KJ Tait

Carbon Offsetting

15 September 2023

Since carbon offsetting was introduced into the 2016 London Plan as a means of securing at least a 35% reduction in carbon emissions from the Building Regulations it has always been a topic for debate.  Offsetting was strengthened in the latest version of the London Plan (March 2021) to mandate that major developments must achieve at least a 35% reduction in carbon emissions from the Building Regulations with any remaining emissions offset to achieve Net Zero Carbon.   


The topic is contentious for several reasons: 


  • Developers believe that after paying the offset payment they can claim that a building is Net Zero Carbon, however current guidance from the UK Green Buildings Council states that Net Zero Carbon claims can only be made on actual energy consumption in use. 
  • Refurbishments are subject to the Net Zero Carbon standard; in most cases they will have to contribute more as the fabric standards are normally worse compared to a new building.   
  • The carbon offset rate as specified within the London Plan at £95 per tonne for 30 years is not high enough and does little to encourage the use of more expensive, innovative products.   


It is this last point that could undergo considerable transformation over the next decade as it is up to individual boroughs as to how much they set the carbon offset payment to be.   Islington Council already has a carbon offset price of £920/tonne for 30 years and City of Westminster Council have recently consulted on increasing the carbon offset payment from £880/tonne for 30 years through their ‘Draft Planning Obligations and Affordable Housing SPD’.  


What does this mean in reality? If we assume a building has an emissions rate under Part L 2021 of 5kgCO2/m2 and is 10,000m2.  This leads to emissions from the building of 50 tonnes per year.  Scaled up over 30 years, this would result is emissions of 1,500 tonnes.  At £95 per tonne, the carbon offset tax would be £142,500, however, in Islington the tax would be £1,380,000.  This represents a 968% increase in the payment and could ultimately affect the financial viability of new build and refurbishment projects.   


Conversely, understanding this tax early in the design process could lead to better design decisions around fabric, HVAC, energy generation, and lighting systems to reduce the carbon emittance of the building and reduce the offset tax payment.