granted if the HRA has been carried out and suitable mitigation has been set in place, a principle established by the EU ‘Dutch Nitrogen Case’ (2018) and the R v Fareham Borough Council High Court ruling (2021). As of 21^st July 2023, over 32 LPAs have been identified by NE as having areas needing Nutrient Neutrality (NN) for new developments, with guidance issued to 74 LPAs.

Nutrient Mitigation

As of 30^th July 2024, the government announced their aim to deliver 1.5 million new homes.  To reduce the pollution from this, and support sustainable development, the Government will allow developers to acquire mitigation through a ‘Nutrient Mitigation Scheme’. This will allow authorities and developers to identify the level of mitigation required to cancel out the nutrient pollution of a specific project.

This is known as ‘nutrient neutrality’(NN) and utilises catchment calculators to assess the baseline of a site, (both the development and offset sites) the resulting net levels of pollution and the area and change in land use required on other land to offset these discharges where it cannot be achieved directly onsite.

Whilst Nutrient Neutrality is similar to other forms of ecosystem services, such as carbon sequestration and Biodiversity Net Gain, in that it quantifies the outcomes into ‘units’ or ‘credits’ based on habitat improvement or enhancement, it differs from them in that actions need to be directly preventing pollution on a specific habitat area, rather than having a general offsetting application as with carbon sequestration or follow an overall mitigation hierarchy like BNG. As such, nutrient credits must be created and sold to a development in the same catchment area.

Land identification and banking of mitigation credits

Currently when land is identified as a vulnerable priority habitat, LPA’s have freedom to create their own solutions. However, developers are able to purchase credits from within the same catchment area, as and when required using a nutrient mitigation scheme. Mitigation works will be allowed to start before any particular development site’s offset is required with the results ‘banked as ‘credits’ so are “oven ready” to sell.

Mitigation schemes have been set up in the 27 catchment areas targeted by NE. Note that whilst some of these catchment areas are experiencing both nitrate and phosphate pollution, in many cases the catchment is only experiencing high levels of one of these two nutrients. As such there is only value in offsetting the appropriate nutrient.

Mitigation Actions

This can include shifting agricultural land towards low nutrient loading practices or the creation of new wetlands, woodland or grasslands. Natural England Guidance (2019) states that actions should be committed to for 80-125 years, although in practice many of the land changes will continue in perpetuity. Mitigation activities may include:

• Creation or restoration of new semi natural habitats. This is where land is converted to semi natural habitats such as natural wetlands, woodlands, or grasslands;
• Treatment wetlands including for: capturing runoff from agricultural land; diverted river water; Wastewater Treatment Works (WWTW). A treatment wetland such as an Integrated Constructed Wetland (ICW) is specifically designed to remove nutrients, the design quality will affect mitigation and therefore the number of credits for sale.
• Short-term temporary agricultural management measures such as fallowing of land, cover crops or provision of buffer strips. This option may be of interest to landowners as the land is not secured in perpetuity. It cannot be used as long-term nutrient neutrality mitigation but allows a short (fixed) term interim mitigation measure before the in-perpetuity measures are created elsewhere. This gives time for the developer to create the long-term mitigation scheme required, whether with the same landowner or another, as above (or an alternative wastewater treatment system).
• Other actions, if an LPA agrees, may include long term mitigation when a farmer agrees to stop fertilising their land altogether.

Often there will be a requirement to enter the land into a trust to ensure the commitment of the land-use change in perpetuity.

The Nutrient Offset Market

The offset market is still emerging. Seeing as most projects would need to be maintained for at least 80 years, with such a long-term commitment, values in our opinion are likely to rise, especially when NN offsetting is established more comprehensively UK wide. Phosphate credits have been sold at circa £50,000, nitrate credits being more common have been sold at circa £1,825 (as at 9.2.26).

Nutrient Neutrality, Biodiversity Net Gain and Carbon Codes

It is possible to stack environmental projects from separate markets. The same land may produce biodiversity units and nutrient credits, although it should be noted that once a 30-year BNG project ends, the Nutrient Neutrality agreement will continue for a significantly longer period. There is the opportunity to continue to do BNG works on the land to create additional units, granted it is likely that there will be less of a net gain once the original habitat aims have been achieved. This combination is currently the most profitable opportunity for any landowner wanting to make the most of Environmental credits.

Land with Woodland and Peatland under the Woodland or Peatland Carbon Code can produce BNG units or nutrient credits as long as it is classed as ‘further enhancement’ over what the carbon scheme paid for and does not compromise the ‘financial’ criteria for acceptance onto these schemes. Sales of carbon must still be a necessity to provide financial viability to the woodland creation project.  Woodland may often combine BNG and NN whilst peatland will rarely in practice ever be in a position to do so. We are currently working on environmental schemes involving Carbon, BNG and NN on the same land.

Timing is however vital as you cannot create a credit for something you have already done, would do anyway or have an obligation to do. It is important to remember that starting the works for one particular scheme in isolation is likely to increase the baseline habitat value for any other environmental agreement, highlighting the importance of timings and starting agreements as near as possible in tandem.

Comparison of Environmental Schemes

Similarities  

• Values of changes quantified by units/credits.
• Metric/carbon calculators used to work out the number of units.
• Offsetting
• Additionality; you cannot be paid for existing works, i.e. you cannot enter existing established woodland into a carbon credit scheme. All units must result from a gain from an original baseline.

Dissimilarities 

• Marketplace for NN is catchment based, BNG is England wide whilst carbon schemes are UK wide and potentially worldwide.
• NN is based on the presence of a priority habitat, BNG is affected by the presence of priority habitats in terms of works required and units produced but otherwise most habitats can be improved and used for BNG. Carbon credits may be produced on any land, subject to the usual woodland creation restrictions/requirements.

Nutrient Neutrality with Agri-Environment Schemes

The enhancements from a funded agri-environment scheme cannot be used for an environmental offset agreement, but the land itself can produce units above and beyond these works as long as a baseline is taken after the agri-environment scheme has achieved its objectives.

Any land, whether organic or in stewardship for a number of years, will have improved the habitat condition and therefore likely have reduced the value not only for prospective soil carbon and BNG but also NN.  Careful planning and up-to-date specialist advice will be needed before making any decisions.

It remains a difficult decision as to whether to stop these funded enhancements now to continue with the guaranteed funding until purchasers are found and to sell fewer credits. We know that land may be taken out of a stewardship agreement without penalty if it is for the purpose of entering it into an environmental agreement that improves the habitat beyond the original agreement.

What we can do for you:

We offer a comprehensive service running from the planning of your nutrient mitigation scheme all the way up to selling your nutrient credits. Stage 1 involves assessing the potential of your site for a nutrient mitigation scheme carrying out a nutrient budget calculation. Stage 2 involves liaising with the relevant consultees, including your LPA, as well as potentially Natural England and the Environment Agency, to construct and agree your nutrient mitigation scheme. Following stage 1 we can also begin marketing your credits. It is often beneficial to begin this process prior to finalizing your credits because having a sale lined up can sometimes motivate your LPA to act quickly in approving your nutrient mitigation scheme.