Major London housing development to be zero carbon from October 2016

April 2016: As highlighted in an earlier post – the GLA have just issued new London Housing Supplementary Planning Guidance (SPG) and Energy Planning Guidance which sets out the carbon targets for new residential developments in the capital following the government’s announcement last year to scrap its zero carbon homes policy.

Full detail follows below – but a helpful summary is provided in the GLAs new Energy Assessment Planning Guidance (page 12) on the key takeaway –  new carbon targets:

Stage 1 schemes received by the Mayor up until 30 September 2016 – 35% below Part L 2013 for both residential and commercial development.

Stage 1 schemes received by the Mayor on or after the 1st October 2016 Zero carbon (as defined in section 5.3 of this guidance) for residential development and 35% below Part L 2013 for commercial development

Over the past few months, the Mayor has referred to keeping London’s zero carbon homes policy through a number of responses to Mayoral Questions (see references below). This new Housing SPG is however the first official GLA document which confirms the process for how the zero carbon policy is to be implemented. The full text from the SPG on Zero Carbon Homes follows below – with some accompanying  analysis:

Zero carbon homes

2.3.56 As set out in Standard 35 above, for the period 2016 to 2031, London Plan policy
5.2B sets a ‘zero carbon’ target for residential development. T his target was to align with the then expected introduction of ‘zero carbon homes’ through Part L of the Building Regulations. However, the Government announced (July 2015) that it ‘does not intend to proceed with the zero carbon allowable solutions carbon offsetting scheme, or the proposed 2016 increase in on-site energy efficiency standards, but will keep energy efficiency standards under review’.

Prior to this (March 2015), as part of the Housing Standards Review, through a Written Ministerial Statement, the Government set out that it expected local planning authorities not to set conditions with requirements above a Code Level 4 equivalent (around 19% improvement on Part L 2013).

2.3.57 The London Plan policy seeking ‘zero carbon’ homes remains in place and was not changed by the recent Minor Alterations to the London Plan. However, together with other standards ‘zero carbon’ was tested through the needs and viability assessment for the Alteration which indicated that the standards would not compromise housing viability. This approach will also help ensure the development industry in London is prepared for the introduction of ‘Nearly Zero Energy Buildings’ by 2020.

Definition

2.3.58 ‘Zero carbon’ homes are homes forming part of major development applications where the residential element of the application achieves at least a 35 per cent reduction in regulated carbon dioxide emissions (beyond Part L 2013) on-site (in line with policy 2.5B). The remaining regulated carbon dioxide emissions, to 100 per cent, are to be off-set through a cash in lieu contribution to the relevant borough to be ring fenced  to secure delivery of carbon dioxide savings elsewhere (in line with policy 5.2 E).

Implementation

2.3.59 In line with the implementation date for previous increases in the London Plan carbon dioxide targets and improvements to Part L of the Building Regulations, ‘zero carbon’ housing will be implemented for Stage 1 schemes from 1st October 2016.

2.3.60 The technical implementation of this policy should be in line with the Mayor’s Energy Planning – GLA Guidance on preparing energy assessments (March 2016). The Mayor’s Housing Standard’s Viability Assessment assumed a carbon off-set price of £60 per tonne of carbon dioxide for a period of 30 years. Where the borough applies a carbon dioxide off-set price of £60 per tonne, it is not considered necessary to carry out a further viability assessment of the policy approach.

 A few points here:

  • The Mayor has taken an opposite stance to that of the Chancellor, who scrapped the zero carbon target in his Summer Budget last year. In a Housing Viability Assessment report commissioned in 2015 by the GLA, analysis of London development concluded that “The estimated cost impact of moving to zero carbon homes in 2016 represents circa an additional 1-1.4% of base build cost….the move to zero carbon homes in 2016, do[es] not represent a significant determinant in the viability and the deliverability of housing development in London.” This has led to the GLA’s statement in the Housing SPG that the zero carbon requirement “would not compromise housing viability”.
  • The SPG’s text states that “‘Zero carbon’ homes are homes forming part of major development applications” – suggesting that planning applications for smaller residential developments will not have to apply the zero carbon target. [Only major development applications are referred to the Mayor for planning approval. For residential developments this typically means sites with more than 150 residential units – more here]. What proportion of London homes being built are a part of ‘major’ developments? This is unclear at the moment – and unfortunately not set out in the Mayor’s new planning Annual Monitoring Report, published a few weeks ago – but it is likely that major development represent a very high percentage of new London homes being built.
  • So how many new homes will this zero carbon target apply to? The two leading Mayoral candidates have both pledged an increase the rate of house building in the capital: Sadiq Khan has stated he will “ensure a minimum of 80,000 new homes a year“.  Zac Goldsmith has committed to “Doubling home building to 50,000 a year by 2020“. At present new homes developed in London represent around one-sixth of total new UK homes built. Increased pressure on the need for new housing in the capital suggests that, if London does attain an accelerated growth in house building, the London Plan’s policies could lead to potentially 20% or more of new UK dwellings to comply with zero carbon rules.
  • Some background to those housing figures – annual London housing build is around 25,000 homes a year, from the last GLA data (September 2015 Housing in London report). For new developments which have received planning consent, the latest GLA Energy Planning Monitoring report shows that, the Mayor and boroughs have approved major development with a total of 55k, 43k, and 43k homes for the years 2012, 2013 and 2014 respectively (most of which will be built out over the coming decade).
  • The zero carbon policy will start from 1 October this year, which may lead to a rush of Stage 1 applications being submitted by developers before 30 September 2016, as to avoid additional spend to meet the revised carbon targets [N.B. planning applications to the Mayor are first submitted on a Stage 1 basis, where comments are provided by the GLA to the developer on whether the application conforms to the London Plan’s policies. The application is the resubmitted at Stage 2 to receive final comments and a decision by the Mayor. A parallel application process is undertaken by the developer at the local authority level, where the development is sited, with GLA and borough planners working together].
  • The carbon offset policy has been in place in the London Plan for several years now (see para 5.23 of the London Plan), with the GLA’s 2014 SPG on Sustainable Design and Construction (SDC) providing implementation detail for boroughs. In the first instance, the  SPG states boroughs “should develop and publish a price for carbon dioxide” [p47]. It is not clear how many boroughs have so far established these planning related carbon offset funds: one that has is Islington. Westminster have also proposed a carbon price.  A number of Mayoral Questions have  been asked for clarification about the GLA’s carbon offset policy since the Chancellor’s cancellation of the zero carbon homes policy – see MQs  here, here and here).
  • The new Housing SPG however now states that “Where the borough applies a carbon dioxide off-set price of £60 per tonne, it is not considered necessary to carry out a further viability assessment of the policy approach.” Hence all London boroughs will now be able to apply this off-set price in planning negotiations for major housing projects from October of this year, with the SPG on SDC setting out (para 2.5.19) how these funds should be directed to local low carbon projects – with a preference given to retrofitting.
  • How much resource will potentially be directed to borough low carbon projects as consequence of these new funds?  Appendix 13 of the Draft Appendices to the Housing Viability Study Draft provides some initial estimates.
  • Lastly – it shouldn’t be missed that the London Plan will still be pushing significantly beyond national building regulation targets with regard to onsite carbon emission reduction measures. Both residential and non-residential development will have to deliver savings of at least35% below Part L 2013″ before the offsetting provision is examined.

All in all this represents a significant development for London planning climate policy – and brings into question the Chancellor’s decision to to scrap the 2016 zero carbon target. It’s not immediately clear what quantum of funding will be directed to boroughs to invest in low carbon projects, or what projects will be supported – this is something which should emerge over the coming months.

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