Defra sets out plans for private nature finance, including peatland carbon

Standards and assurance

The paper says BSI has consulted on an initial version of its Supply of Nature-Based Carbon Benefits standard (Flex 703), with a version for market adoption expected in 2027. It is intended to cover nature-based carbon schemes across habitats, including peatland restoration. Defra also says it will publish more detail later this year on the recognition of high-integrity carbon offset credits, including the role of the Integrity Council for the Voluntary Carbon Market's Core Carbon Principles, in its response to the voluntary carbon and nature markets consultation.

Defra notes that self-assessment against the Nature Investment Standards has not given buyers enough confidence. It is funding a project with the devolved governments to develop and pilot an assurance framework that moves towards accredited certification, expected to run from 2027 to 2029. It is also exploring a voluntary, industry-led Environmental Market Governance Scheme to oversee UK nature markets.

Validation and verification

The paper says consultation responses showed a shortage of validation and verification professionals, which can delay credit issuance, along with reports of slow, costly and inconsistent work. Defra plans a market discovery phase to identify where support for capacity is most needed.

Combining payments on the same land

An annex sets out three draft principles on which Defra invites views. Suppliers should be clear what each payment is for, with no double funding. Buyers should be able to buy more than one outcome, such as carbon and biodiversity, from the same project. Where outcomes are used to compensate for harm elsewhere, a buyer offsetting only one impact would normally see the project's other outcomes retired, unless it can show it has no residual impact of that kind. Defra says the principles do not change any existing scheme and would not be applied retrospectively.

Finance

The paper describes the Big Nature Impact Fund, managed by Finance Earth, which uses up to £30 million of public first-loss investment to attract at least twice as much private capital into projects including peatland restoration. It also notes the Environment Agency estimate that peatland restoration provides 36 cubic metres of floodwater storage per hectare.