The Flood Hub

Environment Agency Press Release 31.05.2022

Innovative projects to restore and rewet peatlands, create green urban spaces and improve flood resilience are among 50 schemes to benefit from the final round of a pioneering fund to drive private investment in nature and tackle climate change.

The second round of the Natural Environment Investment Readiness Fund (NEIRF), announced today by Defra and the Environment Agency, will provide grants of up to £100,000 to environmental groups, local authorities, businesses and other organisations to help them develop nature projects to a point where they can attract private investment.

The funding will help to develop projects so they can demonstrate a return on that investment by capturing the value of carbon, water quality, biodiversity and other benefits provided by natural assets such as woodlands, peatlands and rivers – with revenue generated through the sale of carbon storage, improvements in biodiversity, natural flood management benefits and reduced water treatment costs.

Examples of projects receiving funding in round two include:

• Rewetting lowland peat near Doncaster to grow plant fibre material to use as padding for clothes. This project will attract investors by showing how revenue can be generated from the sale of biodiversity credits and carbon units, as a means of compensating for biodiversity loss and carbon emissions, as well as through the creation of sustainable textiles.
• Habitat enhancement, such as tree planting, brownfield land regeneration and nature recovery, to address ecological and environmental degradation in the Liverpool City Region with revenue generated through selling biodiversity units to housing developers that need to compensate and provide a net gain for any biodiversity loss resulting from the development.
• Exploring the potential for new natural surface water drainage schemes in Plymouth to unlock development by reducing flood risk, improving water management and climate resilience, aiming to attract investment from beneficiaries such as water companies and developers.
• Developing a pilot seagrass carbon code to attract investment in seagrass beds as a carbon sink and biodiversity-rich habitat to facilitate agreements for the sale of carbon units.
• Transforming the Great Fen in Cambridgeshire by restoring peatlands and generating carbon income through the Peatland Code – used to assess the amount of carbon stored by different activities.

Projects from the first round of funding announced in July 2021 are making good progress, setting up governance such as community interest companies to manage income and revenue, and creating models for generating and selling carbon, biodiversity and water quality benefits.

These new projects will build on the success of the fund so far. One of the four NEIRF pilot schemes, the Wyre Natural Flood Management project, has secured investment and will now deliver work to reduce flood risk to downstream communities – generating income through the sale of these services.

Over several years, interventions in the Wyre catchment will include wetland creation and temporarily storing water by putting in place leaky barriers, sloped embankments and hedgerows alongside peatland restoration and river restoration. Other measures include slowing overland water flow through changes in grassland management, and tree planting to allow water to seep into the ground.

It is the first project to use a new green investment financial model, which will see the upfront investment repaid through contracts with organisations that benefit from these improvements, including water and insurance companies.

Lord Benyon, Minister for Green Finance, said:

“Given the scale of the environmental challenges we face, including climate change and biodiversity loss, it is crucial all parts of society play a part and we attract finance from diverse sources to help support this work.

“The government’s 25 Year Environment Plan was clear that whilst the public sector will continue to be an important source of funding, it is critical that there is more private sector investment to protect and enhance our domestic natural environment.

“Today’s announcement means we are now funding nearly 80 projects across England at the cutting edge of this ambition, creating a pipeline of projects that can be scaled and replicated elsewhere to attract more money to protect and restore the environment.”

Emma Howard Boyd CBE, Chair of the Environment Agency and interim Chair of the Green Finance Institute, said:

“The finance community is increasingly aware that investors want to understand how their savings deliver good outcomes on the ground. What we learn from these projects will help the private sector invest in activities that deliver both environmental improvements and generate returns.

“By showing what works we can attract a wider pool of investors to fund work on a much larger scale that helps protect people from climate impacts and restores nature. Given the current acceleration of climate risks to the global economy, we need this to happen at pace.”

Working on behalf of Defra, the Environment Agency is working closely with the Green Finance Institute and Ecosystems Knowledge Network to make the knowledge generated by these projects available publicly to encourage similar approaches to access private sector finance for nature projects in the future. The government has set an ambitious target to stimulate at least £500m of private investment per year by 2027 to support nature recovery – rising to at least £1bn per year by 2030.

Among the 29 schemes already benefitting from the first round of funding are projects creating new woodland, delivering natural flood risk management, and improving water quality. Successes so far include:

• Norfolk Wildlife Trust’s Wendling Beck Exemplar Project is about to sell its first credits to fund the transformation of farmland through river restoration, grassland and wetland creation to offset impacts elsewhere.
• The National Trust is investigating potential revenues from natural flood risk management interventions in the Calder and Colne, including through the sale of carbon and biodiversity units.
• North York Moors National Park has calculated the natural capital value of the Esk Valley and individual holdings of the Esk Valley Farmers Group and is now investigating potential buyers in the region to refine what transactions would be possible by summer 2022. These could include flood, carbon, and water quality benefits which buyers may want to pay for.
• Kent Wildlife Trust’s Wilder Carbon Standard project is working towards its own carbon standard and legal agreements, including due diligence requirements, to allow them to start selling carbon units.

Tony Juniper, Chair of Natural England, said:

“The development of these kinds of projects will be a vital part of how we deliver the ambitious Nature Recovery Network that is at the heart of Natural England and the government’s plans and I am glad to see the Natural Environment Investment Readiness Fund showing how it can be done.

By investing in nature we can not only tackle climate change and create, protect and restore important habitats – but also improve the health and wellbeing of society by connecting people with the natural environment.”

Dr Rhian-Mari Thomas, CEO of the Green Finance Institute, said:

The Natural Environment Investment Readiness Fund has been revolutionary in bringing us closer to attracting large sums of private investment into nature recovery, which is urgently needed.

The Green Finance Institute is delighted to support this pioneering community of over 75 project developers as they create and test investable, high-integrity solutions across England that will help to channel private capital towards nature by demonstrating a return on investment.”

The fund will help deliver on commitments in the government’s 25 Year Environment Plan and Green Finance Strategy, as well as supporting the Prime Minister’s 10 Point Plan for a Green Industrial Revolution and the Net Zero Strategy.

 

Click here for a link to the original article by the Environment Agency.