Last year, Peers secured an amendment to include ‘energy efficiency’ within the definition of infrastructure that the UK Infrastructure Bank may invest in. During the passage of the Bill, Peers also consistently pressed for the inclusion of nature-based solutions (NBS) to go alongside this within the definition, and as the Bill returned to the Lords for its ‘ping pong’ stage, an amendment in the name of P4P Chair Baroness Hayman was finally conceded by the Government.
The inclusion of nature-based solutions and energy efficiency within the definition of infrastructure for the Bank, which is tasked with unlocking £40bn of infrastructure finance, will help provide investment certainty in two crucial markets and support wider social and economic co-benefits.
Today, the UKIB announced the first real-world outcome of these provisions, by committing £12million to support an innovative nature restoration project in the Scottish Highlands and Islands which will enable the restoration of temperate rainforest, with the aim of stimulating natural capital markets, and helping to tackle climate change, boost biodiversity, and deliver benefits to the local community.
Peers made the following arguments when pressing for the inclusion of this important provision for nature in the Bill, which help to unpack the future benefits these changes may enable:
It would send a clear signal that investment in nature is a considerable emerging opportunity. There is a significant financing gap (an average $700bn) to protect and restore nature globally. Existing government initiatives do not bridge this gap and action is needed to help mark to participants scale natural capital products and service growing investor demand. This amendment provides confidence and sends a strong, legal signal to the Bank, markets, and globally, that the government is leading role in helping to build and develop this nascent market.
Nature-based solutions are often more cost-effective for the taxpayer. Examples such as carbon removal show a considerable cost saving (and high returns) when nature-based solutions, such as supporting farmers to create and restore woodlands and wetlands, are used compared to engineered carbon capture solutions, as well as capitalising on the additional nature and climate benefits (e.g. biodiversity, health).
Urgent steps must be taken to limit and adapt to the changes baked into the UK’s climate due to human emissions and NBS are a crucial component to adaptation. The CCC’s report on UK adaptation finance notes that £3bn a year this decade may be required to address this and highlights the role of the UKIB in adaptation finance and the contributions nature-based solutions can play.
NBS bring social and economic co-benefits: Investing in nature will support the UKIB’s current objectives of tackling climate change but also support regional and local economic growth, job creation and positive health and wellbeing outcomes.
The UK cannot reach its net-zero goals without addressing nature. Advice to Government (including from the Dasgupta Review, the CCC, and the OEP) demonstrates that critical risks facing the UK include threats to its natural systems. UKIB infrastructure investment in nature can help mitigate these risks and deliver a net-zero and nature-positive economy.
The UK infrastructure Bank Bill received Royal Assent on the 23 March 2023
