Katharina Cavano l Palladium - Nov 03 2021
New Report Reveals Massive Funding Gap for Nature Restoration in the UK

According to the latest report from the Green Finance Institute, the finance gap to secure key nature-related outcomes in the UK, such as biodiversity protection and restoration, is estimated to be GBP 56 billion over the next 10 years. The gap, which is calculated as the difference between required spending and committed/planned spending on nature-related outcomes, covers England, Scotland, Wales, Northern Ireland, and UK Overseas Territories.

The report notes that nature is vastly underfunded and that the market can play an important role in closing the finance gap, but that those markets are still in early phases of development and need strategic direction to best activate and utilise private capital.

Since 1990, the UK has almost halved its greenhouse gas emissions and in 2019, became the first major economy in the world to publish legislation with a binding target to reach net zero emissions by 2050. But reaching net zero can’t be done without restoring and re-valuing nature.

The UK, which is hosting the COP26 climate conference, has made public a series of ambitious commitments to restore and protect nature.

The UK government is developing a ground-breaking new agricultural subsidy system after leaving the EU – this will redirect old payments for agricultural production towards the generation of public environmental goods. If total subsidy levels are maintained, this would contribute upwards of GBP 35 billion over the next 10 years towards closing the gap. This is a big step in the right direction. Additionally, the UK government’s recent net zero strategy has committed an extra GBP 750 million to a Nature for Climate Fund, which will help to kick start peatland restoration and woodland creation while the subsidy system is put in place.

However, this still leaves a funding gap of approximately GBP 20 billion, or GBP 2 billion each year. This is where private investors and companies need to step up.

“The data is conclusive that public investment – even if funding commitments increase – will not be enough to fund the UK’s nature recovery ambitions,” notes Rhian-Mari Thomas, Green Finance Institute CEO. "Private investment is therefore urgently required in addition to public sector funding if we hope to transition to a net zero and nature-positive economy," Thomas concludes.

Nature-Related Outcomes

The report analysed seven nature-related outcomes, including maintaining and enhancing water quality, protecting and restoring biodiversity, and improving bioresource efficiency. But it was biocarbon projects to reduce greenhouse gas emissions and increase carbon sequestration that were labelled as the biggest single area, requiring upwards of 20 billion pounds over the next ten years.

Projects under this outcome include planting woodland, restoring peat bogs and moving towards more regenerative farming practices for soils. Carbon sequestration and emissions mitigation is an environmental outcome where clear, UK-specific frameworks are being developed to enable private actors to value and pay for the ecosystem services that they benefit from. This in turn creates the potential for markets to sell carbon credits, for land managers to generate revenues, and therefore for investors to step in and close the funding gap.

Green Finance Institute’s findings don’t come as a surprise to Palladium’s Managing Director, Jose Maria Ortiz, “Net zero targets can only be achieved through a comprehensive approach to changing the ways we produce, consume, tax, and value resources.”

“But we welcome this much needed report which has highlighted the huge size of the current funding gap for UK nature restoration. Private finance must now step up at an unprecedented scale and rate to help fill that gap. Our new nature restoration facility, Revere, aims to help accelerate that,” Ortiz adds.

The Green Finance Institute adds their voice to the chorus calling for immediate action at scale to address the climate crisis by protecting, regenerating, and revaluing nature. All eyes will be on global leaders at this year’s COP26 as the UK looks to lead the world towards a cohesive commitment on delivering net zero targets.

Revere is delivered through a partnership between Palladium and UK National Parks. Revere catalyses private finance for innovative nature-based solutions to restore the UK’s 15 National Parks at the scale and pace needed to tackle the climate emergency and biodiversity crisis. For more information visit www.revere.eco or contact info@thepalladiumgroup.com.