What to expect from environmental law in 2026 – Natural Capital and Air and Emissions

This is the third of our five articles on what to expect from environmental law in 2026. This article focuses on two separate topics – Natural Capital and Air and Emissions.

Natural Capital 

2025 saw continued growth in the natural capital sector.  The legal requirement for many project developers to deliver at least 10% biodiversity net gain (BNG), introduced in 2024, drove strong demand for nature-based solutions and a surge in contracting for the reservation and purchase of BNG units. In addition to this private financing activity, 2025 saw new steps to channel public funding to natural capital projects with the government committing to protect 30% of UK land and seas for nature by 2030 (the ‘30by30’ commitment).  The carbon credits market also continued to grow, with Burges Salmon making its own investment in premium credits which will be generated by Oxygen Conservation.

Looking ahead to 2026:

• Important developments are expected in BNG law and policy.  The 10% BNG requirement is expected to be extended to Nationally Significant Infrastructure Projects (NSIPs) by May 2026.  By contrast, the government indicated in December 2025 that it intends to expand the classes of development which are exempt from BNG requirements (for example, smaller housing developments).

• Following the Planning and Infrastructure Act receiving Royal Assent, the Nature Restoration Fund (NRF) will be implemented. Housing and infrastructure developers can meet their environmental and biodiversity obligations (such as biodiversity net gain) by paying into the NRF.  Natural England will use the NRF to pool investment and deliver investment in nature through Environmental Delivery Plans (EDPs), which each set out a package of conservation measures applicable to the relevant local area.  We await to see how the scheme will be implemented in practice. 

• The government announced a raft of planned activity for 2026 in its Environmental Improvement Plan (EIP) published in December 2025.  For example, it will:

  • progress plans to streamline and strengthen nature market governance following the recent consultation on Voluntary Carbon and Nature Markets and Corry Review recommendation to explore a Nature Markets Accelerator;

  • sponsor the British Standards Institution’s (BSI’s) Nature Investment Standards Programme and introduce new standards for biodiversity, natural carbon and nutrient markets, to boost confidence and scale up investment for nature and sustainable farming;

  • provide funding to the Taskforce on Nature related Financial Disclosures (TNFD) and encourage UK organisations to familiarise themselves with the TNFD nature related risk management and disclosure framework; 

  • reach a decision on inclusion of high-quality UK woodland carbon removals under the Woodland Carbon Code in the UK Emissions Trading Scheme; and

  • deliver agri-environment schemes and to support farmers and land managers taking action for nature.  This includes established schemes such as Countryside Stewardship, newer schemes such as the Sustainable Farming Incentive and Landscape Recovery, and also the potential for future schemes which have not yet been created.

Air and Emissions 

Compared to the other topics covered in this article, air and emissions received fairly limited attention during 2025. The Clean Air Bill, which was shelved during the purdah, was not picked back up after the election and any commitments on clean air were noticeably absent from Labour’s manifesto. However, 2026 may see movement in the following areas:

• The Environmental Audit Committee has announced that it will launch an inquiry into air pollution in 2026. The scope of the review and exact timings are yet to be published but it is likely that the shelved Clean Air Bill will be a topic of discussion. 

• New Emissions Trading Scheme (UKETS) regulations may be brought into force during 2026 which will begin phasing out free allocation for sectors which are covered by UK CBAM (see further below) over 2027 – 2030. It may be that we also see moves to link the UKETS and EUETS regimes more closely - the UK-EU Summit - Common Understanding paper (published in December 2025) sets out possible parameters for a linking agreement to tie the two regimes together, but does not contain any specific deadlines. It remains to be seen how the regimes may be aligned in the future and whether this eases the burden on businesses operating across the EU and UK. For further details on other UKETS developments during 2025, take a look at our article here.

• Legislation to implement the UK Carbon Border Adjustment Mechanism (UK CBAM) – the policy instrument designed to ensure that imported goods bear a carbon cost equivalent to that faced by UK producers and so prevent carbon leakage – is expected when the Finance Bill 2025-26 becomes law.  While this new environmental tax will not take effect until January 2027, 2026 will feature the development of guidance and compliance systems to underpin detailed operation of UK CBAM.  It will be an important year for businesses to get ready to manage UK CBAM requirements and costs.  For UK-EU supply chains, EU CBAM became fully effective on 1 January 2026 after a two year transitional period. 

• The outcome of the EA’s consultation on modernising environmental permitting for industry, which closed in October 2025, is awaited and may be published in 2026. The consultation, which set out proposals to modernise the environmental permitting regime in England and Wales, could lead to staged and flexible approaches to permitting for complex sites / projects and may see the EA take a more central role in deciding what constitutes ‘Best Available Techniques’.  Further details on the scope of the consultation are set out in our article here. 

Burges Salmon advises on a wide range of environmental law, including the topics outlined above.  If you have any questions on environmental law please contact a member of the Environment Team.

Written with the assistance of Sarah Sackville Hamilton and Helena Sewell.