Key takeaways
No BNG, no DCO
Developers must demonstrate a 10% biodiversity net gain for DCO applications from November 2026.
Earlier ecological involvement on NSIPs will be essential
Baseline assessments and biodiversity strategies should be embedded into project design from the outset.
BNG obligations could become a key contractual risk
Risk allocation for biodiversity requirements will require careful consideration.
From 2 November 2026, biodiversity net gain (BNG) will become mandatory for nationally significant infrastructure project applications in England, with the Department for Environment, Food and Rural Affairs (DEFRA) having recently published guidance setting out how BNG should be considered throughout the design and consenting process.
In this article, we have summarised the new guidance and explained what this means for developers and contractors involved in these types of infrastructure projects.
What is biodiversity net gain?
For those not already aware, BNG is an approach to development ensuring that developments have a measurable positive impact (a ‘net gain’) on biodiversity, meaning that natural habitats are left in a better state than they were before development.
The impact to a natural habitat is assessed by the loss or generation of ‘biodiversity units’, a statutory biodiversity metric, which are measured by ecologists having regard to factors such as the habitats size, quality, location or type.
Biodiversity units may be lost as a result of development but can also be generated through the creation or enhancement of habitats.
There are essentially three ways in which a developer can achieve BNG:
by creating biodiversity on-site (eg creating new woodland)
by creating biodiversity off-site (ie on developers’ own land or through the acquisition of ‘off-site biodiversity units’ on the market)
by purchasing statutory biodiversity credits from the government.
The overall purpose of BNG is to ensure that the biodiversity units delivered by a development exceed those lost as a result of it, resulting in an overall net gain for biodiversity.
What are nationally significant infrastructure projects (NSIPs)?
An infrastructure project will be of ‘national significance’ where it meets the statutory size and capacity thresholds under the Planning Act 2008, meaning consent is gained through a Development Consent Order (DCO) granted by the Planning Inspectorate, as opposed to via the local planning authority.
NSIPs are generally large-scale infrastructure projects in sectors such as energy, transport, water, wastewater and waste, for example: power stations, wind farms, major road and rail schemes, airports, reservoirs and water or waste treatment facilities.
What is changing in respect of NSIPs?
Although biodiversity enhancement and ecological mitigation have always been considered as part of the DCO application process for NSIPs, from 2 November 2026, developers will now be required to demonstrate that the biodiversity value of the project post development will be at least 10% higher than the baseline position pre-development.
This is a fundamental shift from the current process, meaning that, in practical terms, failing to demonstrate that the 10% net gain will be achieved is likely to prevent development consent from being obtained. Whereas at present, a DCO may still be granted where a net loss to the biodiversity value is justified and adequately mitigated.
What is the new guidance?
DEFRA's guidance is aimed at developers of NSIPs and explains how BNG should be considered throughout the design, application and consenting process.
The guidance outlines the practical steps developers should take to meet the statutory BNG objective by establishing items such as the ‘biodiversity baseline’, assessing ‘biodiversity value’, identifying and delivering biodiversity gains, preparing DCO applications and securing, managing and monitoring those gains following consent.
It also clarifies that in respect of NSIPs:
BNG will apply only to habitats affected by the development rather than the entire site
Biodiversity gains may be delivered either on-site or off-site in the first instance
Simplified requirements will apply where developments have temporary impacts.
A key message throughout the guidance is that BNG should be considered as early as possible in project development. Developers are encouraged to engage with stakeholders at an early stage and to follow the mitigation hierarchy (ie avoiding significant harm to biodiversity in the first instance).
What does this mean for developers?
Following the removal of the statutory pre-application consultation regime from July 2026, designed to speed up and simplify the DCO process, developers are likely to face increased pressure to quickly establish baseline habitat values, biodiversity constraints and develop a compliant biodiversity strategy at a much earlier stage of project development.
With the minimum BNG requirements applying to NSIP applications submitted from 2 November 2026, early engagement of ecologists will be fundamental to ensuring that biodiversity considerations are embedded into scheme design from the outset, and that the project can demonstrate compliance as part of the DCO application process.
Developers involved in these types of projects are therefore encouraged to familiarise themselves with the guidance ahead of 2 November 2026.
What does this mean for contractors?
In a previous article we discussed the updated NEC4 option X29 clause, which, when selected, is likely to facilitate a clearer allocation of risk regarding a project’s nature and climate requirements. This was a timely update by the NEC given the recent legislative changes, including these mandatory BNG requirements for NSIPs, which will inevitably have significant implications for contractors engaged to deliver these types of projects.
Although the BNG requirement will have a wider impact on project delivery, including in respect of time and cost, the allocation of responsibility for meeting this statutory 10% BNG net gain requirement is likely to be the most significant issue for contractors. It is likely that developers will seek to flow down as much risk as possible, particularly where the contractor has design responsibility. Contractors, however, will need to be wary of assuming absolute obligations to achieve biodiversity outcomes which are likely to depend on factors beyond their reasonable control. In any case, careful drafting of the building contract will be required to ensure that the parties’ intended allocation of risk is clear and not does exceed (inadvertently or otherwise) the contractor’s anticipated scope of responsibility.
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This article was co-authored by Associate, Paula Mas Alvarez.
