Net zero carbon real estate: planning

It is an area which is affected by politics at all levels, with nationally-set planning legislation and policy sitting alongside development plans and other policy adopted at the local authority level. The current trend of de-regulation – more permitted development rights; increased flexibility in use classes; and further reforms anticipated in the Planning Bill – does not always sit easily with the need to mitigate and adapt to climate change, a tension which is likely to become more prominent as policy evolves and projects are considered in detail.

Planning policy as a driver for low carbon development

Planning applications must be determined in accordance with the development plan unless material considerations indicate otherwise. This statutory provision gives primacy to policy set at the local level, but it is also clear that other matters – such as national policy – can be significant factors for any particular scheme.

How far local policy then goes depends on a number of factors, including politics, local economy and industry, and how up to date the policy documents are. Local authorities also need to take account of the requirement in the NPPF for local requirements for buildings’ sustainability to “reflect the government’s national technical standards”.

The London Plan 2020 includes examples of the more stringent low carbon policies being imposed. These include:

• Major development should be net zero-carbon, reducing greenhouse gas emissions in operation and minimising peak and annual energy demand, to be demonstrated through a detailed energy strategy;
• A minimum on-site reduction of 35% compared to Part L of the 2013 Building Regulations, with a commitment to review this as and when Building Regulations are made more stringent;
• Any shortfall against the net zero-carbon target on site must be met via another scheme or cash payment to the local authority’s carbon offset fund. Whilst not setting the carbon price, the Plan notes that a price of £95 per tonne was viability-tested by the Greater London Authority and may be suitable; and
• Schemes which will be referred to the London mayor must include a whole life cycle carbon emission assessment.

Policies such as these clearly place a significant emphasis on the sustainability credentials of a new development. They also mean there must be a detailed analysis of greenhouse gas (GHG) emissions for all stages of a development.

For these policies to have effect it is clearly also necessary for the building design and energy strategies considered at the application stage to be implemented, and that is achieved through the planning conditions and section 106 obligations. At their most basic level these will require implementation of the approved plans, but will also extend well beyond that, for example to require independent verification reports to be submitted to the local planning authority, or they may contain detailed provisions seeking to maximise the prospects of a planned combined heat and power network being used by new developments.

It is clear to see the direction of travel for planning policies – in some cases carbon-related requirements will push developers to do more, whilst in other cases the real estate industry may already be going beyond the local requirements due to other drivers. Developers will, as for all policies, want to keep a close eye on the emerging shape of decarbonisation policies, to ensure that they are compatible with a viable scheme.

Climate-related planning litigation

There has been a continued increase in litigation based on climate-related grounds generally, and the planning system is no exception. To-date, a number of the legal challenges have focused on infrastructure – such as national policy in relation airports, energy and roads – and there are others which are targeting local plans and real estate development.

Examples of relevant judicial review challenges include:

• A community group seeking to challenge the adoption of a local plan on the basis that the annual housing target for the area was set without adequate consideration of the impacts of the additional homes on climate change. This is a good example of those within the planning system being asked to reconcile two different aims – increased housing supply and mitigating climate change impacts – and decide if they are consistent and if not which should have precedence;
• A challenge to the grant of permission for an oil production development, on the basis that the environmental impact assessment (EIA) only considered the direct greenhouse gas emissions from the development (the well), and not those arising from the future use of the oil products (as a fuel). This is an important concept, with the court being asked to consider whether the scope of the assessment was sufficient and complied with the EIA Regulations, or whether a development project should consider emissions arising from consumers’ use of the end products.

EIAs have long provided grounds for challenging planning decisions, and with the EIA Regulations since 2017 requiring consideration of the impact of a project on climate, this trend is very likely to continue and contribute to the increasing range of challenges based around climate issues.

Developers cannot prevent a challenge being brought in respect of their planning permissions, but it is possible to make it as hard as possible to bring a successful judicial review claim. A positive approach to sustainability and climate factors is an important part of that strategy.