There was an announcement in early March that all (major) new build residential developments in London from the 1st October 2016 will need to meet the Greater London Authority’s ‘Zero Carbon’ target.

The GLA have maintained the introduction of a ‘Zero Carbon’ target so that the property industry in London is prepared for the introduction of a ‘Near Zero Energy Buildings’ policy by 2020. In simple terms, the GLA definition of ‘Zero Carbon’ requires that all CO2 emissions remaining after the current requirement for a 35% reduction beyond Building Regulations are accounted for. This can be achieved in three ways:


  • on-site, through renewable energy generation, such as solar, or through energy efficiency measures
  • offsite, such as through energy efficiency measures in local buildings, (this is vague in the proposals) or;
  • a cash in lieu payment to relevant London Borough. (£60 per tonne CO2 for 30 years)

My calculations make this around £1,000-£2,000 per home, depending on size and a revenue stream of ~£45m per year across the London boroughs, or ~£1.4m each, (assuming everyone just uses the “cash in lieu” option).

I have written about my concerns about zero carbon homes using offset payments before and they remain for the following reasons:

  1. New home occupants will be living in a home that is no cheaper to run or more efficient than one from three years ago, and may be surprised at the bills of their “zero carbon” home.
  2. There is an administrative burden, with each borough having to put in place procedures and staff for what may amount to no more than a few hundred thousand pounds per year.
  3. Offsetting payments have something of a record of under-performance. See the National Energy Efficiency Database report for evidence of the massive difference between predicted performance of energy efficiency measures and the reality.
  4. They ignore the other environmental issues that are of concern, for example, air quality. The obvious way a homebuilder will reduce emissions on-site would be to deploy (more) solar power panels. Even if you accept the methodology for calculating their CO2 emissions reduction, (of which more another time) they do nothing to reduce air pollution from gas fired heating systems.
  5. Finally, even if you also accept the definition of “zero carbon”, it is economically irrational; we should be identifying what is the optimal performance we can achieve without spending too much money; this might be negative emissions or above zero, zero is just a nice, round number.

Of course, homebuilders may choose to invest more in reducing the energy use of their new homes through efficiency measures and deploying more renewables on-site, but by my maths the cash in lieu payment is likely to be cheaper.

There are two ways to improve the policy, starting with centralising the system for dealing with cash in lieu payments to avoid 32 boroughs each having their own systems. (Some already have their own in place.

We should also allow for a relaxation of the specific CO2 target where it can be demonstrated that energy efficiency measures will reduce demand further and/or other measures will reduce the cost for the occupants. As a specific example of above, “Passivhaus” developments are an acceptable alternative as these have the benefit of reducing CO2 emissions, air pollution and end-user bills.

It’s not all negative, and one clear benefit of this policy being brought forward by the GLA is that the rest of the country will get the opportunity to see how it works on a local scale before considering rolling it out further.