Planning obligations

Carbon Offset payments are a form of S106 contribution, and are paid in instances where a development cannot provide the required Carbon savings as set out in the adopted planning policy (as of writing, the London Plan). 

The Greater London Authority (GLA) published guidance in 2021 on the collection and use of Carbon Offset funding.

Prioritising projects for offset funding 

The Guidance sets out the following priorities for C02 offset funding as below. The primary purpose of a project funded by carbon offset fund should be to deliver carbon savings. In order to demonstrate that a project meets this primary purpose, the guidance indicated that projects applying for C02 offset funding should provide an estimate of the carbon cost-effectiveness of the proposed measure, i.e. the capital cost per tonne of CO2 saved over its lifetime (£capex/tCO2 lifetime). 

Within this broad framework (of delivering carbon savings), the guidance sets out the following priorities:

Main priority

• Reduce energy demand in existing buildings, including through energy efficiency measures and improving monitoring and operation.

Secondary priorities

• Generate renewable electricity, e.g. solar PV
• Generate renewable or very low carbon and low emission heat e.g. solar thermal, heat pumps or fuel cells,
• Replacing higher carbon systems that contribute to poor air quality such as gas-engine CHP Support low carbon heat networks
• Undertaking whole building retrofit, e.g. improving energy and water efficiency, installing renewables and smart metering

Reducing energy demand is the first, best and often most cost-effective approach to decarbonising buildings, which is why the GLA recommends that LPAs prioritise measures such as energy efficiency improvements. Lower-cost projects that target energy efficiency, such as insulation programmes, should be a priority for offset funds. 

The primary focus for offset funds is to achieve carbon savings but, where possible, projects should maximise co-benefits, i.e. wider environmental, social and economic benefits that align with an LPA’s local strategic priorities identified in climate change mitigation and adaptation plans, Local Plans, as well as key priorities from the London Plan.

Example projects for C02 offset funding 

The guidance lists 4 examples of projects where C02 offset funding could be used: 

• Decentralised Energy Enabling Project (DEEP)  

• Warmer Homes

• Cleaner Heat Cashback 

• London Community Energy Fund 

Who can receive CO2 offset funding? 

There are no restrictions in the guidance as to who can be a recipient or beneficiary of offset funds provided the project being funded aligns with an LPA’s identified priorities for offset funds. 

Bid for s106 (Planning Obligation) funding

To bid for s106 (Planning Obligation) Funding, please see the process outlined on our delivery infrastructure projects page.