Summary of report by Zero Carbon Hub - Allowable ... - Regensw
Summary of report by Zero Carbon Hub - Allowable solutions for tomorrow’s new homes – published July 2011 Background: In May 2011 government announced that to meet 2016 zero carbon standards developers will have to account only for regulated carbon emissions from the houses they build (that is emissions from heating, lighting, hot water and building services but not appliances). Onsite measures (carbon compliance) such as building fabric improvements and onsite energy generation are expected to contribute significantly to the achievement of zero carbon emissions. However, government’s zero carbon policy allows for other measures – such as offsite renewable energy generation and upgrades to existing buildings’ energy efficiency - to be taken into account in achieving a net zero carbon development. This policy is called allowable solutions – the developer pays a contribution to an allowable solutions provider to develop a small, medium or large carbon saving project to offset residual carbon emissions from the development. It is expected that under the current definition of zero carbon, allowable solutions will be used to account for 56% of emissions from flats and 40% of emissions from detached houses. Summary of the proposed framework for the delivery of allowable solutions The key parts of the consolidated framework proposal presented in this report are: 1. A choice for local planning authorities to develop a policy on allowable solutions (Route A); 2. The opportunity, when working to Route A (i.e. to local plans), for housing developers to choose between paying into a community energy fund (steered by the local authority) or by private contract to a third party provider; 3. The option of purchasing allowable solutions from a private energy fund (Route B) when the local planning authority does not have an allowable solutions policy; 4. A verification and certification scheme to show that an investment will achieve the required carbon emissions reductions. The scheme will monitor allowable solutions delivery and release credits, certificates and funds in a timely way to facilitate allowable solutions project development and building regulations approval. 5. A single allowable solutions fund holding to provide a secure ‘bank’ for the allowable solutions investment flow – developers pay into this and credit is released to allowable solutions providers when milestones in project developments are reached. The role of local planning authorities: Allowable solutions policy Local authorities can develop a policy on allowable solutions within their local plan from 2016. This allows them to set which projects/programmes allowable solutions from developments in their area can be used to fund (either through a community energy fund or a third party provider). If the local authority doesn’t create a policy, developers can choose to pay their allowable solutions funding to 1
projects elsewhere in the UK, meaning that the local benefits are lost. There is therefore a clear incentive for local authorities to write policy on this to ensure that the value from developments is retained locally. The report states that the National Planning Policy Framework should include a hook for local authorities to hang a Supplementary Planning Document (SPD) in their area on. The policy needs to be based on sound evidence and the report states that many local authorities already have this evidence in place for the development of their local plans. In some cases, cross-boundary and multiagency evidence has been prepared and the report states that this can be used to inform the preparation of sub-regional/joint Local Planning Authority prescribed Allowable Solutions. These will be of particular value where large community energy infrastructure projects are being considered and/or for small/less well resourced Local Planning Authorities that risk being excluded from the process. Community energy fund The local authority can establish a community energy fund to directly steer delivery of allowable solutions projects. Where a local planning authority has decided to establish a community energy fund, it may wish to use the Community Infrastructure Levy (CIL) or Section IO6 (S106) to collect and pool payments. Local authorities can also work across borders to pool income from allowable solutions to support the delivery of strategic infrastructure projects. Local authorities are encouraged to engage with third party providers - e.g. private partners, community groups - to form new partnerships and joint ventures. Building control For Building Control, the framework aims to provide simplicity. A verifiable certificate showing carbon abated will be issued as evidence that the Allowable Solutions part of the zero carbon requirements in Part L 2016 has been met. It is recognised that there are some training implications for Building Control Staff in understanding the context of Allowable Solutions within the overall ‘Carbon’ performance of a development. Potentially eligible projects: Projects funded by allowable solutions can be any scale and could be on-site, near-site or off-site. The framework sets out a range of examples of the types of projects that could be funded (including renewable energy, energy efficiency and low carbon transport) but does not include a definitive list of project types. Projects outside the UK are not eligible. The aim is that projects funded can demonstrate ‘additionality’ – that is that they wouldn’t happen without investment from an allowable solutions fund. The details of the requirements for this are yet to be clarified. Allowable solutions providers could be a range of types of organisation, including charities, energy companies, ESCOs or housebuilders. A National Allowable Solutions Database will be established giving details of projects seeking investment across the UK. There are two types of funds that could be set up to invest in allowable solution projects: 1. A community energy fund (steered by a local authority) may wish to fund: 2
A strategically planned project which aligns to an aspiration set out within the Local Planning Authority’s local plan – for example a district heating network which the Fund may be prepared to put its own equity into ( and thus take a share of the future revenue as an equity owner);
A project selected from the National Allowable Solutions Project Database located in their area – for example a community in the local area may have submitted a ‘shovel ready’ project to the Allowable Solutions project database
2. A private energy fund (steered by private fund managers, such as a group of major housebuilders, a bank or a utility) may wish to fund:
A cost effective carbon saving project which has successfully won a tendering process for funding. This project could be located anywhere and at a scale consistent with the aims of the policy;
A project from the National Allowable Solutions project database – the private fund operator could interrogate the national database for projects that deliver the carbon savings that they need to ensure are abated.
Pricing: Government has stated that allowable solutions must at least initially be cheaper than onsite carbon compliance measures and that there will be a national ceiling price. The proposal at present is not to have a floor price. £46 per tonne per year is suggested as a potential price – this will be discussed in further consultations. Some Local Planning Authorities may seek to charge a lower price for Allowable Solutions recognising the viability constraints that may exist in their local area. Timescales: Allowable solutions credits may be time limited – that is if an allowable solutions provider has not delivered the required carbon savings within a suitable timeframe, the credit may be allocated to another provider. It is suggested that the time limit is 3 years, though this has not yet been determined. Next steps: A consultation is expected in the autumn 2011.
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projects elsewhere in the UK, meaning that the local benefits are lost. There is therefore a clear incentive for local authorities to write policy on this to ensure that the value from developments is retained locally. The report states that the National Planning Policy Framework should include a hook for local authorities to hang a Supplementary Planning Document (SPD) in their area on. The policy needs to be based on sound evidence and the report states that many local authorities already have this evidence in place for the development of their local plans. In some cases, cross-boundary and multiagency evidence has been prepared and the report states that this can be used to inform the preparation of sub-regional/joint Local Planning Authority prescribed Allowable Solutions. These will be of particular value where large community energy infrastructure projects are being considered and/or for small/less well resourced Local Planning Authorities that risk being excluded from the process. Community energy fund The local authority can establish a community energy fund to directly steer delivery of allowable solutions projects. Where a local planning authority has decided to establish a community energy fund, it may wish to use the Community Infrastructure Levy (CIL) or Section IO6 (S106) to collect and pool payments. Local authorities can also work across borders to pool income from allowable solutions to support the delivery of strategic infrastructure projects. Local authorities are encouraged to engage with third party providers - e.g. private partners, community groups - to form new partnerships and joint ventures. Building control For Building Control, the framework aims to provide simplicity. A verifiable certificate showing carbon abated will be issued as evidence that the Allowable Solutions part of the zero carbon requirements in Part L 2016 has been met. It is recognised that there are some training implications for Building Control Staff in understanding the context of Allowable Solutions within the overall ‘Carbon’ performance of a development. Potentially eligible projects: Projects funded by allowable solutions can be any scale and could be on-site, near-site or off-site. The framework sets out a range of examples of the types of projects that could be funded (including renewable energy, energy efficiency and low carbon transport) but does not include a definitive list of project types. Projects outside the UK are not eligible. The aim is that projects funded can demonstrate ‘additionality’ – that is that they wouldn’t happen without investment from an allowable solutions fund. The details of the requirements for this are yet to be clarified. Allowable solutions providers could be a range of types of organisation, including charities, energy companies, ESCOs or housebuilders. A National Allowable Solutions Database will be established giving details of projects seeking investment across the UK. There are two types of funds that could be set up to invest in allowable solution projects: 1. A community energy fund (steered by a local authority) may wish to fund: 2
A strategically planned project which aligns to an aspiration set out within the Local Planning Authority’s local plan – for example a district heating network which the Fund may be prepared to put its own equity into ( and thus take a share of the future revenue as an equity owner);
A project selected from the National Allowable Solutions Project Database located in their area – for example a community in the local area may have submitted a ‘shovel ready’ project to the Allowable Solutions project database
2. A private energy fund (steered by private fund managers, such as a group of major housebuilders, a bank or a utility) may wish to fund:
A cost effective carbon saving project which has successfully won a tendering process for funding. This project could be located anywhere and at a scale consistent with the aims of the policy;
A project from the National Allowable Solutions project database – the private fund operator could interrogate the national database for projects that deliver the carbon savings that they need to ensure are abated.
Pricing: Government has stated that allowable solutions must at least initially be cheaper than onsite carbon compliance measures and that there will be a national ceiling price. The proposal at present is not to have a floor price. £46 per tonne per year is suggested as a potential price – this will be discussed in further consultations. Some Local Planning Authorities may seek to charge a lower price for Allowable Solutions recognising the viability constraints that may exist in their local area. Timescales: Allowable solutions credits may be time limited – that is if an allowable solutions provider has not delivered the required carbon savings within a suitable timeframe, the credit may be allocated to another provider. It is suggested that the time limit is 3 years, though this has not yet been determined. Next steps: A consultation is expected in the autumn 2011.
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