New Carbon Tax For Developers

Since 1 October 2013, all new London developments are required to show how they meet a target to reduce CO2 emissions by 40% beyond 2010 Building Regulations. If you are not London based, please keep reading as what happens in London is likely to follow-on in the regions not too far down the road.

The requirements are set out in draft supplementary Planning Guidance for Sustainable, Design and Construction and GLA guidance on Preparing Energy Assessments.

So what has changed? There are two major implications. Firstly, more detailed assessment is now required to inform the design and planning application; secondly, a new carbon tax will apply when a development is unable to meet the 40% target.

However, the target is being applied very differently across London. We are seeing evidence of a great deal of variation in the related Carbon Tax with estimates ranging from £46 to £90 per tonne of CO2. We are also seeing variation in the time period being set, 30 years is suggested within the guidance. The additional cost incurred is being secured through s106 contributions into an offsetting fund to deliver carbon savings elsewhere or potentially through other projects being undertaken by the developer.

If you are a developer, you are likely to have concerns about meeting the new target and the potential negative impact this will have on your project, especially in relation to sites:

  • With limited potential to connect to existing or future decentralised energy networks;
  • With significant constraints such as high flood risk;
  • Within a conservation area;
  • Where a listed building is involved.

The best way to mitigate the potential impact on project viability is to assess the potential implications, and your options, at the earliest possible stage.

If you would like to discuss the potential commercial impact of this new carbon tax on your projects, please call Iain Fraser on 0203 544 3998 or email iain.fraser@greengage-env.com.