CivTech 8 challenge: design biodiversity credits and enable investment in Scotland's nature
How can biodiversity credits be designed in a way that provides simplicity for projects and buyers, and enables investment in Scotland’s nature? Challenge Sponsors: NatureScot, Scottish Government: Environment and Forestry Directorate and Scottish Wildlife Trust.
Biodiversity credits are an economic instrument that can be used to finance actions that result in measurable nature positive outcomes for biodiversity and the environment. They directly address the need for investment in natural capital, beyond nature’s role in managing the carbon cycle.
Biodiversity credits differ to biodiversity offsets – they can be part of a company’s nature-positive journey, an investment in nature’s recovery, rather than an offset for damage.
The development of biodiversity credit markets has the potential to help address the £20 Billion finance gap for nature in Scotland by leveraging responsible private investment into nature recovery, in line with the Scottish Government’s Biodiversity Strategy and Natural Environment Bill and the Interim Principles for Responsible Investment in Natural Capital.
This Challenge is one of the first being launched as part of the Innovate for Nature strategy, and falls under Mission 2 — More Than Carbon.
A live Q&A session will be held with the Challenge Sponsor team on Tuesday 15th November 2022 at 15:00. Click here to register for the session.
CivTech will also be holding a virtual briefing session to talk to a Challenge Manager about the CivTech Process and how to apply to solve a CivTech Challenge, at 5.30-6.30pm on Thursday 17th November. Click here to register for a place.
Why does this Challenge need to be solved?
- In Scotland there is a £20 billion funding gap for Nature Restoration, with no functioning mechanism for direct private investment in biodiversity
- Projects need to be aggregable at a sufficient scale to be attractive to corporate investment and ESG buyers, as well as enabling new funding mechanisms, via regulated exchanges, that could attract retail investment.
- There is a lack of a common commercial mechanism for landowners to join up to, for landscape-scale restoration that fully takes into account the benefits to Nature, which is needed for both investors and to achieve the desired outcomes for nature – i.e. ecosystem intactness and integrity.
- There is an insufficient financial incentive for landowners and managers to arrive at common agreement on land use and management across a landscape.
- While a current lack of ’NBS Project Pipeline’ is cited to be holding back private investment, the reason for the scarcity of projects, is that carbon financing (currently the only established mechanism of private financing available to nature restoration projects) is often insufficient to make the project viable, compounded by a natural reluctance by landowners to sell their carbon credits, in case they would require them in the future to offset their own emissions.
- Scaled up carbon financing opportunities are also constrained, by the fact the established Carbon Codes for Woodland and Peatland constrain purchases to UK only buyers. This is necessary, as the international regulations of the Voluntary Carbon Markets (VCM) determine UK credits sold internationally cannot be used towards achieving the UK’s Nationally Determined Contribution (NDC) to the UNFCCC under the Paris Agreement, in response to the Glasgow Climate Pact.
Anyone can apply, from anywhere. You could be an existing company with a team and a product that is ready to be repurposed to answer the challenge. Or a group of graduates with a great demo. Or a digital team that’s looking for a great idea to get involved with. Or even the reverse — an individual with no digital background but with real insight into the challenge and a cracking idea but can put together a great support team.
Rewards for CivTech challenges
Up to 3 teams are selected for the 2-3 week Exploration Stage of each challenge, and will receive £5000 per team (plus VAT if applicable). Winning teams will be invited onto the 12-15 week Accelerator Stage. Each team completing the Accelerator will receive £30,000 (exc. VAT), with no hidden charges, and no equity or IP stakes being taken.
If you are successful at the Demo Day following this stage, further contracts can be negotiated up to a total value of £210,000 or £610,000 (plus VAT if applicable) per team (depending on whether your Challenge was advertised on Public Contracts Scotland with a value of up to £250,000 or up to £650,000.) Highlands and Islands Enterprise, Scottish Enterprise, the Scottish Investment Bank and other support channels will also get involved to help drive the businesses forward. Click here for full details of the process.