The European Commission has launched a consultation on the 'no net loss' objective for biodiversity which is part of its EU Biodiversity Strategy to 2020. In particular, the consultation seeks views on biodiversity offsetting, a system by which adverse impacts on biodiversity resulting from development are permissible provided that the developer replaces or compensates for the lost biodiversity at the same site or elsewhere. Offsetting is contentious with some environmental groups arguing that it gives developers a licence to build anywhere, and conflicting opinions on the net impact of existing projects where offsets have been used.

Whilst the consultation does not propose any specific measures (legislative or otherwise), it does raise the prospect of the Commission adopting a formal 'mitigation hierarchy' for development whereby priority will be given to avoiding or preventing adverse impacts; where impacts cannot be avoided, to minimising and rehabilitating their effects; and finally to offsetting any residual impacts. Much of the detail of the consultation is based on the recommendations of a policy options report to the Commission by the Institute for European Environmental Policy (IEEP) last year which concluded that “mandatory requirements for the offsetting of residual impacts would be needed to make a significant contribution to no net loss.”

The consultation asks whether the Commission should issue an EU framework for offsetting with common standards and technical guidance; whether offset sites should be secured from future development; whether offsetting should always be at or in close proximity to the site where the damage took place; whether offsets should be on a "like for like" or can be "traded up" (meaning that the offset may be in the form of rarer or more highly valued biodiversity but over a smaller area); and whether small developments should be exempt.

Offsetting is already commonly used by developers to comply with requirements under the EU Habitats and Birds Directives to maintain or restore favourable conservation status for protected species and habitats within the Natura 2000 network of designated protected areas. The consultation indicates that any future 'no net loss' initiatives will address areas outside of the Natura 2000 network and seeks views on whether there should be any overlap with existing requirements.

Some EU Member States, including Germany and France, have already adopted a 'no net loss' principle into domestic legislation. In the UK, the government has launched a two year pilot offsetting scheme and consulted last year on giving developers in England the choice of whether to use offsetting, but progress has been slow.

The consultation closes on 26 September 2014. The Commission is expected to propose specific initiatives to meet the 'no net loss' objective by the end of 2015, in line with timetables in the EU Biodiversity Strategy.