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June 2020: A consortium of five London boroughs, Barking and Dagenham, Ealing, Greenwich, Haringey, and Westminster have commissioned and recently published the following study: “Towards Net Zero Carbon Achieving greater carbon reductions on site: The role of carbon pricing“. This report seeks to review the current planning guidance from the GLA on Carbon Offsetting, and in particular the carbon offset price recommended in that guidance. This new study presents the rationale for this work as follows: “the current carbon offset price (£60-£95/tCO2) and requirement of a minimum 35% carbon reduction do not incentivise sufficient savings on site. This means that new buildings have substantially higher carbon emissions that they should.” The GLA’s 2018 guidance document sets out that “Currently, the GLA’s recommended price for offsetting carbon is £60 per tonne. This is a nationally recognised non-traded price of carbon and is also the Zero Carbon Hub price.” However, the guidance also recognises the need to review this offset price level and states “To assess whether this price continues to be appropriate the GLA commissioned AECOM to carry out a study of possible carbon offset prices, considering both published carbon prices and the cost of undertaking various carbon reduction projects in London… The new draft London Plan includes a new recommended carbon offset price of £95 per tonne which was tested as part of the viability assessment. This is intended to be the price (Local Planning Authorities) LPAs adopt, unless LPAs have set their own local price. The recommended GLA carbon offset price will be reviewed regularly.” (the new London Plan reference to £95/tonne is referenced as footnote 155 on page 384 of the London Plan 2020). Note – the option is available to boroughs to set their own offset price – but there needs to be some evidence to support any such price being set.

This new study by the London boroughs is an attempt to do this – and sets out the following: “We have undertaken extensive energy modelling on several typologies of buildings. Our calculations demonstrate that the decarbonisation of the electricity grid means that, for the same specifications, a greater improvement over Part L is achieved with no extra effort/cost (‘60% is the new 35%’). On this basis, and given the consensus on the need and benefit of a ‘fabric first’ approach and low carbon heat, our recommendations are:

• To incentivise on-site savings by adopting a high first tier price of £1,000/tCO2 for those easily avoidable and unnecessary residual emissions not met on-site, which fall short of a 60% improvement threshold (measured over Part L1A) for domestic and a 50% improvement threshold (measured over Part L2A) for non-domestic developments.
• To incentive PV with the introduction of a medium carbon price second tier of £300/tCO2.
• Finally, and only for residential applications for which it is easier to achieve this high level of performance than for nonresidential applications, we recommend a low carbon price
• third tier of £100/tCO2 as a positive signal. “

The report concludes with some further opportunities to ensure that zero carbon buildings take into account their full environmental impact.